Changing plans, delays cause friction in development deal

“It might be better to explore our options and see what’s out there. Four years is a lot of time, and things have changed.” — Council President Thomas Tafelski

Times-Herald Newspapers

DEARBORN — Frustrations over a proposed development were front and center last week as the City Council continued deliberations on whether to extend an exclusivity agreement with the project’s architect for another year.

At issue was the preferred developer status for Dearborn Village Partners for a west downtown city-owned parking lot. That status, which is slated to expire at the end of the year. first was awarded in 2005. It was based on a proposal that was in line with the city’s broader plan of redeveloping the district into a modern downtown reminiscent of trendy spots like Royal Oak and Ann Arbor.

In general, the agreement provides sole rights to Dearborn Village Partners, headed by Dearborn resident Hakim Fakhoury, to put a development on the asphalt lot between Military and Howard on Garrison. It has been extended multiple times since it was first struck.

Fakhoury initially proposed a design with two six-story to 10-story buildings containing residential units, a hotel, specialty retail, office and entertainment components. The buildings were supposed to be built atop two city-owned parking garages.

Four years later, the project has been unable to get off the ground, as it has faced setbacks and numerous changes amid a deep recession. And vacancies and tax delinquencies at several nearby properties owned by Fakhoury-controlled entities are causing some council people to question if it’s time to try their luck with another developer.

“Fatburger has been coming for seven months,” Council President Thomas Tafelski said of a sign proclaiming the restaurant’s impending arrival at one of Fakhoury’s other properties during a Dec. 14 council study session.

“I think we need to consider the merits of the project,” Tafelski said, “but I also think it might be better for the city to explore our options and see what’s out there. Four years is a lot of time, and things have changed.”

Fakhoury acknowledged that several of his properties have been vacant for extended periods, and that the scope of the project has downsized since it was first proposed – the condominium/hotel towers have been changed to student housing. But that is a product of an economy where even the most creditworthy businesses are struggling to find loans, said James Parelly, Fakhoury’s business partner.

“Donald Trump can’t get financing right now,” Parelly said.

And Fakhoury still has something no other developer will be able to offer: roughly $100 million in state tax credits. Economic and Community Development Director Barry Murray said the credits equate to about a 20 percent return to the developer for every private dollar invested. The Michigan Economic Development Corp. still will honor those dollars pledged to Fakhoury’s project, Murray said, but the tax incentive programs that were utilized have since been discontinued due to drastic state revenue shortages.

“If this project doesn’t get extended, then the tax incentives go away,” Fakhoury said.

That, and the notion that the city likely wouldn’t be able to find a new developer right now, had Councilman Robert Abraham in favor of the extension.

“I am planning to support the extension to DVP based on the proposed project, current economic conditions and facts presented to the council by DVP, the mayor and the administration, as well as the important point that we have no other viable alternatives at this time,” Abraham said in a statement.

Council members were slated to vote on the extension after press time yesterday. Check to see how they voted.