Royal OakDecember 17, 2013
Subsidy deal points to Barnes & Noble closure
By Robert Guttersohn
C & G Staff Writer
The City Commission and the Michigan Economic Development Corporation agreed Dec. 16 to a shared subsidy deal that would allow a local technology company to fill part of the space currently occupied by Barnes & Noble at 500 Main Street.
The company Vectorform currently is headquartered in Royal Oak and has satellite offices in Seattle and New York. It is looking to double its workforce and will be moving into the second floor space.
A month after a withdrawn liquor license request put in doubt the national bookseller’s future in Royal Oak, the deal between the city and state essentially seals the fate of Barnes & Noble at its current location — which it leased until January 2015.
Representatives from Barnes & Noble declined to comment on the matter Dec. 17.
The state’s part of the deal will be to provide a $375,000 cash grant to the company.
Michelle Elder from the MEDC defended the grant by saying that without it the company had planned to leave for other cities around the country.
“These jobs would not be here without this program incentive,” she told the commission.
The City Commission approved the deal with a 5-1 vote. Mayor Jim Ellison abstained from the vote, citing a conflict of interest. Commissioner Peggy Goodwin was the lone dissenting vote.
As its contribution, the city will provide several downtown-parking permits for Vectorform employees and clients equivalent to about $22,500 for one year only. Additionally, two electronic vehicle chargers will be installed near the building, although the details of how they will be paid for will be worked out at a later date. According to the resolution, their installment is not to cost the city any money.
Vectorform will be investing $2.25 million into the space and will have three years to double its local work force from 70 to 140 in order to keep the MEDC grant. Jason Vazzano, the president and CEO of Vectorform, said the move to a downtown location was necessary to draw young talent looking to work in a more urban setting.
“The bottom line is that we are in a global fight for talent,” Vazzano said.
He said they plan to move to the location sometime next year. How that will happen is unclear considering Barnes & Noble’s lease, but Tim Blum, the owner of the building, said last month that the retailer’s sales have not supported the rent.
Blum said the company had been unable to pay the rent they had initially agreed to, and more than a year ago, he cut rent for the space in half. His hopes were that with the closing of Borders — a national book retailer that went out of business in 2011 — Barnes & Noble would increase its sales volume. That, he said, has not happened in Royal Oak.
Attempts to contact Blum or a representative from Royal Oak Partners were unsuccessful, but Timothy Thwing, the director of planning for the city, said Blum has been searching for another tenant for about two years.
“I think it’s very clear from Mr. Blum’s standpoint that Barnes & Noble’s days are numbered,” Thwing said.
City Manager Don Johnson hinted at the possibility of Barnes & Noble moving to another Royal Oak location.
“I know one of our landlords approached me and wanted to know if I had a contact name for Barnes & Noble,” he said.
The prospect of losing the downtown bookstore drew several residents to the meeting including Jennifer Clark, who brought her son and daughter with her.
Clark told the commission she fostered her children’s love for reading at the downtown store, and the people of Royal Oak need the store to be preserved.
“They need 500 S. Main St. to continue as Barnes & Noble because it is a location that welcomes and nurtures local residents, providing a location to relax, shop, spend time and money without requiring them to be 21,” Clark said.
Commissioner Kyle DuBuc said it was unfair to portray the decision as the city versus Barnes & Noble.
“I think it’s a complete misconception that we are forcing out Barnes & Noble,” he said “Consumers are forcing out Barnes & Noble.”
Goodwin said she felt uncomfortable making a decision that would determine the fate of the store without a representative of it being present and without Blum there to explain what he’ll be doing with the first floor of the location.
“I’d like this to work, but I feel like we need more information,” Goodwin said.
She equated the downtown losing the bookstore to Somerset Collection losing Macy’s.
Commissioner Mike Fournier said the closing is inevitable and the city could end up with a large vacant property downtown if it hadn’t approved the deal.
“This seems like an opportunity to bridge an inevitable store closing, in my opinion,” Fournier said.