Law No Worry For Hotel Developers

November 15, 2002
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GRAND RAPIDS — Developers of a proposed convention hotel for Calder Plaza had their first meeting with the city today, Nov. 18, since commissioners approved an option last month that gave them a year-long exclusive right to relocate the city offices to another downtown site at no cost to taxpayers and buy City Hall, the plaza, and the underground parking ramp.

But while Gallium Group LLC, formed by Blue Bridge Ventures and Hines Interests LP for the project, talk with City Manager Kurt Kimball and his staff about a new site for the city, state lawmakers may or may not take action in the lame duck session on an amendment to Public Act 99 — action that may or may not be important to a hotel deal.

Gallium has offered to either build the city a new administration building or renovate an existing structure, and then sell it to the city on a 30-year lease.

PA 99, however, prohibits a city from buying property via an installment agreement that is longer than 15 years. State Senators Ken Sikkema and Glenn Steil introduced a bill earlier this year to amend the act to allow a city to enter into such a contract for up to 30 years.

But the fate of the bill is uncertain. It hasn't emerged from the finance committee yet and Steil announced last month that he plans to kill SB 1304 because he doesn't like the Gallium project.

That news, however, didn't disturb Blue Bridge President Jack Buchanan.

Buchanan told the Business Journal that he wasn't worried about whether or not the bill gets amended. He added that he could restyle the deal to the city's benefit. He also said he would not ask Sikkema to push the amended version through the Senate.

"We are not asking him to do anything at this point," said Buchanan.

And he may not have to, because Public Act 31 allows a city's building authority to enter into property-leasing agreements for up to 50 years.

Under PA 31, the city, through its Building Authority, was able to sublease space last year to the state Department of Management and Budget at One Monroe Center, better known as the former City Centre mall, for 25 years.

The same statute allowed the city to sign a lease-purchase agreement for 25 years with the Granger Group for the building and issue a $30 million bond package to renovate it. City police moved into the western half of that building last year, while state offices are expected to fill the eastern portion next year.

As for the Gallium project, Buchanan wasn't ready to reveal details of his deal until he had a firmer grasp of what the city needs in a new building. He did say, however, that one option he has outlined gives the city a new building that would cost almost $4 less a square foot than the city is paying Granger for City Centre.

The proposed hotel has 24 stories and 400 rooms and would be located across Monroe Avenue from the new DeVos Place convention facility.           

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