Economy brings big changes to big development

By J. PATRICK PEPPER
Times-Herald Newspapers

DEARBORN — When the City Council approved an extension of a preferred developer’s agreement with Dearborn Village Partners LLC on Dec. 21 (see related story), it was with the understanding that the west downtown project would be significantly different than what was first proposed.

The most prominent difference is in the dollar amounts. What was supposed to be a $124 million private-public project has been more than chopped in half to comprise a projected $50 million investment.

But other changes also have been made to the initial plan, including the absence of a Michigan Avenue civic space and the purpose of a housing component.

In a memo on the project, Economic and Community Development Director Barry Murray outlined those changes. He said the project initially was to include:

• 256 condominiums with midrise structures of eight to 10 stories sitting atop a three-story parking deck. Those units, with a projected $75 million in private investment, made up the lion’s share of the project and were to include 8,000 square feet of ground level retail space.

• An 881-space parking deck estimated at $28.6 million that would be built and privately financed by the developer. Under the project brownfield plan, the city would reimburse the developer up to $32,500 per space through tax revenues generated by the project.

• Demolition of the existing Michigan Avenue frontage, with the exception of the Oakwood Muirhead building at the northeast corner of Michigan and Military. Eligible demolition costs were estimated at $919,000. Additionally, utility infrastructure and contingencies represent another $3 million of the project component.

• Two commercial buildings with retail on the first floor and rental lofts above and a theater complex at the former Bally’s Vic Tanny site, with a projected cost of $16.5 million.

• Civic space was envisioned in the middle of the Michigan Avenue frontage, which would require the relocation of Fidelity Bank into other space within the new project or elsewhere. The proposal was for DVP to pay $3 million for the parking lot site. In return the city would invest the same sum into the civic space and land acquisition.

• The total project, including the Michigan Avenue frontage and parking lot development, included $91.5 million in private investment $32.5 million in public infrastructure for a total of $124 million.

Murray said DVP has made verbal representations that the new project is being altered to meet current market conditions and to reflect the unavailability of the Fidelity Bank property. The new configuration relies on a combination of the parking lot space and only the Michigan Avenue frontage controlled by DVP. Although a plan is yet to be developed illustrating that program, Murray laid out some general points of interest. According to the memo, the proposed project now would include:

• Student housing that would be privately developed to accommodate University of Michigan-Dearborn students. That component would be completed in two phases and eventually serve 432 students.

The first phase of the project would represent $10 million to $13 million in private investment. Fakhoury has obtained a letter of intent from real estate development firm Moravian Cos. indicating their interest in this aspect of the project.

• A 110- to 125-room hotel valued at approximately $7.5 million and $10 million in private investment.

• A free-standing parking deck of undetermined size that would be separated from the stacked arrangement of parking and housing that previously was envisioned. The separated components would reduce significantly the cost of the deck, Murray said, noting that the Dearborn Town Center deck currently under construction is projected to cost about $21,000 per space.

• An Emagine! Theater is being discussed for the Bally’s site, adjacent to the Muirhead building. The project would contain a bowling alley on the lower level and a multiplex movie above.

Based on a similar, recently approved project in Royal Oak, it would equate to $12 million to $15 million in private investment. Fakhoury has secured a letter of intent from Emagine! President and Chief Executive Officer Paul Glantz on that component.

• In total, the new project would equal about $29.5 million to $38 million of private investment and $7 million in public contributions. With the addition of demolition and other costs, the total could approach $50 million.

Tags: