May 8, 2003 - Everybody came to the Book-Cadillac. 

Baseball sluggers Joe DiMaggio and Ted Williams stayed there. So did actress Gloria Swanson and songwriter Irving Berlin. 

Attorney C. Beth DunCombe's parents took her to the Book-Cadillac in 1960 to see John F. Kennedy campaign for president. 

Everybody came to the Book-Cadillac, until one day in 1984 when high debts and a depressed urban economy closed it down. Soon, though, everybody may once again come to the Book-Cadillac. A rescue deal that first surfaced late last year became nearly final Wednesday when the Detroit Downtown Development Authority approved a plan to renovate the hotel. 

What is to emerge from the $150-million project is the Renaissance Book-Cadillac, part of Marriott International Inc.'s Renaissance Hotels line. There'll be 450 rooms and 83 condominiums on upper floors. If everything goes on schedule, the refurbished hotel will open its doors just in time for the January 2006 auto show and Super Bowl XL in nearby Ford Field. 

Some financial details remain to be worked out. The city had scheduled a celebratory announcement for today, but put it off for a few more weeks pending final approval of a $15-million loan from the federal Department of Housing and Urban Development for the project. Even so, all the indications are positive that construction work will begin soon. 

The story of how Detroit's most fabled hotel came back from the dead is a story of complex legal and financial maneuvering that took years to accomplish. "This isn't like banging up an Applebee's, where you go out and you squeeze Farmer Bob and Farmer Joe until you get the cheapest cornfield by the new subdivision," said one person who worked on the deal, asking not to be named because some details remain to be ironed out. "This is very creative, very difficult work." 

But the work got done. And because it did, the Book's two decades of darkness may seem like no more than a bad dream between two happy summer days. 

Perhaps no builders ever created so much so fast in Detroit as the three Book brothers -- J. Burgess, Herbert and Frank -- did during the 1920s. In a few short years, they built much of Washington Boulevard as we know it, including the Book Tower office building in 1926 and the Book-Cadillac Hotel in 1924. Their favorite architect, the classically trained Louis Kamper, gave the 1,200-room palace a romantic Beaux Arts styling on the exterior with a Venetian decor inside. 

Over the next 60 years, the hotel changed names and owners as Detroit's fortunes rose and fell. Its final owners were a group of investors who took advantage of then-current tax-shelter rules to form a limited partnership called Cadillac Associates. Fewer than a dozen families in all, they had just begun to map plans for a renovation when the recession of the early 1980s hit Detroit like an epidemic. 

The hotel closed, one of many such casualties that also included the J.L. Hudson's store and the old Stroh's brewery. 

The Cadillac Associates partners filed for bankruptcy seeking to reorganize under Chapter 11 of the code. 

But instead of a quick, easy route to reopening, the Chapter 11 case almost killed the hotel. And the problem lay with fear of the Internal Revenue Service. 

Instead of the profitable partnership they thought they'd entered, the investors in Cadillac Associates were facing monstrous tax bills if a bankruptcy plan was approved. The IRS would view written-off debt or a sale of the hotel as the same as income to the investors -- triggering a tax liability that could run into the millions of dollars. 

There was one way to avoid those enormous tax bills, and that was to keep the bankruptcy case open. Only a resolution of the Chapter 11 case, resulting in a sale of the hotel or otherwise getting the debts scrubbed clean, would trigger the IRS bill. 

Suddenly, the investors in Cadillac Associates had no incentive to reopen the hotel. They now had every incentive not to resolve the case. Keeping the case in limbo would at least fend off the IRS. 

Years passed. The bankruptcy judge stopped holding hearings. The court files were boxed and shipped to storage in Chicago. And year by year, the hotel decor crumbled as snowmelt and rainwater trickled through ceilings and floors, turning memories into paste. 

When Mayor Dennis Archer took office in 1994, he appointed a Land Use Task Force to map a redevelopment strategy for the city. One of the recommendations was to deal with major eyesores like the Hudson's building and the Book-Cadillac. 

Archer also named DunCombe, a bankruptcy lawyer at Dickinson Wright and his sister-in-law, as president of the Detroit Economic Growth Corp. (DEGC). The DEGC is a quasi-public arm of the city that puts together development deals. DunCombe helped get the title to the Hudson's building cleared so the city could take over and demolish the old hulk in 1998. But she sensed that the Book-Cadillac merited another look. 

For one thing, Detroit badly needed more hotel rooms. The Cobo Conference and Exhibition Center has been underused for years. Convention planners say the city lacked enough rooms to support most conventions. 

Then, too, almost no new hotel could approach the majesty of the Book-Cadillac in its best days. 

