|By John Gallagher, Detroit Free Press
Knight Ridder/Tribune Business News
June 17, 2006 - Twenty-two years after the Book-Cadillac Hotel
closed, and almost three years after a previous renovation effort fell
apart, the deal to reopen the vacant landmark finally started to come
together this week.
Beginning Wednesday and continuing Friday and into next week,
dozens of lawyers have spent days inside the Butzel Long law firm at
150 W. Jefferson Ave. to close on the approximately $176-million
financial package that will make reopening the hotel possible. The
closing means that construction crews should begin work on the hotel in
coming weeks as money begins flowing to the Ferchill Group, a
Cleveland-based developer that will do the project. It also means that
a prime piece of Detroit history -- a place where John F. Kennedy spoke
and generations of Detroiters celebrated weddings, bar mitzvahs,
retirements and other milestones -- will get a chance to flourish once
more. Barring further problems -- and problems are always possible in
major projects like this -- the hotel should reopen as the Westin
Book-Cadillac in about two or three years.
Plans call for the remade property to feature 455 hotel rooms
and 66 luxury condominiums on the upper floors selling in the low
Combined with Mayor Kwame Kilpatrick's announcement Thursday
that Tiger Stadium will be razed and replaced with retail and
residential projects, this week's closing brings two of downtown's
larger eyesores closer to resolution. "For there to be movement on
those sites that have been real dilapidated places, or dinosaurs if you
will, says a lot about our positive movement," Kilpatrick said.
A few of the closing details will carry over into next week,
but no serious roadblocks arose as of late Friday.
Opened in 1924, the Book-Cadillac long served as one of
Detroit's most notable hotels. Baseball greats Joe DiMaggio, Lou
Gehrig, Babe Ruth and Ted Williams stayed in the building. So did
actress Katharine Hepburn and Dr. Martin Luther King Jr. But Detroit's
deteriorating economic plight in the decades following World War II
weighed more and more heavily on the hotel's finances. It went through
name changes and ownership restructurings before closing in 1984.
In the 1990s, the city came close to knocking it down. Perhaps
most embarrassing was the collapse of a much-celebrated 2003 renovation
plan led by the Texas-based Kimberly-Clark Corp. That plan, valued at
roughly $150 million, fell apart when it became clear more money was
needed. If nothing else, the Ferchill deal illustrates how complex, if
not downright byzantine, urban redevelopment projects can become. The
problem all along was that lenders felt the Book-Cadillac was too risky
for a conventional loan. To overcome those objections, Kilpatrick's
development aides stitched together a plan with multiple layers of
financing, including both debt and equity and several kinds of tax
credits, to make it work.
John Ferchill, head of the development firm, has called the
Book-Cadillac deal the most complex of his career. A final snag turned
up just last week, when debate over Michigan's Single Business Tax
seemed to threaten the availability of several million dollars in
SBT-related tax credits for the Book-Cadillac. "We get all this way and
then, bam!" George Jackson, president of the Detroit Economic Growth
Corp., said last week. Jackson also is a prime leader of the
redevelopment effort. But Jackson said Friday that all the parties had
agreed that the SBT credits would be protected under whatever
compromise emerges from the current debate in Lansing. So the closing
went ahead as scheduled this week.
And, if nothing else, this week's closing, if it ultimately leads to the hotel's reopening, should boost Kilpatrick's batting average on major development projects. Critics have chided the mayor for announcing several major deals only to see nothing take place. His biggest flops might have been his aborted plan to renovate the Michigan Central Depot into the next police headquarters and the scuttling of the Kimberly-Clark deal.
Copyright (c) 2006, Detroit Free Press
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