Ann Arbor conference center proposal: Some say it'll work, some say it won't, City Council must decide
Work continues on the underground parking structure along South Fifth Avenue in downtown Ann Arbor. What goes on top once it's done remains the question.
Ryan J. Stanton | AnnArbor.com
Many questions surround New York-based Valiant Partners' proposal to build a 150-room hotel and 26,000-square-foot conference center on a slab of city-owned real estate.
Is it feasible? Could it turn a profit? What's happened in other communities with similar conference centers? Would the city be on the hook financially if it doesn't work out?
Chuck Skelton, a nationally recognized hotel industry expert, recently issued a 51-page report that makes a case against the project. Skelton claims the conference center is not economically feasible and would just steal business from existing hotels.
That differs from a 25-page demand study by PKF Consulting, a New York-based firm hired by Valiant. PKF found the project appears viable, and while it's true it would compete with existing hotels, it would offer a product not currently found in the downtown area.
"This is a hotel with a fairly large amount of meeting space," said John Fox, PKF's senior vice president. "We think this is potentially viable here. I point to the strength of Ann Arbor, in both geography as well as what's near it, meaning the University of Michigan."
Another voice in the debate is the Roxbury Group, a consultant hired by the city. The firm has studied Valiant's proposal and is recommending the City Council vote next month to enter into a non-binding letter of intent with the developer to negotiate a development agreement.
Roxbury has advised council members they should take any studies done by either side with a grain of salt, since each carries some bias.
Meanwhile, a coalition of residents is lobbying the city to reject Valiant's proposal, suggesting there are better uses for the site. Some argue it could be turned into an urban park, while others want to see more affordable housing downtown.
The towering facility, as proposed by Valiant, would take shape atop the underground parking deck the city is building at the Library Lot on Fifth Avenue, between Liberty and William.
Valiant's mixed-use project includes a public plaza and a small number of luxury condo units, as well as retail, restaurant and office spaces.
City officials have been in talks with Valiant for the last few years, and the parking deck is expected to be finished early next year. Valiant has said it's willing to assume all risk and guarantee the city won’t be on the hook financially if the hotel isn’t successful.
But the idea that the city would own the conference center after it's built still has some council members unconvinced it's as risk-free as it sounds.
Conflicting reports
Skelton, president of Ann Arbor-based Hospitality Advisors Consulting Group and owner of the Comfort Inn in Chelsea, reviewed conference centers in small and mid-sized markets.
His report found the Lansing Center experienced a $1 million loss before debt service in 2009, while DeVos Place in Grand Rapids lost $557,000. Meanwhile, Monona Terrace in Madison lost more than $4.5 million, while the Century Center in South Bend lost more than $1.6 million.
A conceptual drawing showing what the hotel and conference center could look like.
Unless Valiant builds a 45,000- to 50,000-square-foot center, Skelton said, it's just going to directly compete with what's already in the market, and it's going to lose money.
"If it were big enough to actually bring in new business, that would be one thing," he said. "But what they've proposed there is really kind of pie-in-the-sky."
Skelton's report differs from what Valiant has claimed, which is that the operation would turn a profit and potentially kick back more than $270,000 a year to the city's general fund. But it seems those payments would be dependent on the success of the project.
The report from PKF Consulting, paid for by Valiant, concludes the proposed conference center "appears viable." However, PKF didn't quantify demand or project actual operating results or financial feasibility. Its findings were based on a review of similar facilities in comparable markets, review of industry trends, and an identification of potential users.
At the time of PKF's report, Valiant had a 30,000-square-foot conference center in mind, with 22,000 square feet of meeting space. The conference center more recently has been reduced in size for economic reasons, since the city won't help finance it.
PKF said Valiant's facility, with a banquet capacity of 500, would compete with a number of local venues, including the Marriott Ypsilanti at Eagle Crest with a 640-person banquet capacity, the Sheraton Four Points with a 550-person capacity, and Kensington Court, Weber's Inn, Campus Inn and the Holiday Inn off Plymouth Road with capacities ranging from 300 to 390.
PKF found that no single property is positioned competitively to accommodate multi-day group conferences downtown, so Valiant likely would do well in the market.
Valiant is assuming U-M will drive use of its facilities, and says interviews with members of the university community confirmed demand is there. But the university has said it won't make any upfront commitments to a private development hoping to attract university business. Some, including Skelton, argue U-M already has plenty of its own meeting space on campus.
PKF acknowledges the Michigan Union, with a banquet capacity of 400, offers 22,000 square feet of meeting space and is available to university and non-university users. The same is true for the Michigan League, which is about the same size and offers banquet capacity of 350.
There's also a 415-seat auditorium inside the Towsley Conference Center on U-M's medical campus and a 230-capacity banquet room at the business school. The university also now owns the former Pfizer complex on Plymouth Road, which has a 700-person banquet space.
One of Valiant's weaknesses, PKF states, is that construction costs and debt obligations may necessitate positioning the conference center at the top of the local market in terms of price. PKF also acknowledges the economic downturn has led corporations to shift away from higher-profile venues to more discreet or moderately priced ones.
Having only 150 hotel rooms also could turn away larger groups looking to lodge more people under one roof, PKF states. Eagle Crest, for instance, has 235 rooms.
But the new conference center's cutting-edge communication technologies should enhance its competitiveness for academic and business-oriented conferences and meetings, PKF states.
What others say
One of the most staunch supporters of the Valiant proposal is Jesse Bernstein, former president of the Ann Arbor Area Chamber of Commerce. Except for Eagle Crest, Bernstein said, there isn't another hotel with conferencing capabilities in the entire county that comes close to the level of quality the area needs, and certainly not in downtown Ann Arbor.
Jesse Bernstein is advocating for approval of the Valiant Partners hotel and conference center, saying it fills an unmet need in the downtown.
Ryan J. Stanton | AnnArbor.com
"While we have two hotels downtown that are wonderful properties, they don't have the conference space to provide the level of service that we need," he said. "In three years at the chamber of commerce, I had folks come to me who were looking for a facility that we didn't have, and this facility is like that. I've spoken to people who run conferences at the university and related organizations, and they have trouble finding conference spaces."
