Renovations Planned for Vacant Detroit Hotel

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Louis Aguilar

The planned restoration of the once-opulent Book-Cadillac Hotel, long a symbol of Detroit's inexorable decline, is being hailed as a sign that the city's downtown resurgence is for real.

The plans to restore the vacant building into a high-end Westin Hotel and upscale condominium complex will be unveiled today in a much-anticipated event at the Detroit Athletic Club.

The project joins billions of dollars in public and private investment that has been poured into downtown the past 10 years, bringing new life to long-empty historic buildings and filling the city's blighted core with new casinos, lofts, restaurants, martini bars and small retail shops.

"We are past the tipping point," said Doug Rothwell, president of Detroit Renaissance Fund, the influential nonprofit fund that is one of the estimated 17 sources of financing for the Book-Cadillac deal. "There is enough of those kinds of things in a pretty condensed time period, that when you catalog it, shows there is critical mass in the right direction."

No one has talked like that about downtown Detroit in years. There remain skeptics about the Book-Cadillac project. The estimated $176 million deal is heavy on loans, is partially funded by Michigan taxpayers and is short on private investment, some say.

Even supporters of the deal say it is putting remarkable faith in two market segments -- a robust hotel scene and upscale living -- not normally associated with downtown. The 67 condominium units are expected to sell for about $300,000. The 455 hotel rooms would join another 1,200 hotel rooms planned as part of the three permanent casinos: MGM Grand, MotorCity and Greektown.

"I still think it's a high-risk deal," said Charles Skelton, head of Hospitality Advisors Consulting in Ann Arbor. "That's not to say it can't work or the belief is unfounded, because these are pretty savvy people behind this project. It's definitely bold."

Many praise Cleveland developer John Ferchill, who has made a fortune in restoring historic buildings in Rust Belt cities.

Big day set for yesteryear's star

Amid 600 movers and shakers, Detroit Mayor Kwame Kilpatrick and Ferchill this afternoon are expected to announce the financial deal that would reopen the 33-story, Louis Kamper-designed skyscraper at the corner of Washington Boulevard and Michigan Avenue as soon as 2008.

It was the city's pre-eminent hotel for six decades; five presidents, famous film stars and high-rolling gangsters stayed there. Books and documentaries are still being made about it, and visitors to local Web sites like Fabulous Ruins of Detroit (detroityes.com) closely follow any rumor and development about the hotel.

The vacant landmark has vexed every mayor since its closing in 1984, including Kilpatrick. In 1993, then Mayor Coleman Young couldn't even raise enough money to tear it down.

In July 2003 Kilpatrick held a news conference in front of hotel to hail redevelopment of the landmark as proof that downtown is on the mend. He vowed it would open in time for Super Bowl XL held last February. That deal, which was backed by a subsidiary of the Kimberly-Clark Corp., fell apart when the project's cost escalated after preliminary site work.

Mayor, developer refused to give in

But Kilpatrick and key staff at the Detroit Economic Growth Corp, the quasi-public group that works on rebuilding the city, never gave up. And they had an eager developer in Ferchill, part owner of the Hilton Gardens Inn in downtown's Harmonie Park.

"You have to give huge credit to George Jackson, (head of the DEGC) and Ferchill," said Dick Buss, senior vice president at National City Bank, which is among the financers. "They stitched together something that utilizes so many different types of funding that we finally got comfortable" with the deal.

Some of the biggest development deals in downtown are in the hands of out-of-towners, including the two big Riverfront projects at the former Uniroyal site and alongside the Renaissance Center and the $45 million plan to turn the Lafayette Building into condos.

That outside interest is another sign that things are changing for the better downtown.

"It used to be that one, maybe two, firms had to take most of the risk," said Atanas Ilitch, president of Olympia Development LLC, the real estate arm of the Ilitch empire.

"But now with so many willing to be part of project, things can get done a lot of faster," Ilitch said.

The Ilitch family were downtown pioneers when they renovated the historic Fox Theatre and then relocated the Detroit Tigers to Comerica Park. Now the family has embarked on another ambitious plan that may include redevelopment of the 1923 Detroit Life building in the historic area behind the Fox. It also hopes to find a developer and major tenant for a five-acre site at Grand Circus Park. The site includes the 1928 United Artists Theatre building and the former Statler Hotel parcel, which is owned by the city.

The Book-Cadillac isn't the only historic building with plans to become a hotel again. The Pick-Fort Shelby on Lafayette is on track for a $73 million renovation that would make it a 204-suite hotel, with a 40,000-square-foot conference center and 63 apartments that may be later sold as condos.

Some question patchwork of financing

The Book-Cadillac's complex financing also reveals how hard it is to get private investors to put their money on downtown Detroit

"What's worrisome is the relatively small amount of (private) capital that has been put up," said Patrick Anderson, a Lansing-based economist that studies Michigan's economy. Financing ranges from conventional loans; federal, state, county and city funding; state tax credits from the soon defunct single business tax, brownfield redevelopment and the never before used new market credit.

"That shows the length Detroit has to go to get a private investor to put up their own money," Anderson said.

Despite Michigan's sagging economy, the city's shrinking population and looming budget deficit, Anderson said downtown Detroit can continue to rebound.

"Detroit's biggest problem has not been the depressed Michigan economy," Anderson said.

"Detroit's biggest problem has been Detroit's economic, political, social and other problems. I see all the activity as a sign of optimism as Detroit is turning itself around."