"It was Detroit's Grand Hotel, and if we lose it, it would be Detroit's last opportunity to have a Grand Hotel," said James Totas, curator of American Art at the Detroit Institute of Arts. 

So DunCombe recruited staffers and outside experts to untangle the knot. 

"We knew there was going to be a huge fight," DunCombe recalled recently. "The investors wouldn't just roll over. They were about to get hit big time. No one was trying to hurt them, but money's money." 

It took awhile for the investors to even believe the city was serious. DunCombe had her staffers file a motion in bankruptcy court in Detroit to reopen the case and to convert it to a Chapter 7 liquidation. That got everyone's attention. Liquidation would have prodded the IRS to move in. 

Despite the stakes, negotiations were amicable. 

"What we kept saying was, `We're not trying to hurt you,' " DunCombe said. " `If we can come up with a method by which we can save the building and not hurt you and it's a win-win for everybody, let's try it.' " 

Still, people worked for months before somebody saw a way out. If the current owners couldn't sell or reopen the hotel, then new owners would be found in a way that didn't exclude the old investors. 

To make it work, the DEGC crafted a new partnership entity that would take over 99 percent of the controlling interest in the hotel. The old investors would have 1 percent of the ownership. And because this wouldn't involve an actual sale, nothing would trip the IRS into action. 

In effect, the city told the investors they were getting a new 99-percent partner who would have full control over the hotel, and they would have to accept it. 

Michael Lewiston, a Troy attorney for the investors, would not discuss the deal in detail, but stressed his clients were happy with the outcome. 

"We all worked together," he said. "My group will be part of the new venture and we're very pleased developer to be participating in it." 

This new bankruptcy plan was approved in late 2001. But having cleared the title, the city still didn't know whether the hotel's physical structure remained sound enough to salvage. 

DEGC staffers started getting studies done on the facade and the innards. They moved slowly, trying not to spend too much money, and paying attention to the most serious issues that developers would want addressed. 

As data came back from the studies, city staffers were encouraged. Despite rumors that the hotel's reinforced-concrete skeleton was too deteriorated to save, reports came back positive. The city estimates that less than 10 percent of the structural integrity has been compromised, and that portion is repairable. 

Other obstacles were removed. The city purchased a vacant parking lot adjacent to the J-shaped hotel for expansion purposes, in case developers would want to, say, build a parking deck. Without that space, the deal probably wouldn't have gone forward. 

Meanwhile, a steady stream of developers began to troop through the building. Many were shocked at how badly deteriorated or stripped the interior was. But they also said a renovation was possible. 

In early 2002, DEGC staffers spoke for the first time with representatives of the Kimberly-Clark Corp. of Dallas, Texas. Best known as the consumer-products company whose brands includes Kleenex, Scott, Huggies, Pull-Ups, Kotex and Depend, the company also has a subsidiary, Historic Hospitality Investments, that redevelops landmark properties using tax credits as a key part of its financing. 

Just a few weeks ago, the company opened the Renaissance Grand Hotel in St. Louis, a project much like the Book-Cadillac. 

The city was encouraged. Kimberly-Clark was proving the model of what the city wanted in a developer. When snags occurred, the company would try to work everything out rather than walking away. 

But it took another year to make the numbers work. A $150-million financing package was stitched together. Historic Hospitality Investments is to take over the city's 99-percent stake, retaining the original investors as its 1-percent partner to avoid tax problems. The deal includes several types of tax credits geared to historic preservation, plus $21 million in cash equity from Kimberly-Clark. 

The deal, while almost done, needs final approval of a loan from the federal Housing and Urban Development Department expected later this month. 

Lynn Fournier, director of tax-credit investments for Kimberly-Clark, said last month she was so confident that she was already hiring contractors to begin interior work soon. 

"We're on a very tight time frame, and our goal is to have it open in fourth-quarter 2005," she said. 

Will Elwood, a tax attorney with the Detroit law firm Dickinson Wright who worked on the deal for the DEGC, recently met a friend at downtown's Opus One restaurant. They began talking about the hotel deal. Against all odds, it had succeeded. 

"We took one martini in honor of the good old Book-Cadillac," he said. 

Their quiet celebration no doubt will be echoed many times in the future as the Book-Cadillac nears its reopening. Several things might delay that date; contractors might run into unforeseen problems in the nearly 80-year-old building. 

But the story thus far does seem to carry one of those rare positive morals for a city that's had so much bad news. If the Book-Cadillac can come back from the dead, what cannot be done? 

"We danced on the head of a pin," DunCombe said with a smile, "and it really worked." 

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(c) 2003, Detroit Free Press. Distributed by Knight Ridder/Tribune Business News. KMB, MAR,