Hotel Online 
News for the Hospitality Executive

advertisements
 
Twenty-two Years after Detroit's Book-Cadillac Hotel Closed, The Ferchill Group's
 $176-million Rehab is Close to Happening - Plans Call for a 455 room
 Westin with a Condominium Component

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 $300,000s.

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

Distributed by Knight Ridder/Tribune Business News. For reprints, email tmsreprints@permissionsgroup.com, call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA. NYSE:KMB,


To search Hotel Online data base of News and Trends Go to Hotel.OnlineSearch
Home | Welcome| Hospitality News | Classifieds| One-on-One |
Viewpoint Forum | Ideas&Trends | Press Releases
Please contact Hotel.Onlinewith your comments and suggestions.