DETROIT | Development & Construction: Motown Lowdown

[subterranean]

$400 million? That has to be a typo, and if it isn't, that's ridiculous. The Book Cadillac restoration was half the cost. Maybe I just don't understand what it is that they are planning to do. The Mark in Seattle will contain a 200 room luxury hotel and office space, built at Seattle prices, and would be the second tallest if built in Detroit, for that price. I understand a restoration is different, but I'm just having a hard time comprehending that number.

[The North One]

You're comparing a cheap Seattle new build in 2016 to restoring a pre-war masterpiece? The design is incredibly intricate, probably needs new plumbing, electrical, heating and cooling; add restoration of cornices and embellishments, the building will also need a new copper roof, there's also a dome lobby to restore. Overall it's a larger project than the Book Cadillac and it's being done right. This is why developers aren't willing to build opulent structures anymore, that shit costs money.

Also that Brewster Douglass development looks incredible, wow!

[subterranean]

Originally Posted by The North One

You're comparing a cheap Seattle new build in 2016 to restoring a pre-war masterpiece? The design is incredibly intricate, probably needs new plumbing, electrical, heating and cooling; add restoration of cornices and embellishments, the building will also need a new copper roof, there's also a dome lobby to restore. Overall it's a larger project than the Book Cadillac and it's being done right. This is why developers aren't willing to build opulent structures anymore, that shit costs money.

Also that Brewster Douglass development looks incredible, wow!

I understand they are very different. I still don't think it's worth half a billion dollars, personally. The proforma must go out 100 years. The Book Cadillac took massive amounts of subsidy, a crazy mezzanine financing structure, a huge hit/back down from state-funded debt, and it still almost went under a couple of years ago. At half the cost.

[subterranean]

It took a 17-layer mezzanine financing deal to get the Book Cadillac done at $180 million:

http://www.crainsdetroit.com/article...ancing-lawsuit

I wonder what ponzi scheme they have cooked up for Book Tower.

[rlw777]

Originally Posted by subterranean

$400 million? That has to be a typo, and if it isn't, that's ridiculous. The Book Cadillac restoration was half the cost. Maybe I just don't understand what it is that they are planning to do. The Mark in Seattle will contain a 200 room luxury hotel and office space, built at Seattle prices, and would be the second tallest if built in Detroit, for that price. I understand a restoration is different, but I'm just having a hard time comprehending that number.

1) The article says experts say the redevelopment could cost $400 million. Bedrock said total cost has not been determined.

2) Historic tax credits are expected to be a part of the financing mix. Even if the redevelopment price is $400 million Gilbert won't be paying $400 million

3) You aren't think like a guy who owns 40+ buildings in downtown Detroit. Each building rehab increases the value of other properties in the area and makes the area more desirable for live, work, and play. When you own most of downtown your investments have a cumulative effect.

[The North One]

Originally Posted by subterranean

It took a 17-layer mezzanine financing deal to get the Book Cadillac done at $180 million:

That was ten years ago...

I wonder what ponzi scheme they have cooked up for Book Tower.

He's getting tons of tax credits, I don't think this is any kind of scheme.

[subterranean]

I am very familiar with how these projects get financed because it's what I do for a living.

This guy is going to be milking the public dole and Detroit will see basically zero benefit for the millions he'll reap. That's my problem with it.

[The North One]

Zero benefit? That's hyperbolic to say the least. You now have a problem with state subsidies? Detroit isn't at the point yet where developers can get big loans (although it's coming) not sure how else you want him to get things done since he's pouring his own investment money into the city. Is it that you think he's inflating the costs in order to get more tax breaks?

[subterranean]

Listen, obviously everyone wants to see these beautiful buildings saved. But this guy is a multi-billionaire and if this building is going to be some kind of plaything for the wealthy, like the Book Cadillac that can't even stay afloat on its own two legs, then I think we should be scrutinizing these deals with a fine-toothed comb. I will try to reserve much of my opinion until I see the actual deal on paper, but I guarantee this is going to be over-subsidized by the public...in the poorest large city in North America. If not, I'll gladly eat my words.

[The North One]

Why do you keep saying the Book Cadillac "can't stay afloat" there is no evidence for you to suggest that, in fact Detroit is very undersupplied when it comes to hotels and that's why you're seeing a lot of new ones popping up. The current hotel stock can't even support a major event at Cobo Center. If you care so much why did you leave the city? The tax incentives come from the state of Michigan which has some of the wealthiest communities in the nation it's not being solely held up by the poor inner city neighborhoods. It's hardly the only city with ivory towers for the rich, you've got cities like Dallas that have a much higher city proper population with a 30% child poverty rate.