Joe Sefcovic, president of the Washtenaw County Hotel/Motel Association and an Ann Arbor Area Convention and Visitors Bureau board member, said he and several local hoteliers have formed a task force and plan to submit a report to the city soon.
"There's a lot of people opposed to this project for a lot of good reasons," said Sefcovic, general manager of the Holiday Inn on Plymouth Road. "I just think that, based on the track record of city-owned conference centers and hotels, that they're not making any money. And the meetings business is down since 2001 all across the United States, so it doesn't make sense."
With the rise in video conferencing and cutbacks in corporate travel, Sefcovic said hotel occupancy rates in the area are hovering around 60 percent — or barely "break even." Valiant's project, he said, would just pick the pockets of the current hotel community.
Valiant ultimately will need at least eight votes from the 11-member City Council for any kind of deal to happen. As of right now, it doesn't appear to have those votes.
At least four council members — Sabra Briere, Mike Anglin, Stephen Kunselman and Carsten Hohnke — appear unconvinced, and Mayor John Hieftje isn't sold, either.
"I'm not a fan of that proposal," Hieftje said, adding he doesn't think it would work without a commitment from U-M. "I just don't see this conference center proposal being successful without the biggest organization in town committing to using it."
Hieftje's still willing to let the proposal work its way through the process.
"I think it deserves another day here in front of City Council," he said. "Something could come of this that the city could use. But at this point, from what I know about it, I have not been in favor of this and don't see a way for it to be successful."
Council Member Stephen Rapundalo, D-2nd Ward, chaired the advisory committee that recommended the city give further consideration to Valiant's proposal.
"The fact that they're taking on all the risk, I think, is feasibility enough," he said. "They're going to have to get it financed and, if the market doesn't believe that there's a demand, then they're not going to finance the project."
Ted Annis, former treasurer of the Ann Arbor Transportation Authority, said he'd prefer the city reconsider the town square proposal submitted by the Dahlmann Campus Inn last year. Even if Valiant is willing to finance its project without city dollars, he said, he'd hate to see the city hand over such a prime piece of real estate for what he considers a risky project.
"I love my downtown," Annis said. "I have a vested interest. And if the developer fails, I really don't want to see a white-elephant shell sitting on a nice piece of public land that could have been put to a much better community use."
Ryan J. Stanton covers government and politics for AnnArbor.com. Reach him at ryanstanton@annarbor.com or 734-623-2529. You also can follow him on Twitter or subscribe to AnnArbor.com's e-mail newsletters.
Comments
Susan Ottevanger
Sat, Apr 2, 2011 : 2:14 p.m.
I consider myself very fortunate to have grown up in AA. I have lived 10 years in Miami, 2 in Seattle, 8 in Toronto, 18 in Los Angeles. That proposed thing should STAY IN VEGAS.
63Townie
Tue, Mar 29, 2011 : 4:54 p.m.
Ann Arbor needs this like a fish needs a bicycle.
Wolf's Bane
Tue, Mar 29, 2011 : 12:16 p.m.
Here is a suggestion that I hope the City Council will consider: Finish the underground parking structure. Then create a temporary park on top to be utilized by the Art Fair and other special events. When the economy picks up and a real need for a conference center exists (and can be proven), then revisit? Hey, now that is a plan I can get behind!
Wolf's Bane
Tue, Mar 29, 2011 : 11:58 a.m.
The city will make a grave mistake by approving this ridicules conference center and all officials will be voted out next election. I mean ALL elected officials. The biggest problem with the conference center is not that it is ugly or totally inappropriate, but that our city will be on the hook financially for the financing!!! We can't afford this. Not at this time, not ever! We need to concentrate on education, revenue, and quality of life issues in Ann Arbor, not silly conference centers or ugly PUDS that will never reach 100% occupancy. Enough!
15crown00
Tue, Mar 29, 2011 : 5:21 a.m.
u guys arev nuts.it's a total waste of time and money
leaguebus
Mon, Mar 28, 2011 : 4:20 a.m.
I wonder how much Talley Hall has cost the city over the years? I see some scary likenesses. It seems to me that if the developers want half the parking, the amount of money that they owe the city should start at $25m?
AA
Mon, Mar 28, 2011 : 1:38 a.m.
It is unrealistic to believe that the current and ongoing economic climate would allow for an investment of this proportion for lodging and meeting space. Perhaps . . . in the future.
Awakened
Mon, Mar 28, 2011 : 12:39 p.m.
If it did, some bright entreprenuer would do it without City guarantees. When government has to guarantee work to get business to invest it is a sure sign that it is a bad investment. The taxpayers will own this one.
ShadowManager
Mon, Mar 28, 2011 : 1:37 a.m.
I think the gist here is the category that includes people who don't think it will work equals = "most" The amount that will matter to the City council = "not at all".
talker
Mon, Mar 28, 2011 : 12:15 a.m.
DonBee wrote about building it, (expecting it to fail) letting the city take it over, and use it for housing. Perhaps that might have been the way things would work out, but now the "game" has changed. Any failure of a project with any of the city's revenue at stake, even city property tax collections, would bring in Emergency Managers from the state. Ann Arbor's city manager, Fraser, is one of the new Emergency Managers, who would be sent here by Gov. Snyder to manager the city and dissolve all city employee contracts. This would affect our police, firefighters, teachers, etc.. This would be catastrophic for so many. But it wouldn't be catastrophic for some who have been pushing this projects. Someone posted about possible financial incentives among some who are pushing for the project. Besides Valiant Partners, do any consultants, and any local project pumpers have stakes in the project that could endanger the independence of Ann Arbor?
Kai Petainen
Mon, Mar 28, 2011 : 12:24 a.m.
if you're looking for a list of those involved, you can see a more comprehensive list here: <a href="http://www.scribd.com/doc/23313466/Valiant-HQ" rel='nofollow'>http://www.scribd.com/doc/23313466/Valiant-HQ</a> section 7, 8 and 9 list an organization overview
Kai Petainen
Sun, Mar 27, 2011 : 11:53 p.m.
