Gallium Still Alive, But Option Dies

October 31, 2003
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GRAND RAPIDS — He may be on his way out the door, but he still hasn’t left the building.

Mayor John Logie, who ends his three-term reign on Dec. 31, effectively used about three minutes worth of words to persuade city commissioners to table a motion for 30 days that likely would have extended the yearlong purchase option Gallium Group LLC had on City Hall, Calder Plaza and the Government Center parking ramp for another six months.

Just when it appeared that commissioners were going to giving Gallium the extension it wanted by a 5-to-2 vote last Tuesday night, less than 20 hours before it was set to expire, the mayor spoke up.

“The option is completely unnecessary,” said Logie, while calling the developer’s most recent pitch gamesmanship and a squeezing of the commission. “They haven’t given us any basis to extend this option.”

The mayor said the developer failed to meet many of the requirements of the purchase agreement, a major one being that Gallium didn’t get Kent County involved in the project. The county building is also on the plaza.

“The reality is we don’t need an option,” said Logie “There aren’t other people asking for this property.”

So instead of voting on extending the option, commissioners agreed to give city staff a month to dissect the latest proposal from Gallium Group, compare it with the numbers they drew up in June, and report their findings to commissioners — all things that could have been done with an extended option in place.

But now commissioners won’t vote on the extension until Nov. 25, at the earliest.

In the meantime, the Gallium option no longer exists, having expired last Wednesday, and the city is free to sell the building, the plaza and the ramp to anyone for the first time since October of last year.

“The fact is, the ball is still in play,” said Bob DeJong, a partner at Miller, Canfield, Stone & Paddock, who moderated the Tuesday luncheon presentation for Gallium.

Gallium told city commissioners that it can build a new hotel on Calder Plaza and a new City Hall at a yet-to-be-named downtown site without it costing the city a penny more than its current operating expenses and the future cost of necessary repairs to its building and its parking ramp.

“We do get to zero, based on present value,” said Marvin DeVries, former dean of the Seidman School of Business at GVSU, who served as a financial consultant for Gallium and testified by telephone at the presentation last week.

Gallium is an investment partnership between Blue Bridge Ventures of Grand Rapids and Hines Interests LP of Houston. The partners have proposed to build a 400-room hotel on the plaza across Monroe Avenue from the new convention center.

To do that, they have to buy City Hall, the plaza, and, possibly, the parking ramp from the city. Gallium said the ramp didn’t have to be included in the deal as long as enough parking spaces could be reserved for the hotel.

“Not buying the ramp isn’t necessarily a deal killer,” said Jack Buchanan, CEO of Blue Bridge Ventures and the catalyst behind the hotel proposal.

If commissioners do extend the option late this month, the resolution will likely include an amendment calling for an independent appraisal of the city’s Calder Plaza property and Gallium will likely be required to pay for it and an extension.

Buchanan told the Business Journal that Gallium would pick up the tab for the property appraisal and would likely do the same for the extension, depending on its cost. But he noted that his group paid $25,000 for the option, spent roughly $250,000 on their latest proposal, and devoted five months of the 12-month option to doing “homework” required by the city.

Still, he felt confident that commissioners would give Gallium an extension.

“The facts are there,” he said of the Gallium proposal. Buchanan added that at least one commissioner told him that they would treat the option as if it was in effect until the vote.

Third Ward Commissioner Robert Dean made the motion that called for a vote on extending the option. He said he did so to give city staff a chance to review the numbers from Gallium and allow commissioners time to fairly assess it.

Second Ward Commissioner Rick Tormala asked for the property appraisal to be included in the motion and that Gallium pay for it.

“We haven’t gotten the answers, not only from the developer, but from our staff,” he said.

Tormala added that he and fellow 2nd Ward Commissioner Lynn Rabaut, who was against giving Gallium an extension, have asked for an appraisal before and haven’t gotten one. He also clearly expressed his feelings about the ongoing hotel discussions between Gallium, the city, and, most notably, the mayor.

“I think this is more about politics and personality instead of policy,” said Tormala. “This has become a personal conversation between you [Logie] and Jack Buchanan.”           

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