So I did some research and you're talking about the loan settlement that went to the renovation, correct?

[Docta_Love]

Here's a few quote's from the article that are pertinent to the discussion, i'll withhold my final opinion until i know exactly how much he's getting in tax breaks. But apparently a lot of the exterior detail is in really bad shape and had been in danger of falling off the building, which is mentioned as one of the main reasons as to why the costs are so high. On another note the crazy fire escape looks like its to be rebuilt the Book Tower was Kamper's first skyscraper and had forgotten to put one in his original design.

It will almost certainly be the most expensive of the crop, with development experts saying Gilbert's overall redevelopment of the Book Tower and adjoining Book Building could cost $400 million or more (his Bedrock Real Estate Services LLC said total cost estimates have not yet been determined, but did say that historic tax credits are expected to be part of the financing mix).

There are pink leather hair salon chairs still in the building. Old typewriters. Recording studio equipment. Documents and other miscellaneous paperwork. Open newspapers from decades ago. Personal items.

In short, it's almost like everyone who worked in the building left at once, in a hurry.

"An extreme amount of clutter and damage on the inside, as far as ceilings falling in and water damage," said John Olszewski, vice president of construction for Bedrock, which has bought more than 90 Detroit properties in and around downtown in the past five years.

But the interior work, at this point however, plays second fiddle to restoring building's elaborate exterior, Olszewski said.

"The biggest and most complex."

That's how he describes the three-year plan to restore and preserve the Book Tower and Book Building, which the Detroit-based company bought a year ago last month, along with a squat, 30,000-square-foot community center, for a reported $30 million.

In all, more than 500,000 square feet was part of the deal Bedrock completed with Milan, Italy-based Akno Enterprises, longtime owners of the buildings.

Effectively, Bedrock bought the entire block between State Street and Grand River Avenue. The company says a final redevelopment plan, including specifics on the mix of uses, has not been determined, although at the time it purchased the buildings, Jim Ketai, managing partner and CEO of Bedrock, said the buildings will contain "a new innovative and unique mix of retail, office and residential tenants."

[subterranean]

If you care so much why did you leave the city?

I left because of the politics, mostly.

Originally Posted by The North One

Why do you keep saying the Book Cadillac "can't stay afloat" there is no evidence for you to suggest that, in fact Detroit is very undersupplied when it comes to hotels and that's why you're seeing a lot of new ones popping up.

I'm saying it has had financial problems since day 1, even as almost half of the financing came from public sources. You'd have to have been living under a rock not to know this. Every year it's something new. HUD, pension fund, state loans. The Westin almost vacated the building within a few years of project completion because of the messed up finances of the building owners.

http://www.mlive.com/business/detroi...its_westi.html

http://www.crainsdetroit.com/article...default-notice

http://www.crainsdetroit.com/article...ancing-lawsuit

http://www.clickondetroit.com/news/l...-108-hud-loans


And you clearly do not know how these financial incentives packages work.

A Section 108 loan guarantee is backed by CDBG dollars from the local or state agency who administers them. If they are not paid back, the state or city is on the hook for them. On top of this, CDBG dollars are supposed to go toward projects that benefit people making less than 80% AMI. They cannot be used for the new construction of housing (which includes renovating a project that was not formerly housing). And yet they condominiumized the deal and used a source for low-income residents to subsidize a luxury hotel brand.

The state filled part of the gap to develop the housing with funds that are legally restricted for low-income housing and used it for luxury condos. That fund comes from the interest on loans for first-time, low-income homebuyers. Not rich suburbanites.

And they are not "tax incentives", they are tax credits. Large corporations reduce their tax liabilities by purchasing the tax credits, partly funding the development and paying less in taxes. It's a creation of the Reagan era (Tax Reform Act of 1986) and trickle down economics.

Finally, yes--if the developer thinks or knows they are going to get half of the project paid for by taxpayers, you can damn well guarantee they are going to take advantage of that.

As for the Book Tower, I want to see the financing structure. I have slightly more faith in Gilbert, but I have a feeling this one will reek, too.

[The North One]

Given that the building opened for business right when the great recession hit I'd say it's had it's work cut out for it, that's for sure. The Westin itself isn't struggling to do business in the city today, it even says that in the 2013 article you posted but that's beside the point, just something about the picture being painted that bothered me.