"Valiant has said it's willing to assume all risk and guarantee the city won't be on the hook financially if the hotel isn't successful" Question. Would the university buy it as property of their own? Is that in the long term plan? If so, it would give the university some tax-free property in downtown Ann Arbor?
clan
Sun, Mar 27, 2011 : 9:15 p.m.
Annis has it right. Look at Campus Inn , City Center Bldg, and Key Bank, all kept up attractively. Dahlman has a track record of doing things right.
Sarcastic1
Sun, Mar 27, 2011 : 7:33 p.m.
Call the conference center a shelter and it will pass.
Wolf's Bane
Tue, Mar 29, 2011 : 12:01 p.m.
Gosh, I think you hit the nail right on the head. A homeless shelter right on top of a parking structure. I can see it now, the underground parking structure becomes a hunting ground for the homeless trying to get a fix.
yua
Sun, Mar 27, 2011 : 7:05 p.m.
Other ideas: The federal building is a dead zone along Liberty and IMO should eventually be relocated. Or, if the library is eventually rebuilt, why not put it between Fifth and Fourth as well? Then any convention center can have the space they need. Or, doesn't an AATA transit center make more sense between Fifth and Division? I think there are too many questions like this for us to make a quick decision about building a convention center next to the school district library that we might regret. IMO these two blocks need to be considered together thoughtfully, bringing City Council, local businesses, the Chamber of Commerce, AATA, the school district, the DDA, the post office, and the Department of Justice together. That sounds like a tall order, but with good planning I think these blocks have a lot of potential.
yua
Sun, Mar 27, 2011 : 7 p.m.
While I strongly support downtown development and am very pro-business, I remain skeptical about a downtown convention center, and I've been skeptical about the underground parking structure all along. But the structure is happening anyway, and at least it will add parking so other parcels can be developed downtown without disrupting customer traffic. I agree we should have the U on board, but with the purchase of the Pfizer property it sounds like they really have all the space they would need. I agree they would end up using a downtown convention center, but I also agree it would mostly mean taking business away from other hotels in the county. However, it might also mean moving business from adjacent counties (Oakland, Wayne) and bringing it here so we should think about that. All of this means this is really not just a city proposal; it's a county proposal, and we should consider it as such--in terms of benefits, costs, financing, etc. I think the Pfizer property is the best place to put a new convention center within the city limits, but the U apparently wants to keep non-U of M groups off-campus. So there goes that. Right now I'm most interested in seeing a conversation between Jesse Bernstein and Joe Sefcovic about the pros and cons in terms of local hotel businesses. But I'm still interested in considering the entire library lot/federal block as a single location for serving various city, county, and federal needs. For example, a convention center or hotel makes a lot more sense on Fourth, across from the parking structure there. Fourth south of Liberty has few businesses besides that club (a problematic business) so the kind of blank wall that a convention center would face the street with would be more appropriate there. (And the club would probably benefit from the location.) The other neighbor on William would be the funeral home. IMO this is much preferable to building a towering hotel adjacent to The Earthen Jar.
Leslie Morris
Sun, Mar 27, 2011 : 6:17 p.m.
This is a reply to "jsjustareader2". Charles Skelton produced his report himself and contributed it to the City Council, because he hoped that his information might discourage the city from involving itself in the risky Valiant proposal. He received no payment for this report.
Sharon VanderKaay
Sun, Mar 27, 2011 : 5:54 p.m.
Can we talk about the design in economic terms? Regardless of the business case for best land use and/or investment sources, will the design add vibrant character to the city? Based on some of the local new construction I've seen over the past 15 years, it's time to look at more ambitious judging criteria. I am a big fan of Ann Arbor and believe its citizens deserve more than two design extremes: forgettable old-style reproductions or new-style bland architecture. If we understand what kind of design feeds the human psyche, market success will follow, IMO. Recently I wrote a blog post, "Design for Empathy" that begins with the questions: Why do discussions about redevelopment devolve into polarized arguments for or against? Or parks vs. towers? Instead, what if we asked: How will the design improve our state of mind? How will it add vibrancy, variety, character and connect with other basic human needs? Is that too much too ask? More dialogue about healthy-minded design is needed to ensure that - for citizens as well as investors - we create ongoing economic assets. Ann Arbor is a special place that need not sell itself short.
Dog Guy
Sun, Mar 27, 2011 : 5:17 p.m.
As evidenced by the City Hall wreckovation, the city hall egomaniacs figure that significant architecture is shocking and that architecture which shocks is therefore significant. Their plans for this white elephant show that they believe beauty has been overused and ugly would show their fresh thinking. As Jesse Bernstein is in favor, it is most certainly a tax sinkhole.
Brian
Sun, Mar 27, 2011 : 5:15 p.m.
This project is far more than what the city needs and UM has plenty of space if it needs meetings space which already has the latest technology so the technology argument is a hollow one. Additionally, if the projections made by the builder are off, which seems highly likely as they are based on rosey assumptions and uncommitted use by the largest employer in Ann Arbor, we're stuck with a big, empty, ugly white elephant in the heart of our city. There are other places more appropriate for such a building. Right in the heart of town next to a library is not it. I support the town square concept as it is a perfect location for a downtown park, or central park, something that is greatly lacking in Ann Arbor, next to the library where people, families, and children could enjoy downtown and use our great resource in the library. My only concern about the Town Square idea is that if it is to be utilized fully is has to remain a safe and clean zone so children can play safely. If it becomes a hangout for addicts, harassers, and vagrants it will not be used by the people of this city for its intended use. This space has the potential to be a jewel in the city's assets, another reason why people love living in and moving to Ann Arbor if we do it right. I hope city council is not swayed by a promised smell of money in the city coffers that is based on unproven assumptions and looks at the actual market and reflects upon it based on what make our city great and why people choose to live here.
abc
Sun, Mar 27, 2011 : 4:52 p.m.
Mr. Whitaker, Mr Cahill, The group you two are listed as supporting (the website you both included in your posts) has the following as a part of its 'Our Position' statement. "This site exists to inform Ann Arbor citizens about this boondoggle that threatens to permanently despoil one of the most attractive vacant parcels in the downtown..." In this sentence what is meant by 'threatens'? Are we not past threatening? Also what is meant by "permanently despoil one of the most attractive vacant parcels"? How is / was this parcel attractive? What should be done now that there is half of a building in the ground? What is your group's position on that?