The planned restoration of the once-opulent Book-Cadillac Hotel, long a symbol of Detroit's inexorable decline, is being hailed as a sign that the city's downtown resurgence is for real.

The plans to restore the vacant building into a high-end Westin Hotel and upscale condominium complex will be unveiled today in a much-anticipated event at the Detroit Athletic Club.

The project joins billions of dollars in public and private investment that has been poured into downtown the past 10 years, bringing new life to long-empty historic buildings and filling the city's blighted core with new casinos, lofts, restaurants, martini bars and small retail shops.

"We are past the tipping point," said Doug Rothwell, president of Detroit Renaissance Fund, the influential nonprofit fund that is one of the estimated 17 sources of financing for the Book-Cadillac deal. "There is enough of those kinds of things in a pretty condensed time period, that when you catalog it, shows there is critical mass in the right direction."

No one has talked like that about downtown Detroit in years. There remain skeptics about the Book-Cadillac project. The estimated $176 million deal is heavy on loans, is partially funded by Michigan taxpayers and is short on private investment, some say.

Even supporters of the deal say it is putting remarkable faith in two market segments -- a robust hotel scene and upscale living -- not normally associated with downtown. The 67 condominium units are expected to sell for about $300,000. The 455 hotel rooms would join another 1,200 hotel rooms planned as part of the three permanent casinos: MGM Grand, MotorCity and Greektown.

"I still think it's a high-risk deal," said Charles Skelton, head of Hospitality Advisors Consulting in Ann Arbor. "That's not to say it can't work or the belief is unfounded, because these are pretty savvy people behind this project. It's definitely bold."

Many praise Cleveland developer John Ferchill, who has made a fortune in restoring historic buildings in Rust Belt cities.

Big day set for yesteryear's star

Amid 600 movers and shakers, Detroit Mayor Kwame Kilpatrick and Ferchill this afternoon are expected to announce the financial deal that would reopen the 33-story, Louis Kamper-designed skyscraper at the corner of Washington Boulevard and Michigan Avenue as soon as 2008.

It was the city's pre-eminent hotel for six decades; five presidents, famous film stars and high-rolling gangsters stayed there. Books and documentaries are still being made about it, and visitors to local Web sites like Fabulous Ruins of Detroit (detroityes.com) closely follow any rumor and development about the hotel.

The vacant landmark has vexed every mayor since its closing in 1984, including Kilpatrick. In 1993, then Mayor Coleman Young couldn't even raise enough money to tear it down.

In July 2003 Kilpatrick held a news conference in front of hotel to hail redevelopment of the landmark as proof that downtown is on the mend. He vowed it would open in time for Super Bowl XL held last February. That deal, which was backed by a subsidiary of the Kimberly-Clark Corp., fell apart when the project's cost escalated after preliminary site work.

Mayor, developer refused to give in

But Kilpatrick and key staff at the Detroit Economic Growth Corp, the quasi-public group that works on rebuilding the city, never gave up. And they had an eager developer in Ferchill, part owner of the Hilton Gardens Inn in downtown's Harmonie Park.

"You have to give huge credit to George Jackson, (head of the DEGC) and Ferchill," said Dick Buss, senior vice president at National City Bank, which is among the financers. "They stitched together something that utilizes so many different types of funding that we finally got comfortable" with the deal.

Some of the biggest development deals in downtown are in the hands of out-of-towners, including the two big Riverfront projects at the former Uniroyal site and alongside the Renaissance Center and the $45 million plan to turn the Lafayette Building into condos.

That outside interest is another sign that things are changing for the better downtown.

"It used to be that one, maybe two, firms had to take most of the risk," said Atanas Ilitch, president of Olympia Development LLC, the real estate arm of the Ilitch empire.

"But now with so many willing to be part of project, things can get done a lot of faster," Ilitch said.

The Ilitch family were downtown pioneers when they renovated the historic Fox Theatre and then relocated the Detroit Tigers to Comerica Park. Now the family has embarked on another ambitious plan that may include redevelopment of the 1923 Detroit Life building in the historic area behind the Fox. It also hopes to find a developer and major tenant for a five-acre site at Grand Circus Park. The site includes the 1928 United Artists Theatre building and the former Statler Hotel parcel, which is owned by the city.

The Book-Cadillac isn't the only historic building with plans to become a hotel again. The Pick-Fort Shelby on Lafayette is on track for a $73 million renovation that would make it a 204-suite hotel, with a 40,000-square-foot conference center and 63 apartments that may be later sold as condos.

Some question patchwork of financing

The Book-Cadillac's complex financing also reveals how hard it is to get private investors to put their money on downtown Detroit

"What's worrisome is the relatively small amount of (private) capital that has been put up," said Patrick Anderson, a Lansing-based economist that studies Michigan's economy. Financing ranges from conventional loans; federal, state, county and city funding; state tax credits from the soon defunct single business tax, brownfield redevelopment and the never before used new market credit.

"That shows the length Detroit has to go to get a private investor to put up their own money," Anderson said.

Despite Michigan's sagging economy, the city's shrinking population and looming budget deficit, Anderson said downtown Detroit can continue to rebound.

"Detroit's biggest problem has not been the depressed Michigan economy," Anderson said.

"Detroit's biggest problem has been Detroit's economic, political, social and other problems. I see all the activity as a sign of optimism as Detroit is turning itself around."