I mean I totally agree that these practices are fucked up, it might be relevant to acknowledge the financing happened during a time when Kwame was still in power. But to be fair and like you acknowledge, Gilbert had nothing to do with the Book Cadillac or the Fort Shelby. Gilbert has however made a huge success out of the First National Building: http://www.detroitnews.com/story/new...onal/83704000/

Don't get me wrong the guy is no angel, but he's proven himself to be an asset to the city before and honestly right now we're better with him than without him otherwise I share the same concerns.

I left because of the politics, mostly

I mean, you could have moved to Ann Arbor if you wanted a more liberal government, you'd have a better job market rather than in Portland too but I guess that isn't my business.

[subterranean]

Originally Posted by The North One

I mean, you could have moved to Ann Arbor if you wanted a more liberal government, you'd have a better job market rather than in Portland too but I guess that isn't my business.

It's the state politics that partly drove my decision. And nothing against Ann Arbor. It's a great town. But it's just that: a town. That comes to standstill for football games. Besides, I still love Detroit. I don't have to live there to retain interest and wish good things for it. I visit often and my family is in MI.

[Rizzo]

Originally Posted by The North One

Why do you keep saying the Book Cadillac "can't stay afloat" there is no evidence for you to suggest that, in fact Detroit is very undersupplied when it comes to hotels and that's why you're seeing a lot of new ones popping up. The current hotel stock can't even support a major event at Cobo Center. If you care so much why did you leave the city? The tax incentives come from the state of Michigan which has some of the wealthiest communities in the nation it's not being solely held up by the poor inner city neighborhoods. It's hardly the only city with ivory towers for the rich, you've got cities like Dallas that have a much higher city proper population with a 30% child poverty rate.

So I did some research and you're talking about the loan settlement that went to the renovation, correct?

I think he meant the investment was a money loser. It took millions from pension funds and the city got little or nothing back for their contribution. 17 layers of financing, one can assume there's a bunch of debt reshuffling going on and I believe there is a pending lawsuit.

The performance of the hotel is seperate. They're probably doing well...sure...because in a way they are like a tenant. Totally seperate discussion.

[subterranean]

Originally Posted by Hayward

I think he meant the investment was a money loser. It took millions from pension funds and the city got little or nothing back for their contribution. 17 layers of financing, one can assume there's a bunch of debt reshuffling going on and I believe there is a pending lawsuit.

The performance of the hotel is seperate. They're probably doing well...sure...because in a way they are like a tenant. Totally seperate discussion.

Thanks, that is exactly what I meant. Westin is not the building owner.

[JonathanGRR]

Continuing and melding the current themes of Gilbert and hotels...

Kyle Evans Design
Shinola Hotel planned for downtown as company, Gilbert team up
Sherri Welch | September 13, 2016

Shinola/Detroit LLC and Dan Gilbert's Bedrock Real Estate Services LLC are teaming up on an independent boutique hotel in downtown Detroit.

The red, eight-story building downtown at 1400 Woodward Ave., which began life as a hardware store and most recently housed Eastern Wig & Hair Co. LLC, will be renovated into a hotel meshing the craftsmanship Shinola is known for with Bedrock's urban development experience, the developers say. The four-story building at 1416 Woodward two doors down is also part of the project. It was designed by Smith Hinchman & Grylls in 1936 for Singer Sewing Machine Co.

It's a step well outside Shinola's previous retail focus, which encompasses watches, bicycles and other items, assembled in Detroit.

Renovations on the building are set to begin in November and wrap up in time for a fall 2018 opening of the 130-room Shinola Hotel.

Bedrock is "a creative real estate firm that focuses on delivering unique developments," said Dan Mullen, executive vice president at Bedrock.

"Shinola is this amazing craftsmanship brand. Utilizing both of our expertise to build a hotel is what is so attractive about this."

If you think about a Shinola store, "you begin to see how the Shinola brand can work within a hotel environment," said Shinola President Jacques Panis.

"We're really bringing something unique to this market and hopefully, unique to the U.S. and the world."

The companies are tapping New York-based restaurant company NoHo Hospitality Group, which has a Michel star and James Beard Foundation awards and nominations to its credit, to do the food and beverage elements of the hotel.
...

http://www.crainsdetroit.com/article...gnews-20160913

They briefly mention the building two doors down, but the rendering also shows that the building three doors down has been duplicated onto the one next door as well. I'm assuming that is a design error?

[The North One]

Ex-Microsoft CEO Says He May Give Part of His Fortune to Battle Poverty in Detroit
September 14th, 2016, 8:41 PM

Former Microsoft Corp. CEO Steve Ballmer, who Crain's Detroit Business describes as the richest living native Detroiter, told the publication on Wednesday that he plans to donate vast chunks of his estimated $27 billion fortune to address intergenerational poverty, and Detroit is "very likely" to be a beneficiary of his giving.