Tom Whitaker
Sun, Mar 27, 2011 : 6:16 p.m.
The term "attractive" refers to the desirability of the location from any number of perspectives, not its natural beauty. Opinions vary on what individuals would like to see at this spot--some feel that apartments would be more in keeping with all the A2D2 effort and would be a healthy thing for downtown business. Others think a central park plaza, suitable for art fairs, music concerts, ice skating, car shows, library events, etc. would be an economic boon to the area. One thing we all agree on is that this parking structure/hotel/conference center concept has been pushed through without any public discussion about the best use of our land and our money. No real study has been done on what would be the best possible use. From a government perspective, we needed to update our plan and zone accordingly. We've done that. Design guidelines have been created, but not yet implemented. We need to finish that job. Next, as OWNERS of several key parcels, we need to have a new discussion about what to do with our land. Do we set some parcels aside for a critical civic function and sell the rest? Do we keep doing these fruitless RFPs? Just because our leaders have already committed us to what many of think was an ill-conceived parking structure, doesn't mean we need to keep throwing good money after bad.
Dog Guy
Sun, Mar 27, 2011 : 5:08 p.m.
What should be done now that there is half of a building in the ground? What is your group's position on that? It is called blackmail.
quetzalcoatl
Sun, Mar 27, 2011 : 4:39 p.m.
The most mystifying aspect of this story is why it is not cataloged under "crime".
nickcarraweigh
Sun, Mar 27, 2011 : 4:26 p.m.
It's been my experience in my six years of Ann Arbor residency that the city power structure generally pays little mind to the wishes of its citizenry. Consequently I am, as a rule, unwilling to spend much time looking into the latest boondoogle. It only leads to frustration at a non-responsive government. The conference center/parking structure/hotel proposal represents such an egregious misuse of the the faith and credit of the City of Ann Arbor, however, that it demands to be closely examined. First of all, no city has any business running any kind of convention center. If there was a good profit potential in it, you can count on no city ever being invited to do so. If this project had a reasonable chance to make money, the principals would fund it themselves. Second, the University is cited as a main beneficiary of this project; but, they control literally billions in various funds and accounts. If they want it, let them build it. The University owns about six square miles of tax-free land in the city of Ann Arbor, roughly 15 percent of the municipality. It shouldn't be too hard for them to find a spot for it. Citizens of Ann Arbor already subsidize the University to an unwarranted degree. An incomplete list: The municipal bus service heavily subsidizes travel for University students, employees and retirees. The city courts and police, it is safe to say, spend more resources on a per capita basis dealing with undergraduates than with any other numerically significant population segment. "Football Saturdays" represent an inconvenience to thousands of residents and hundreds of local businesses. In its isolation and in its arrogance, the University feels empowered to eternally ban literally anyone, including Ann Arbor taxpayers, from any and all of its facilities on the mere whim of any member of its privately-run, publicly-funded private army, the so-called public safety department. It's beyond time for the University to stop its bullyin
Stephen Landes
Sun, Mar 27, 2011 : 4:25 p.m.
I don't see why this is such a tough decision. If Valiant wants to buy the building site from the city at current commercial property prices and then build the facility with their own money let them do it. Anything else is corporate welfare and we cannot afford that kind of give away. If Valiant or anyone else wants more than that from the city then the project is not financially viable on its own and it should not be built.
Awakened
Mon, Mar 28, 2011 : 12:46 p.m.
But I think we all know they won't do any of those things when the City will let them gamble on profit without any risk. No gamble is too big if your losses will be bailed out. (Example, the banking crisis.)
Stephen Landes
Sun, Mar 27, 2011 : 11:47 p.m.
I agree with both of you -- no problem there.
deb
Sun, Mar 27, 2011 : 7:01 p.m.
and pay the property taxes
Tom Whitaker
Sun, Mar 27, 2011 : 4:40 p.m.
They need to pay for the building site PLUS the $5.8 million worth of foundation construction we've already done for them.
Tom Whitaker
Sun, Mar 27, 2011 : 4:19 p.m.
The City has already committed $5.8 million of the bond issue for the underground parking structure toward items that are only being incorporated to serve a building above. They include heavy foundations to support a 25-story building, site utilities, and service drives. Therefore, and project proposed for the top of the parking structure must pay $5.8 MILLON+ just to get us back to the break-even point, let alone pay for the air rights to build (another way of selling the land). Valiant has already said they want more than half the spaces in the structure devoted to the hotel and conference center. That puts them even more "in the hole" from the outset. City Council is preparing to vote on a LETTER OF INTENT, not a LETTER OF INFORMATION. If they know right now that they have no INTENT of approving this (don't have 8 votes), then they should show leadership and responsibility and stop wasting our time and money and unanimously turn down the letter of intent. If they don't, Mayor Hieftje should veto it. <a href="http://www.nodowntownconferencecenter.org/home" rel='nofollow'>http://www.nodowntownconferencecenter.org/home</a>
Tom Whitaker
Sun, Mar 27, 2011 : 4:22 p.m.
Typo! I meant: "Therefore, ANY project proposed..."
ShadowManager
Sun, Mar 27, 2011 : 4:13 p.m.
Ann Arbor needs much less "big construction projects" downtown, and this looks like one of the biggest yet. These endless construction and street closures have choked off business --- walking and street traffic --- all over the heart of the city, and I feel with this horrible project topping them all the downtown would not recover.
DonBee
Sun, Mar 27, 2011 : 5:24 p.m.
ShadowManager - It is the law of conservation of holes in a city.... Holes are neither created or destroyed, they are just moved. So once a hole exists, it has to move about the city.
Alan Benard
Sun, Mar 27, 2011 : 3:50 p.m.
Convention business all comes down to airports. DTW is universally known as one of the United States' worst airports. Ann Arbor is a $60 cab-ride away from that airport. It would be irresponsible for event organizers to book this convention center.
deb
Sun, Mar 27, 2011 : 7 p.m.
