City Pummels Calder Hotel Project

June 27, 2003
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GRAND RAPIDS — For Jack Buchanan, last week’s luncheon meeting with the city was hard to swallow. Nothing went down easy for him, especially the thought of not building a 400-room hotel on Calder Plaza.

Buchanan didn’t get the slaughterhouse treatment he said he expected, but Mayor John Logie and Assistant City Manager Gregory Sundstrom did give him an old-fashioned fiscal whupping.

The CEO of Blue Bridges Ventures LLC took a pummeling last Tuesday as to why city commissioners should terminate a one-year exclusive option that his firm and Hines Interests LP, as Gallium Group LLC, have held since late October to buy City Hall, its parking ramp and Calder Plaza.

Not meeting six conditions listed in the option, not fulfilling 17 predicates the city and Gallium had agreed to, not gaining a brownfield designation for City Hall, not having the $9.3 million shortfall needed to do the project, not offering enough for the city property, and not getting to zero to move the city to a new location were just a few of the heavy punches city staff threw at Buchanan before they advised city commissioners to KO the project.

Five city commissioners, however, came to Buchanan’s aid — albeit, a few did so reluctantly — by nixing a motion from Logie to terminate his purchase option on the spot. They said they wanted to hear Buchanan’s side of the story, and they will, later.

“It was their intent to kill us today, but it didn’t happen,” said Buchanan, who after the meeting calmly disputed almost every number that was presented.

A key figure in this intriguing bout is the $45 million in tax revenue over 30 years that Sundstrom said would come from a brownfield designation. Buchanan said that amount is the total tax revenue the city would receive from the project from all sources except for the income tax hotel workers would pay, but it does include the brownfield status. He felt the income stream from the brownfield taxes would be roughly a third of that amount, or $15 million, and not $45 million.

The number is important from Buchanan’s perspective because city staff took the $45 million and added it to the $21 million Blue Bridge said the deal would cost the city over 30 years — which is $6.45 million in current dollars — and told commissioners the project would cost the city close to $67 million and not $21 million over that period.

Buchanan said City Hall would have brownfield status if the city had backed his application. He said he asked for that backing, but didn’t get it at a pair of meetings held this spring. A few weeks ago, the state denied the request. Now Buchanan is looking to take his plea for support to city commissioners.

“We don’t have city staff behind this thing and that is our struggle,” he said. “We may get city commissioners behind it, but staff isn’t behind it.”

Buchanan feels the 34-year-old City Hall qualifies as functionally obsolete for a variety of reasons. Two are that it isn’t ADA-compliant and it’s an inefficient building with a lot of wasted space that costs way too much to run.

“The building has no market value because it is too expensive to operate,” he said.

Another key number Buchanan disputed is the amount the city quoted it would spend on repairs to its current building over the next 30 years. According to the city, it would shell out $330,225 in year one and $11 million in year 16, with nothing in between and nothing after. He feels it will cost the city a lot more than $11.3 million for upkeep over that period.

Despite the beating he took last Tuesday, Buchanan still insists that the city’s cost in the project is $6.45 million, and he said the city could lower that number. How?

Provide an honest figure for repair work. Back the brownfield request. Include the cost to make City Hall ADA-compatible, which involves new elevators. Charge visitors for parking at the new building. And remove $2 million worth of furniture for the new building that he said city staff requested.

Clearly, round one of the main event went to the city, as staffers and the mayor came within a few jabs of scoring a technical knockout. Still, Buchanan does get up off the canvas rather quickly and he doesn’t cut easily. But with eight years and millions invested in this project, he seemingly can’t wait for round two. When the bell for it rings, he said observers can expect an entourage to be working in his corner.

“I know this sounds like we’re nuts, but we’re excited with what happened Tuesday. I mean, nobody is excited about being bashed like that. But what they did was they made a lot of mistakes. They said a lot of things that are completely untruthful and they put them in writing,” said Buchanan.

“Why we’re excited is they’ve laid out their case, as ugly and bloody as they could, and now we have our opportunity to come back. They said they would give us an hour-and-a-half and we’re going to bring in expert, after expert, after expert. These people have a lot of integrity and tremendous credentials who can lay to waste the numbers that are out there.”           

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