|By John Gallagher, Detroit Free Press
Knight Ridder/Tribune Business News
Nov. 3, 2005 - One of Detroit's most famous vacant icons, the Book-Cadillac Hotel, will reopen in early 2008 in a $176-million renovation, Cleveland-based developer John Ferchill said Wednesday in a long-awaited announcement.
Ferchill's confirmation that the project finally is a done deal came two years after an earlier restoration deal involving the Kimberly-Clark Corp. fell apart.
Ferchill, who specializes in renovations of historic structures in older cities, said he plans to create a 455-room hotel known as the Westin Book-Cadillac along with 66 upper-floor condominiums selling in the low $300,000s.
It promises to be downtown's biggest and most significant renovation project since the reopening of the Fox Theatre in 1988, which sparked the creation of a theater and entertainment district.
Despite a history of false starts and disappointments with the Book-Cadillac, city officials say Ferchill's project represents a solid deal.
Among other reasons, Ferchill has scheduled a closing date on his financing package for Dec. 19, with construction expected to start immediately after.
And city officials are encouraged by Ferchill's record of pulling off similar deals in Cleveland and elsewhere.
In addition, he has already built the Hilton Garden Inn in Detroit, which opened in 2004.
"They have a reputation as a company that gets the job done, very hands-on, very no-nonsense type of a developer with a proven track record," said George Jackson, president of the Detroit Economic Growth Corp., which helped negotiate the deal with Ferchill.
The hotel will employ 400 to 500 staffers and include five ballrooms, including an entirely new one with a capacity for 1,000 people to be built on a vacant lot adjacent to the Book-Cadillac.
The hotel will also have at least three restaurants, including a sports bar and a high-end steakhouse.
Ferchill said he will spend $18 million on furnishings alone.
"This has been an incredible joint effort by the Detroit community to help us get this done," Ferchill said. "We are really, really high that this will be a first-class hotel that everybody will be proud of."
In its heyday, the Book-Cadillac played host to luminaries like John F. Kennedy and baseball star Ted Williams, as well as tens of thousands of Detroiters who attended proms, weddings and parties there.
If the vacant hotel stood as a dreary symbol of Detroit's decline, the renovation project will mark not only a physical remake, but also a psychological boost for the community, Jackson said.
"It will be a shot in the arm for all of downtown," Jackson said. "The Book-Cadillac is a real icon in this community, and this restoration will be a project that we can all be proud of."
First opened in 1924 and designed in an Italian-Renaissance grandeur by architect Louis Kamper, the Book-Cadillac's fortunes declined with those of Detroit in the decades following World War II.
The hotel finally closed in the mid-1980s and since then had deteriorated to a near-ruin, with broken windows, extensive water damage and most material of value stripped away.
But the city never gave up on the hotel, and Ferchill had expressed interest in renovating it for the past few years.
Only after Kimberly-Clark's bid fell apart in 2003, though, did Ferchill get involved again.
Construction should take two years and be finished by spring 2008.
Of the $176-million price tag, $160 million will pay for the hotel itself, and the remainder will pay for the upper-floor condominiums.
Putting together a deal like this is far more complex than simply getting a routine construction loan from a bank.
Ferchill, working with the Detroit Economic Growth Corp., had to piece together multiple pieces of interlocking financing to raise enough cash to do the deal.
Among the main pieces of the financing, the project will have a $50-million bank mortgage arranged by Fifth Third Bank; a federal HUD (Housing and Urban Development) loan of $18 million; about $11 million in Downtown Development Authority grants that mostly will pay for interior cleanup of the hotel; more than $60 million in historic-renovation and brownfield tax credits that will be sold to investors, and about $12 million in equity investment that most likely will involve carpenters union pension funds. Several other sources make up the balance.
The City of Detroit's participation remains what it was in the Kimberly-Clark deal, mainly providing development authority funds to clean up the hotel prior to construction.
The funding gap that forced Kimberly-Clark out of the deal was closed by Ferchill Group when it came up with additional tax credits for investors to buy, more equity investment and other non-city sources.
"It is the most creatively financed deal that you will ever see," Ferchill said.
Kilpatrick's campaign finance report filed last week shows that Ferchill gave $1,000 to the mayor's re-election campaign on Oct. 18.
He had earlier given $3,400, the legal limit for donations to the campaign, which means the mayor's campaign likely would have to refund the most recent $1,000.
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