Very wrong. Actually I think JFK is the worst. You expect chickens to be flying around. . .
DonBee
Sun, Mar 27, 2011 : 5:23 p.m.
DTW ranked in the top 3 airports in this year's survey of frequent travelers. It has one of the best on time performances in the US. The problem is it is pricy to fly in and out of Detroit. It is cheaper to drive to Toledo and connect back through Detroit, than to start in Detroit. Lansing and Flint also have a price advantage over Detroit. That is the price of being an airline hub for one airline. As to ground transportation, the airport again denied Super Shuttle the right to provide transportation.
Stephen Landes
Sun, Mar 27, 2011 : 4:27 p.m.
I think your information about DTW is old. With the new facilities constructed it is one of the best airports around. The problem is the primary destination (Detroit) isn't all that desirable.
DBlaine
Sun, Mar 27, 2011 : 3:21 p.m.
Is there a way for annarbor.com to lay out the city's exposure regarding the conference center. Will the city have to pay the bonds if the conference center loses money, etc.? Will property taxes be paid on the conference center land? Otherwise, it's very hard to evaluate whether this is a good idea or not. If they're counting on U-M to provide business, that's a joke. U-M is going to have its state aid slashed; administrators already are warned to watch their pennies. U-M has a ton of conference space. The old Ann Arbor News reported a few years ago that U-M's new conference facility at Palmer Commons was hardly being used. Student groups don't have to pay to use conference rooms at Rackham. And faculty aren't going to want to walk off-campus to pay to use conference facilities they likely could get cheaper on campus.
Kai Petainen
Mon, Mar 28, 2011 : 12:04 a.m.
"The Valiant proposals have consistently implied that they do not expect to pay property taxes on the hotel, and the conference center would presumably be tax-exempt as a non-profit " is the university or a religious organization planning on running it?
Vivienne Armentrout
Sun, Mar 27, 2011 : 4:58 p.m.
The Valiant proposals have consistently implied that they do not expect to pay property taxes on the hotel, and the conference center would presumably be tax-exempt as a non-profit (though that has not yet been established). They do state that the condominiums will pay taxes. The latest LOI says that some kind of real estate taxes will be paid but evidently believe the amount to be negotiable. Their financial plans do not indicate that they have factored in a tax payment to their expense of operation. One of the major players, Michael Bailkin, made his name in New York by obtaining tax incentives for various projects. The proposals have often included the phrase "TIF" implying a brownfield-like tax investment in the project itself. The latest LOI makes no mention of it.
jsjustareader2
Sun, Mar 27, 2011 : 3:17 p.m.
The article ,and Skelton's report, both fail to indicate who his client is. A mere oversight???
Vivienne Armentrout
Sun, Mar 27, 2011 : 10:46 p.m.
A member of our group (Public Land - Public Process, a policy group) interviewed Mr. Skelton when the report was first made public and he stated that he had done it on his own initiative. <a href="http://publicannarbor.blogspot.com/2011/02/charles-skelton-speaks.html" rel='nofollow'>http://publicannarbor.blogspot.com/2011/02/charles-skelton-speaks.html</a>
Leslie Morris
Sun, Mar 27, 2011 : 6:21 p.m.
Charles Skelton produced his report himself, and contributed it to the City Council, in the hope that he could persuade the city not to involve itself with the risky Valiant proposal. He received no payment for this report.
Mike D.
Sun, Mar 27, 2011 : 2:45 p.m.
As someone who actually does business in Ann Arbor, I would love to have a decent hotel downtown. I am proud of my city and I'd like to direct people to its vibrant downtown. It's absurd that the best hotels in downtown Ann Arbor currently are realistically 2-star properties, and both are owned by the same guy who has no incentive to improve them. When I entertain business guests, the closest hotel option that passes the laugh test is the Eagle Crest Marriott, and it's just average. We wind up having our corporate meetings in Birmingham because everyone would rather stay at the Townsend than anywhere around here. And it's bougie-trad. Something modern and cool in downtown Ann Arbor would attract a lot of business just from people I work with!
deb
Sun, Mar 27, 2011 : 6:52 p.m.
Ive been to the Townsend and campus in many times. I saw virtually no difference in the rooms. . . the restaurant and lobby area of the Townsend are a bit nicer. I find them to be very comparable.
Kai Petainen
Sun, Mar 27, 2011 : 2:41 p.m.
sometimes business is about making a deal, getting the money, making the next deal and moving on. not always, but sometimes it's about the quick short term profit (move on) and not the long term circumstances. the question you have to ask yourself... is... and it might not apply in this case.... 'in the short term, who will make the most money on this deal, and what is their relationship to Ann Arbor or the school?"
Awakened
Sun, Mar 27, 2011 : 2:20 p.m.
I'm sure glad that council is deciding this. I wouldn't want it left to experts or entreprenuers.
Kai Petainen
Sun, Mar 27, 2011 : 2:17 p.m.
sometimes i feel that the ann arbor news is one-sided... but this report makes me think that this was a good job of reporting the angle from both sides. nicely done.
Hot Sam
Sun, Mar 27, 2011 : 2:04 p.m.
A few week ago I was up in Traverse City, and there was a small to mid size convention going on at the Grand Traverse, which is a ways out of downtown. The local community had a coupon deal and a shuttle bus service that had every restaurant and bar in downtown full. The locals were loving it, as they were bringing in a windfall in the middle of February in Northern Michigan. What does that have to do with Ann Arbor? With the facilities, restaurants, brew pubs, galleries, and everything else our community has to offer, it seems to me that we could do much more with what we already have. With that said, a new facility could be extremely helpful as well. It should not however include public funds, and should not look any thing like the horrid rendering in the above article.
godsbreath64
Sun, Mar 27, 2011 : 1:57 p.m.
The out-of towners could venture out on foot to shops? They can do this walking to the meetings while enjoying the accommodations already here and leave our roads only massively congested, instead of insurmountably so. How much is Bernstein getting kicked back on this scam?
Joel Batterman
Sun, Mar 27, 2011 : 1:46 p.m.
