Hotel Meeting Was A Downer

October 2, 2002
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GRAND RAPIDS — The developers of a proposed convention center hotel for Calder Plaza said they were disappointed about not getting an option from city commissioners on City Hall and disturbed that some financial aspects of the deal were revealed last Tuesday.

But members of Blue Bridge Ventures, a local real estate development company, and Hines Interests LP of Houston said they were more concerned with the “glaring” differences of interpretation they and the city had on the information they have exchanged since July.

“We want to make sure that the information given by city staff is not totally construed as fact. That is the issue we have right now. We’re not disputing that we don’t have disputes. It’s the interpretation of those disputes that is in dispute,” said Ed Kettle, public information director for the developers, known as Gallium Group LLC for this effort.

“We need to get underneath some of these things,” he said, while adding they remain optimistic that an agreement can be reached with the city.

Kettle told the Business Journal that they were slightly stunned that some of the finances of the deal were made public at last week’s luncheon meeting with commissioners. Kettle felt it was too early to disclose any figures.

“We thought we had an agreement with those guys to not go into the numbers. So we were a little bit taken aback when their presentation was so end-oriented in a process that we view as only being halfway done,” he said. “It really made it difficult. It’s certainly difficult for an observer to understand.

“There are intricacies within this deal that are too difficult to explain in a casual conversation, and some are particular to the kind of deal that (Blue Bridge President) Jack (Buchanan) has constructed to do the things that we claim and know that we can do.”

At the meeting, City Manager Kurt Kimball reported that the financial aspects of the agreement were not ready to be publicly revealed. But then longtime City Fiscal Services Director Robert White, part of the city’s negotiating team, said the developers offered the city $79 million over 30 years and that a cash flow projection showed that the city would lose about a million dollars a year over that period.

Kettle said the developers needed to gain exclusive rights to the property for 10 months in order to learn exactly what type of new facility the city needs, which would tell them how much relocating the city administrators would cost them.

Kimball said that the two sides had generally agreed on how to compile the economics of the deal, the value of the plaza property and the tax revenue that the 24-story hotel would generate.

He also noted that both parties agreed on the general size of a new City Hall and said that they had visited a couple of potential downtown sites. Kimball added that the developers, who have spent $1.5 million on the project so far, wanted an exclusive option from the city before they spend any more money on the effort.

But city staff members disputed a number of issues in the option and needed to know how the developers plan to finance the project, so they recommended that commissioners not enter into an agreement.

“We wanted exclusive rights to that property for a time being while we go through these numbers. Because we know to get to the next step is not only just about programming, but it is about confirming some of the issues that the staff has brought up,” said Kettle.

“We’re glad to do that, but we’re not going to do it in such an open environment that allows anybody to walk in there and steal the deal. Never, ever going to happen. Nor should it. I don’t think there is a reasonable person on this earth that would not understand that aspect of this thing.”

Kettle said they needed a “level of protection” through the development stages of the project, and weren’t asking the city for any money during the 10-month option period.

“We offered to pay them $25,000 so we could spend another $200,000, $300,000, $400,000. Why are we arguing about this?” he said.

Gallium Group wants to build a 24-story hotel on the plaza, across Monroe Avenue from the new convention center that is being built. City Hall and the Kent County Administration Building occupy the plaza and both governments would have to vacate it for the hotel to go up.

“It’s one of those things that seem to be an inch wide and a mile deep,” said Kettle of the differences between them and the city. “But we can’t oversimplify the thing and we certainly don’t want people to misunderstand our position on this thing, because it was not, in our opinion, accurately portrayed.”           

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