Construction extended for $48 million Hyatt Place Hotel development project

By: Victoria Mitchell | Royal Oak Review | Published August 24, 2016

ROYAL OAK — The Downtown Development Authority Board of Directors voted 6-0 last week to extend construction plans for a proposed $48 million North Main Street development anchored by a Hyatt Place Hotel after key players said they needed more time to begin construction.

Representatives from 400 Main LLC appeared before the Royal Oak Downtown Development Authority Aug. 17 and asked for a one-year extension on a reimbursement agreement that the development team has with the authority.

On April 16, 2014, the authority reached an agreement with the development team providing up to $3 million in tax reimbursements through the next 10 years. The reimbursements would come from the increased taxable value of the site following completion.

One of the stipulations was that construction would begin by August 2016.

Managing member Greg Cooksey said the extension of time is for the start of construction and not the completion date, which is estimated as December 2018.

“Projects of this size are extremely complex, as you know,” Cooksey said. “The reason for the delay ...  we just simply weren’t able to start by Aug. 1, due to complexities of the size and putting the financing together.”

Cooksey said that in the last five weeks, updated agreements were secured with the major tenants and all of the capital participants.

A couple of DDA directors were hesitant to grant the extension, stating that the project had already taken quite some time since originally proposed and aspects of the project were changing.

The project as proposed and approved by the Royal Oak City Commission on Oct. 20, 2014, included a Hyatt Place Hotel with a restaurant at the south end of the building. The second floor of the hotel would include banquet and meeting rooms, a 30-by-50-foot outdoor patio and about 120 guest rooms on the third through sixth floors.

To the north of the hotel would be a six-story, mixed-use building with retail, office space and about 60 apartments on the fourth through sixth floors.

A three-level, off-street parking deck would service the property.

Commissioners unanimously approved the special development agreement authorizing the redevelopment of the former Jim Fresard auto dealership at 400 N. Main St. The dealership shuttered in 2008, and the property has been vacant ever since.

“This project just continues to shrink and take longer,” said DDA Director Matt Riley.

Riley said he understands some of the reasons, but he thought shrinking the project would speed things up.

“If you squint, it looks the same,” said developer Greg Erne.

Erne explained that the main differences are changing a proposed banquet center to a conference center and reducing the size of the parking deck.

The project still consists of two buildings, including an 18,000 square-foot office tenant in the building housing the proposed 122-room Hyatt Place Hotel.

The second building would consist of a commercial component on the first floor and residential above. The plans also include a reduced-in-size parking deck.

Iterations of the development plan have been in the works since 2012.

City Manager Don Johnson said the property is owned by those proposing the development and so the city really doesn’t have anything to lose by letting them take their time.

Johnson said the city’s role in this is not as a property owner, but rather in terms of a partial reimbursement agreement on the incremental tax revenue the project will create if it is developed.

“If we were to turn this down, it’s not like we’re doing something that is going to open it up to another developer. They own the property. They’re the ones that are going to develop it or not develop it.

“Any action that we take might mess up this development, but it isn’t going to get us something else there sooner,” he said.

Cooksey said demolition of the existing buildings on the property will be done by the end of this year. He said construction fencing would be placed around the site until construction begins.

Cooksey said that, weather-permitting, they hope to lay the foundation before the winter and move as fast as they can.

“We’ve owned this property for 4 1/2 years,” he said. “We’re trying very hard. ... We’re trying our hardest. We want to turn this into a cash-flow property as soon as possible.”