Development dead? Change in student housing plans could mean west end setback

Times-Herald Newspapers

DEARBORN — The number of disagreements between Dearborn Village Partners LLC principal Hakim Fakhoury and city officials continued to grow last week, this time on a proposed University of Michigan-Dearborn student housing development.

Fakhoury requested an emergency meeting with City Council members after learning university officials were in discussions with Ford Motor Land Development Corp. on putting the complex near Fairlane Town Center as opposed to his west downtown Michigan Avenue location.

In recent comments to the press, he has criticized Mayor John O’Reilly Jr. and his administration for not exercising enough influence with the university to secure the project for Dearborn Village Partners.

At the meeting — which Fakhoury requested that no administration representatives attend, although city attorney Laurie Ellerbrake did — he said that if the city doesn’t take a more active role in the student housing discussion, he would not be able to secure a development for the property. The result, Fakhoury said, would be the loss of several million dollars in state redevelopment incentives allocated to the site.

The developer also protested the city’s recent actions to commence the demolition process on three of his properties: the former Brother’s Tuxedo, Giuliano’s restaurant and Bally’s Vic Tanny. The buildings were supposed to be razed and rebuilt as part of a broader project by DVP, but Fakhoury said that if he can’t get the student housing, he can’t produce the rest of the development, and demolishing the buildings would cause lenders to foreclose on the properties.

There was some confusion among the parties on this issue. Most council members said they thought that he had agreed to the demolitions when they granted DVP a one-year extension in December to a preferred developers agreement on the property – a city parking lot between Military and Howard.

But Fakhoury countered that the demolitions were contingent on DVP securing the student housing — something he said “doesn’t look like it’s going to happen.”

He also said that if the buildings are demolished, it will start a countdown on roughly $9 million in state brownfield tax credits that are contingent on the entire development being completed in five years.

“Clearly the demolition is based on getting a developer’s agreement,” Fakhoury said. “And without (a developer’s agreement) there is no Brownfield money. These properties are uncollectable without that.”

Ellerbrake didn’t have the council resolution with her at the meeting, and thus was unable to cite the exact language. She did say, however, that the brownfield credits weren’t necessary for the city to recoup demolition costs, as liens would be placed on the properties.

Also at the meeting, Fakhoury asked the council to release a $30,000 deposit that DVP was required to post, saying it was for “tax purposes.” He said that in the past the council had granted a similar request, and that he paid the money back in monthly installments of $3,000.

Councilwoman Suzanne Sareini said the council does not have the authority to release the money immediately and referred the matter for review by the Legal Department.

With the prospect of student housing apparently waning, Fakhoury also asked the council to approve a change to his conceptual development proposal to allow for leased loft units instead. But the council members generally agreed that the request was moot point.

“We agreed to a year extend this preferred developer’s agreement for another year so that you would have the time to go out there and get something put together,” Councilman Robert Abraham said. “When you come forward with your plan at that time, we’ll either say, ‘Yes we like this plan’ and enter a development agreement, or we’ll say, ‘This project doesn’t meet the scope and density we envisioned.’”

Fakhoury replied that he wouldn’t waste his time on due diligence if the project has no chance of getting approved.

“We are no closer to a deal now than we were five years ago,” he said. “You people do enough to make a sane man crazy.”

One lingering question raised at the meeting came after Fakhoury revealed that he never actually signed the preferred developer’s agreement extension in December. With the previous agreement expiring Dec. 31, it was not immediately clear what DVP’s status with the city is, or if it would affect DVP’s tax-credit eligibility.