In future years, there will be demand for more hotel space downtown, and perhaps more conference space as well. But I don't think this is the best location (the lot is too small, for one thing) and the public hasn't been offered a real opportunity to advance alternatives for one of the most important pieces of land we own. In my opinion, it's also more clear than ever that Council should never have approved the $50 million underground parking garage on the site, since it appears the garage was largely intended to serve a conference center all along. The downtown has so many other needs, from better public transit to affordable housing to other forms of green infrastructure, that this money could have served. Enormous subsidies for parking are a recipe for malls, not healthy cities. It's a shame that we lacked the leadership to steer us in a more sensible and sustainable direction.
Marshall Applewhite
Mon, Mar 28, 2011 : 12:47 a.m.
@Awakened The business attrition rate will change greatly if we allow Gov. Snyder to implement his plans. I'm not sure if I agree with building a conference center on this site, but I do believe the Ann Arbor area is positioned for immense growth. Once this state becomes competitive again, Ann Arbor will be the first city to reap the benefits.
Awakened
Sun, Mar 27, 2011 : 2:31 p.m.
Upon what do you base the supposition that there will be more demand? The only viable industries in the area are the university and tech firms associated with the uninversity. The university has no shortage of conference centers and if they decided that they did they would build bigger and better ones and undercut the City's prices to have the prestige of hosting. Michigan is still shedding business at an unprecedented rate.
LB
Sun, Mar 27, 2011 : 1:40 p.m.
Why can't some other use for this property come to mind? Something where families can be drawn to downtown. What comes to mind is something like millennium park in Chicago, But on a smaller scale. Sure it would be great short term for the trades to have construction work, for the conference ctr., but long term, I don't think this can work.
truthspeak
Sun, Mar 27, 2011 : 1:59 p.m.
Millennium Park is full of thousands of tourists. We don't have the tourist market they have. Plus in order for such a place to be successful requires there to be programming done for the park. Programming costs money. Families are already drawn to downtown with other events. All that would happen if a park was there is that the activities would relocate from these other areas.. Putting a green space in that area is a waste of space. There is other green space within blocks of that area. This space should be used for something else whether it is a conference center, condos or mixed use office.
PersonX
Sun, Mar 27, 2011 : 1:36 p.m.
There are so many imaginative people in this city who could come up with interesting ways of using this space in a manner that would provide economic, aesthetic, and practical benefits to Ann Arbor without completely disrupting its character and without taking on so much risk. We do not need anonymous, bottom-line outside developers plopping in buildings that may be interesting in isolation, but do such violence to the fabric of the city. It will add nothing to downtown except more opportunity for chain hamburger, pizza, or "Mediterranean" eateries, with horrid corporate facades, since no one seems to have any imagination for anything else these days, driving out the small local restaurants and forcing other hotels out of business. How will Council deal with an empty hotel building? The way this particular project has been pushed through until now is a scandal, and it should be nipped in the bud.
LB
Sun, Mar 27, 2011 : 1:47 p.m.
Well said
AANative
Sun, Mar 27, 2011 : 1:35 p.m.
Who am I to judge architecture, just a native Ann Arboborite having coffee on a Sunday morning, But I do have an opinion and I don't like it. It looks like one of those plastic parts storage things I have in my shop to keep nails in, but worse, it's unbalanced. I want to push it back on it's base. To me, a well designed building should look stable. Imagine walking under that huge expanse of concrete, I can'y imagine it will be anything but cold, and uncomfortable.
1bit
Sun, Mar 27, 2011 : 3:46 p.m.
Jenga, anyone?
Emma B
Sun, Mar 27, 2011 : 3:41 p.m.
Amen, I have an OCD-like compulsion to push that building back-- I would have to avoid that entire block to feel at ease in downtown.
mw
Sun, Mar 27, 2011 : 1:27 p.m.
One of the nice things about Ann Arbor is that it hasn't been screwed up (yet) by failed government-sponsored urban development schemes. Unlike Lansing, Grand Rapids, Saginaw, and Flint there is no freeway cutting right through and blighting the city (I wonder if anybody will ever have to vision to tear 496 out of Lansing?). And we don't have any massively expensive, money-losing white elephants like 'The People Mover' or a conference center that sits empty and unused most of the time. Let's let Ann Arbor continue to develop organically (in a way that Jane Jacobs would love) and keep the urban planners on a very short leash.
truthspeak
Sun, Mar 27, 2011 : 1:17 p.m.
I am for the conference center if the city is not on the hook financially for the financing. I want something built there and think a public park is a waste of the property. I wish the pro-parks contingent would allow a real debate on what should go on top of the parking structure rather than hijacking the discussion all the time so that their own political agenda is pushed upon the city and the residents. With that said, people who are think this project is not needed are not looking at the correct comparisons; you need to compare the same quality hotel that contains the large conference space. With all do respect to the Campus Inn it is average at best. Those who come into town looking for a 4 star hotel or just plain nicer hotel do not have a choice downtown. If any of those places exist they are on the outskirts of the city. There is a real need for a better hotel downtown. The fact that some other hotels went out of business downtown is not the correct comparison because quite frankly they were dumps and were way past their prime. A new hotel can breathe life into downtown. If allowed to be discussed in an adult manner, this project could really be good for the city. The university could end up using this center, but since they are very decentralized, there is no way for them to commit for sure; each department can use whatever facility they want to. If a conference center won't be built, my hope is that something will be built that is good for the economy of the city.
deb
Sun, Mar 27, 2011 : 6:57 p.m.
Like something that will pay property taxes?
DonBee
Sun, Mar 27, 2011 : 12:58 p.m.
Simple answer Build it, let it go bankrupt, let the city take it over and rehab it. Then you can have a new SRO, low income housing unit downtown to replace what was at the Y. Given the City Council's leanings, this has to be in their thinking. The conference space becomes a warming center and soup kitchen.
Vivienne Armentrout
Sun, Mar 27, 2011 : 12:49 p.m.
A good summary. I've heard informally that both the Sheraton and the Campus Inn were expanding their conferencing facilities. Is there any followup on that? Also, what is the status of the hotel proposed for Division St.? And is that proposed conference center on the Kline's Lot dead?
