Parking decks are sticking point in developer’s proposal

‘I have done everything they’ve asked of me. I bought the buildings, and now they don’t want to do what they’re supposed to.’ — local investor Hakim Fakhoury

Times-Herald Newspapers

DEARBORN — The City Council is scheduled to take a vote next week that could have major implications for the west business district.

At issue is whether or not to extend a preferred developer’s agreement with local investor Hakim Fakhoury for a massive development project on the block north of Michigan between Military and Howard.

Set to expire at the end of the year, the agreement gives Fakhoury exclusive development rights to the city-owned parking lot that covers much of the area. Fakhoury, who already owns several abutting properties, said the project would include an Emagine! movie theater, retail suites and condominiums or student housing.

City Council President Thomas Tafelski said he is concerned about how much Fakhoury’s proposal has changed since it was first introduced more than four years ago.

“If the project warrants additional time, then that’s something the council must consider,” Tafelski said.

“But I will also say if the project doesn’t have proper financing, proper direction or the proper modifications, then maybe we should shelve this project and seek new proposals or just let Mr. Fakhoury develop the properties he already owns along Michigan Avenue.”

Negotiations between city officials and Fakhoury have grown increasingly contentious as economic conditions have made financing scarce.

One of the main sticking points has been parking. When the agreement was first signed, city officials indicated they would be willing to build two parking decks to support the project. The tentative plan called for the city to build the structures and then recoup the costs through tax revenues generated by the accompanying developments.

The same model was used by the city in developer Burton-Katzman’s West Village Commons, directly across the street south of Fakhoury’s project, but has since shown that it exposes the city to too much liability. Since the WVC decks were built in 2005, the city has been forced to cover about $2.5 million in revenue shortfalls caused by Burton-Katzman’s failure to complete several portions of the project that would have been contributing to the bond payments.

But Fakhoury said he is unfairly being punished for Burton-Katzman’s misdeeds. Fakhoury said he purchased additional properties to help facilitate the project with the understanding that the city would build the decks. Now he’s stuck holding properties that he said are liabilities — without the help of the larger project to generate economic activity.

“I have done everything they’ve asked of me,” Fakhoury said.“I’ve brought them letters of intent (from prospective tenants), I bought the buildings, and now they don’t want to do what they’re supposed to.”

City officials said they are not legally bound to build the decks, and that, yes, the Burton-Katzman situation has caused them to approach parking decks from a different angle.

“With the economy and how difficult financing can be, yeah, the potential liability for the decks has caused for reconsideration of (the Burton-Katzman) approach,” said Barry Murray, economic and community development director.

At the Dearborn Town Center project, site of the old Montgomery Ward building, the city will finance and build a parking deck in coming months. Tax-capture revenues still will be used to cover the costs, however a clause was added to make the developer responsible for any shortfalls that might occur, as opposed to the city.

Fakhoury said he doesn’t favor such a model, but ultimately he may be forced to consider it anyway.

“I can’t just leave now,” he said. “I have way too much invested, so no matter what happens I will keep moving forward.

“I just wish I could get someone at the city at the table with me.”