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Hotel Developer To Meet With City
The local commercial real estate broker and developer that has proposed a 400-room convention headquarters hotel for Calder Plaza has a showdown date with the city that will either make or break its project.
Blue Bridge, which has joined with Hines Interests LP of Houston to form the Gallium Group for the 24-story hotel project, is scheduled to appear before commissioners at a noon luncheon session on Tuesday, Oct. 28 — just 24 hours before its one-year option on the plaza expires.
Blue Bridge will be given 90 minutes to convince at least four commissioners that the deal is good for the city and its taxpayers and refute the claims made by city staff members at a June meeting that left the developer wounded and its project on life support.
"The difficulty we've had in the past is that we're trying to present a complex deal and it's not something that most people get. Many people clearly have a misinterpretation of what the project is all about, and even about what getting to zero means," said Jack Buchanan, CEO of Blue Bridge.
Getting to zero means not having the city pay any more for a new building, which Blue Bridge would construct as part of the proposal, than what it pays now and would pay in the future if it stays in its current structure on Calder Plaza for the next few decades.
"I think it has been mischaracterized as to what it means and how we described it a couple of months ago. I think we've got a pretty good way to present it that is going to clarify it more and get the information out in a considerably more accurate way than was presented by the city staff," added Buchanan.
When Blue Bridge does go before the commission next month there may be one less commissioner listening to its side of the story. Third Ward Commissioner Scott Bowen recently resigned from the board after Gov. Jennifer Granholm appointed him to a judicial post last month. It's not certain whether a replacement for Bowen will be named by then.
Bowen was one of five commissioners who agreed to give Gallium Group the option on the plaza last October, which cost the developer $25,000. In addition, he was one of the commissioners who voted down a motion made by Mayor John Logie to terminate the Gallium Group option at the June work session.
"It would be better to have Scott there, no question about it. We need enough folks who do have an open mind on the project, that will give it a fair assessment," said Buchanan.
For the Gallium Group to build a hotel on the plaza, the city and county have to relocate and the developer proposes to build each a new downtown headquarters as part of the deal. The plaza is important because it sits across Monroe Avenue from DeVos Place, the new convention center being built. The plaza has also been designated as the leading site for an expansion of the convention center in case one is warranted.
In June, a report released by city staffers offered more than two dozen reasons city commissioners should soundly reject the Gallium Group proposal. But the single biggest reason mentioned was that the developer didn't get to zero, meaning city staff doesn't feel that Gallium can move the city into a new building without raising operational costs.
Assistant City Manager Gregory Sundstrom told commissioners that a move would cost the city $21 million over 30 years with a brownfield designation for City Hall, an amount that works out to be $6.45 million in present-day dollars. But without the designation, Sundstrom said that cost would jump to $67 million over three decades.
"Sixty-seven million is not zero," he said in June. "You can present-value that number all you want, but it's still not zero."
Buchanan disputes that number, saying brownfield status for the building isn't worth $46 million and building amenities sought by the city added to the total cost. He also said last week that his group has two obstacles to clear at what may be his last-ditch pitch at next month's meeting.
One is that the $212 million DeVos Place needs another headquarters hotel to support it. The Convention and Visitors Bureau reported two weeks ago — and for the first time in recent memory — that it lost out on a convention booking because there weren't enough hotel rooms downtown.
The other is that City Hall, built in 1968, is in rough condition and will cost taxpayers a lot more to maintain than city staff has admitted.
"We're confident right now that what we're going to come back with is going to be accurate enough and clear enough that it will be compelling to pursue our project," said Buchanan.