Vivienne Armentrout
Sun, Mar 27, 2011 : 1:19 p.m.
Thanks for this fill-in, Ryan.
Ryan J. Stanton
Sun, Mar 27, 2011 : 1:07 p.m.
For purposes of this story, I didn't pursue an update on those, but there's some background reading for anyone who didn't catch these past stories: <a href="http://www.annarbor.com/business-review/sheraton-renovations-underway/">http://www.annarbor.com/business-review/sheraton-renovations-underway/</a> <a href="http://www.annarbor.com/community/business_review/webers_inn_in_ann_arbor_michigan_completes_renovation_of_lobby_reception_area_meeting_room/">http://www.annarbor.com/community/business_review/webers_inn_in_ann_arbor_michigan_completes_renovation_of_lobby_reception_area_meeting_room/</a> <a href="http://www.annarbor.com/business-review/dahlmann-seeks-to-expand-campus-inn-conference-center-space-in-downtown-ann-arbor/">http://www.annarbor.com/business-review/dahlmann-seeks-to-expand-campus-inn-conference-center-space-in-downtown-ann-arbor/</a> <a href="http://www.annarbor.com/business-review/developers-eye-klines-lot-for-12-story-downtown-ann-arbor-mixed-use-project/">http://www.annarbor.com/business-review/developers-eye-klines-lot-for-12-story-downtown-ann-arbor-mixed-use-project/</a>
David Cahill
Sun, Mar 27, 2011 : 12:35 p.m.
This is a well-researched, solid article! I hope we see more of them. The coalition opposing this bad project is call Citizens Against the Conference Center. Its website is <a href="http://www.nodowntownconferencecenter.org" rel='nofollow'>www.nodowntownconferencecenter.org</a>. Yard signs are now going up, and buttons are sprouting.
Al McWilliams
Sun, Mar 27, 2011 : 12:23 p.m.
Hey Bros, Okay, lemme make sure I get this straight... A dude who owns a competing hotel doesn't think this is a good idea, and the people who would build this one think it is a good idea. How many meetings/task forces did it take to figure that one out?
Ryan J. Stanton
Sun, Mar 27, 2011 : 12:19 p.m.
There have been a lot of questions about U-M's plans for the 174-acre, 30-building North Campus Research Complex, a.k.a. the former Pfizer property, which the story mentions. A spokesperson for the University of Michigan Health System told me this in an e-mail: "NCRC has numerous conference rooms and spaces that vary dramatically in size, including the large cafeteria building that can seat approximately 700 people. Our plan is to continue our current policy of providing conference space only for University of Michigan functions or those with a strong U-M connection."
genericreg
Sun, Mar 27, 2011 : 8:50 p.m.
Annarbor should provide bridge only for annarbor function or those with strong annarbor connection.
Stephen Landes
Sun, Mar 27, 2011 : 4:35 p.m.
That's what I would expect from U of M. With all the space they acquired in the former Pfizer property they don't need off-site conferencing space. Why spend money outside their own operations for something they have in-house. Maybe we need another hotel on the NE side of town to support the space at NCRC.
Olive
Sun, Mar 27, 2011 : 12:15 p.m.
And here's a question after reading the points above: are someone's pockets being lined to push the conference center through?
xmo
Sun, Mar 27, 2011 : 12:04 p.m.
After reading the article, I see the people who don't like the complex as the usual "Anti-business" groups plus the local hotel owners. The people for the project are the New York-based Valiant Partners' and the Chamber of Commerce. In the middle is the city council members who has to keep their supporters happy but would love to spend the additional tax revenue that would come in. It all comes down to: do you want a park or a hotel complex? Classic good vs evil, growth vs non-growth
1bit
Sun, Mar 27, 2011 : 6:30 p.m.
Stephen: I went by it today and I think what you posted makes a lot of sense. As it grew, it could become like Moscone East and West.
Stephen Landes
Sun, Mar 27, 2011 : 4:39 p.m.
@1bit I think you may have hit on a good idea: move the bus station into the parking garage as the ground floor and then build just a conference center on top of that with no hotel. AATA thinks the existing transportation center is too small, so this would allow then to build a quite large transportation center. With buses coming in from all points around town existing and new hotels can be built on the edges of the city.
1bit
Sun, Mar 27, 2011 : 12:23 p.m.
Not necessarily true. I'm all for business and growth. Not so much for future blight and pointless sunblockers. My problem is this is going about things backwards. If Ann Arbor needs a convention center, is this spot really the best location? Is this really what we want Ann Arbor's convention center to look like? There is no need for additional hotel rooms, why not make it more like the Moscone center in San Francisco and allow bus routes to shuttle people there as necessary (the bus station is right there after all).
Craig Lounsbury
Sun, Mar 27, 2011 : 12:22 p.m.
"It all comes down to: do you want a park or a hotel complex?" thats it? the only two possible options?
David Briegel
Sun, Mar 27, 2011 : 12:04 p.m.
Let the free market work. No subsidy. No tax breaks. No public liability. No loans. Let the bidding begin. Pretty simple. Even our gang should be able to handle this!
Chip Reed
Sun, Mar 27, 2011 : 12:03 p.m.
Wasting money to duplicate services seems like a good idea if we really are too cool to have anything to do with Ypsilanti. Eagle Crest is WAY nicer than anything these guys could come up with (golf course, lake view, etc.).
johnnya2
Sun, Mar 27, 2011 : 2:34 p.m.
Eagle Crest is a nice facility. How much spin off business is created from it? ZERO. In fact, Eagle Crest is based on the Vegas casino model. Get them there, and never have them leave the facility. If you have a conference at Eagle Crest where do you go get dinner? What entertainment is there at night.? Most people who attend conventions are not looking to stay in their rooms and watch Sports Center. I attend shows and expos on a regular basis. I do not want to be stuck in a place 15 miles from any activity or things to do.
Awakened
Sun, Mar 27, 2011 : 2:24 p.m.
It is not in walking or bicycling distance for the greenies.
DDOT1962
Sun, Mar 27, 2011 : 12:32 p.m.
Yeah, that view of Ford Lake is priceless, lol.