Send a couple billion Detroit's way Steve!

Also he commented on seeing renders of the Hudson site, possible Apple store.

He told about seeing plans for Gilbert's proposed multi-use project on the old Hudson's site on Woodward Avenue in downtown Detroit. "Right in the middle of it is an Apple store. That really pissed me off," he said, clearly joking. (Bedrock Real Estate Services spokeswoman Whitney Eichinger confirmed an Apple store is in the rendering of the plan for the site, though she said it’s not a sign of a done deal but of something the company would like to see, and that it would be “years away.”

http://www.deadlinedetroit.com/artic...t#.V9rBOj4rLL9

http://www.crainsdetroit.com/article...-about-detroit

[99spartan]

Originally Posted by The North One

Send a couple billion Detroit's way Steve!

Also he commented on seeing renders of the Hudson site, possible Apple store.


http://www.deadlinedetroit.com/artic...t#.V9rBOj4rLL9

http://www.crainsdetroit.com/article...-about-detroit

An Apple store sounds awesome!! I wonder what other retailers will be included? I wish he would have said how tall it is

[animatedmartian]

Originally Posted by 99spartan

An Apple store sounds awesome!! I wonder what other retailers will be included? I wish he would have said how tall it is

What gets me is how we're this far along from when it was first announced when Gilbert was planning on doing anything on this site and we're still only getting hints and rumors.

I'm pretty sure the Great Pyramids in Egypt didn't take this long to conceptualize and build.

Anyway, here are some more immediate developments:

DDA approves $175M for mixed-use developments in the District Detroit
BY ROBIN RUNYAN SEP 15, 2016 Curbed Detroit.



The City of Detroit Downtown Development Authority has approved development agreements for the $150 million Little Caesars World Headquarters Campus Expansion and the $24.4 million first phase of a mixed-use building on Henry Street. It will be north of the I-75 Service Drive and west of Park on Henry. A hotel on Henry Street is still in the works, with no official announcement yet.

The mixed-use building on Henry Street is the first residential piece we’ve seen in the District Detroit, although it’s unknown at this time how much residential, office, and retail will be housed there. The press release says there’s potential for parking and thousands of square feet of retail space. By the looks of it, there should be a pretty decent amount of parking.

Detroit-based joint venture Colisanti-MiG is serving as the construction manager for the $24.4 million first phase of the building currently underway.

....

http://detroit.curbed.com/2016/9/15/...e-developments

New developments approved in Brush Park and West Village through Historic District Commission
BY ROBIN RUNYAN SEP 15, 2016 Curbed Detroit.





There were spirited debates at Wednesday night’s Historic District Commission meeting, as two new developments were up for approval. The commission voted to approve both of them, so we’ll hear more on each of these soon.

First was another development in Brush Park. This one is .95 acres bordered by Winder, I-75 Service Drive, Brush, and Beaubien. It will add 287 new residential units, plus commercial spaces. They are of varying heights and widths and they look fairly similar to the City Modern development [Dan Gilbert's Development]. They’ll also have a small pocket park, carriage houses, and interesting live/work units. Hamilton Anderson Associates has been working on this for a while and meeting with the Brush Park CDC. No timeline right now, but these are moving forward. (We'll get renderings soon).

The second [renderings above], and much more spirited discussion revolved around a development of row houses on Coe and Van Dyke in West Village. These lots have been empty for years, have seen different proposals for years, and it finally looks like these will move forward. The debate wasn’t over the development itself, as residents would like to see something on the lots. Residents wanted more communication in the process, which was noted. The look was too modern for many, and some residents would like to see more brick. Comments ranged from full approval to "Appropriate for Midtown or Royal Oak, but not West Village," to "At least it’s not shipping containers." Ground could break as early as November.

The Coe Development is a partnership between Christian Hurttienne Architects, the developer Woodborn Partners, and it’s the first development spearheaded by Invest Detroit, to align with their initiative to invest in the Villages, Southwest Detroit, and the Livernois /6 Mile corridor. There will be eight row houses, each three-bedrooms with a one-car garage (seen above). The corner commercial building will have 1,500 square feet of retail space.

http://detroit.curbed.com/2016/9/15/...rk-development

There's now 4 major developments in Brush Park/Brewster Douglass. Very quickly there will only be a handful of large vacant parcels of land to develop on.