1bit
Sun, Mar 27, 2011 : 11:59 a.m.
"Since the beginning of time, man has yearned to destroy the sun. I shall do the next best thing: block it out." - Charles Montgomery Burns
a2grateful
Sun, Mar 27, 2011 : 11:46 a.m.
Six more points to consider: (7-12) 7) There is no local business initiative to support a hotel/conference center. 8) The city and DDA have no proven development record other than municipal buildings and parking structures. They are currently proposing ending support for pools, senior centers, while poorly maintaining many streets. They have surpassed their level of wisdom, experience, and credibility as they contemplate a hotel/conference center. 9) The city had a downtown hotel that failed and bankrupted: The Ann Arbor Inn, now low-cost housing. 10) Much personal and business conferencing is conducted electronically. As energy and transportation costs increase, bricks and mortar centers are less viable. 11) The city population is less than 115,000 and declining. Few cities of this size could support this hotel and conference center. 12) Existing hotels and conference centers in our region are greater than demand. Adding supply to this dynamic hurts the overall economy.
deb
Sun, Mar 27, 2011 : 6:56 p.m.
Vivvianne armentrout posted below: The Valiant proposals have consistently implied that they do not expect to pay property taxes on the hotel, and the conference center would presumably be tax-exempt as a non-profit (though that has not yet been established). They do state that the condominiums will pay taxes. The latest LOI says that some kind of real estate taxes will be paid but evidently believe the amount to be negotiable. Their financial plans do not indicate that they have factored in a tax payment to their expense of operation. End quote. This is a lost source of income for the city. If the market were relied upon im sure a tax paying buyer could be found
deb
Sun, Mar 27, 2011 : 6:46 p.m.
additionally the city would be giving the conference center/hotel 350 of the new parking spots. I am not doing the math on what those are worth(cost for new parking sturcture/# of spots), but I believe that it is over half, please correct me if I am wrong. So the city would be giving the worth of those parking spots (revenue, assets) to the hotel.
Tom Whitaker
Sun, Mar 27, 2011 : 4:36 p.m.
The City has already committed $5.8 million toward a future building above the structure with heavy duty foundations and site utility work. Until I see the developer hand over a check for $5.8 million, plus an amount for air rights that is equal to the value of the land, then you are incorrect in saying the developer is taking all the risk. Learn the facts before blindly giving in to this madness. If it made sense as a private business, a private business would not need this hand out from the City. Valiant knows there's a sucker born every minute, and in these lean years for developers, government suckers are the only candy available in the store.
johnnya2
Sun, Mar 27, 2011 : 2:29 p.m.
1) UM has never built a center for that purpose. They utilize facilities they have, but are not in the business of building a conference center and hotel. 2) This project is NOT built just for UM, so why do you think that is the only customer out there. There are plenty of other conferences/conventions that A2 is not even considered a viable option due to the limited facilities. 3) The developer is taking all the risk with the benefit going to the city. The conference center would be owned by the city. The developer and hotel get the benefit of the rooms sold. In business that is called win win 4) There are no guarantees for anything in the life other than we will all die. 5) The city will not be subsidizing this. Just because you say it does not make it so. 6) There was no grass roots movement for SMartphones either. I guess they should never have been developed in your world. 7) The local businesses against it are hotels that will now be required to compete. I am sure the Sheraton would love for Kensington Place, Bell Tower, Campus Inn and every other competitor to fail. 8) Conference centers owned by cities are MANAGED by professionals. In fact, the article talks about the Eagle Crest facility. Do you know who owns it? It is certainly not Marriott. It is MANAGED by Marriott. 9) The city has two downtown hotels that continue to operate (Campus inn and Bell Tower). I guess because something failed more than two decades ago we should never do something again? 10) Meeting space and conference space usage is on the rise. In fact. your transportation cost argument is what will drive the viability of this project. Companies are doing conferences and conventions that are much more regionally specific. Instead of a Michigan company sending its people to a conference in Las Vegas, they can do a small regional specific show in markets like Ann Arbor. 11) Kellogg Center at MSU is a smaller city with more space 12) Those hotels will get better or die
a2grateful
Sun, Mar 27, 2011 : 11:44 a.m.
Six points to consider regarding a hotel/conference center: 1) If UM needed a hotel they would build it, or co-venture with the city. 2) UM has ample conference space. If they need more, they will build it, or use conference space in the surrounding area. 3) If the private development market believed in the viability of a hotel/conference center they would build it. They would assume all financing and risk. They would pay for the land and all improvements, including the parking garage. 4) Although DDA reads a list of "money and groups" that a hotel/conference could bring, none of it is guaranteed, and none of it is secure. It is 100% conjecture. 5) The city has declining revenue from residents, state, and feds. The city does not support current debt levels as evidenced by unfunded pensions and health care. The city is in no position risk subsidizing a hotel/conference center. The state and feds cannot, and will not, "bail" the city out. 6) There is no grass roots citizen movement to support a hotel/conference center.
Tom Whitaker
Sun, Mar 27, 2011 : 4:30 p.m.
Yard signs are available here: <a href="http://www.nodowntownconferencecenter.org/yard-signs" rel='nofollow'>http://www.nodowntownconferencecenter.org/yard-signs</a>
HPD
Sun, Mar 27, 2011 : 10:50 a.m.
I appreciate the thought and care our representatives continue to give this public decision. I am not convinced that the City of Ann Arbor would be advantaged by going into the hotel/conference center business. I've seen a plan to make the ground level of the underground parking structure into a public park area with a performance space and other attractive features for everyone to enjoy downtown. The city has some terrific park planners who I'd guess would be excited to collaborate with citizens to create a landmark all of us could use.
yohan
Sun, Mar 27, 2011 : 10:44 a.m.
If the hotel / conference center is economically viable or not is not relevant. Simple truth of the matter is that the city government of Ann Arbor, with all of it's cuts to basic services, cannot afford to undertake another massive construction project just to meet the demands of the "gods" at UM. This also applies to the proposed hospital parking deck, a.k.a. "transit center".
lynel
Sun, Mar 27, 2011 : 2:29 p.m.
The U of M is NOT making any demands for this center, they don't need it.