City chooses Village hotel developer

Officials say much work remains to hammer out plan

By: K. Michelle Moran | Grosse Pointe Times | Published March 8, 2017

 The City Council voted unanimously in favor of selecting the Pedersen Development Company LLC as its preferred hotel developer during a meeting Feb. 27.

The City Council voted unanimously in favor of selecting the Pedersen Development Company LLC as its preferred hotel developer during a meeting Feb. 27.

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GROSSE POINTE CITY — Although they acknowledge that a Village hotel is still no done deal, Grosse Pointe City leaders now know whom they’ll be working with to try to get one.

The City Council voted unanimously in favor of selecting the Pedersen Development Company LLC as its preferred hotel developer during a meeting Feb. 27. The decision doesn’t automatically guarantee that a hotel will emerge from the negotiations that will take place over the next six months — the period for the preferred developer to work out a final plan with the City — but does bring the City one step closer to filling what a number of residents on the east side say has been a longtime unmet need for a small, upscale local hotel.

The developer has proposed a four-story, 127-room boutique hotel — a Cambria Suites — in Village Parking Lot 3, with 3,200 square feet of meeting space, a coffeehouse or pub, and outdoor seating for diners on St. Clair Street. Lot 2 development would include 9,800 square feet of retail, 24 residential units priced at $300,000 to $410,000 and the option for another six residential units atop the parking garage for $595,000 to $715,000, and 315 spaces in the parking garage. The estimated project cost is $22 million.

Pedersen Development Company LLC is based in Boulder, Colorado, but Managing Partner Curt Pedersen is based in Michigan and has had a home in Grosse Pointe City since 1998, and one in Fenton since 1980. Development Partner Dan Francis, one of the partners involved with the Whiskey Six bar and restaurant in the Village, has lived in the Pointes for 28 years and currently lives in Grosse Pointe Farms.

City Councilwoman Sheila Tomkowiak said all three of the hotel proposals were “very good,” but she was especially impressed with PDC’s presentation, and she said the leaders are “flexible” and willing to work with the City.

“The quality of the work that you see in a proposal is indicative of the work they will do,” she said. “They did their due diligence. … They would be a good partner for us to go to that next step.”

During their vote on a preferred developer, City officials imposed a number of conditions. These included asking the developer to explore the possibility of building the hotel and parking structure all on Lot 2 — a request that appeared to be motivated by concern from a number of businesses that use Lot 3 for parking and have their front entrances on that lot.

Among those calling for consideration of Lot 2 instead of Lot 3 was City resident and attorney Jim Bellanca Jr., who represents Kercheval Company LLC — which manages 14 spaces in the Village. It was a sentiment echoed by several other stakeholders at the Feb. 27 meeting.

St. John Hospital and Medical Center President Bob Hoban said that the hospital — which has the St. John Medical Center Ralph C. Wilson Jr. Campus in the Village at 17141 Kercheval Ave. — is “not opposed to a hotel in the Grosse Pointes.” Hospital officials were, however, opposed to a hotel on Lot 3, which he noted is where the entrance to the St. John facility is located.

“You’re squeezing a development in the front yard of lots of businesses on Lot 3,” Hoban told City officials.

Beaumont Health System currently occupies about 25 percent of the Neighborhood Club Recreation and Wellness Center at 17150 Waterloo Street, and there’s some concern that Beaumont’s presence might be threatened by the loss of Lot 3. Neighborhood Club Executive Director Stu Alderman said that Beaumont is now looking at its lease agreement.

Alderman said he was “not saying they’re leaving, but” it’s a possibility if parking became too difficult to find near the building. Neighborhood Club members also told him they wouldn’t renew their memberships if they could no longer park nearby because of the hotel.

“We do support development in the Village,” Alderman said. “We do support development in the City.”

The hotel proposal on Lot 3, however, was something he said he had reservations about.

Speaking on behalf of the Boll family, Kristine B. Mestdagh expressed similar concerns. Her philanthropist parents contributed funds to create the John A. and Marlene L. Boll Center for Human Development, which handles learning and development issues ranging from speech therapy to behavior management; it’s one of the specialized programs offered as part of the Beaumont-occupied portion of the Neighborhood Club and has provided services for local families.

“In donating to the Beaumont facility, it has brought in many children from our community and beyond, and if Beaumont is no longer able to use that facility … you’ll be losing services for your (residents),” Mestdagh said.

City Councilman John Stempfle recommended that PDC schedule meetings with all of the affected businesses and adjacent property owners to address parking and other concerns.

The City Council is “not ram-rodding (a development) through,” said City Councilman Christopher Walsh.

He pointed out that after a previous Village hotel deal collapsed because of the recession, the City didn’t have interest from developers for roughly the last decade. With the economy on the upswing and developers once again expressing a desire to pursue a project, he said the City has the responsibility to at least explore those possibilities, given the seriousness of the developers and the amount of money they’re willing to spend in the community to make a hotel happen.

“We aren’t going to have any money coming from our general fund … to make this work,” Walsh assured residents at the packed meeting, which drew several dozen nearby residents and business owners. “We’re not going to enter into an agreement where we are going to put our financial (health) at risk. … It’s exciting to see that people want to invest in our community.”

Stempfle reiterated the fact that “no public funds should be used for the development, now and in the future.”

But City Councilman Christopher Boettcher wasn’t so sure that would be the case.

“It will cost the City something,” he contended. “To say that it’s not going to cost the City anything is not true. It will cost money and energy. … How far should we subsidize the project in terms of the long-term viability of it?”

Boettcher said he was looking forward to seeing results from forthcoming studies on parking, feasibility and other issues.

City Councilman Donald Parthum Jr. said PDC stood out to him because it was the first developer that started proactively talking to local stakeholders and altering its plans based on those discussions.

City Manager Pete Dame said hotels have been proven to bring customers to the businesses surrounding them. He cited an Oxford economics study that found that for every $150 spent on lodging, guests spent another $56 on food and beverages and $63 on recreation and retail outside of the hotel.

“It’s because of the potential long-term economic (benefit) to the Village … to sustain long-term economic vitality” that the City has been trying to secure a hotel development, Dame said.

At the same time, he acknowledged the need to proceed with care.

“I think it’s important that we respond to the concerns that have been raised and address those,” Dame said.

After the meeting, Dame said that the developer wouldn’t be buying the entire City-owned parking lot where it would be building — it would only be purchasing the portion on which the hotel was placed, while the remainder of the parking lot would still be owned by the City. The price to be paid to the city for the hotel portion of the lot is one of several areas that needs to be negotiated, Dame said, countering a rumor that the City intended to sell the land to a developer for $1.

Over the next six months, Dame said, the City and developer would be conducting parking and traffic studies, meeting with stakeholders and taking other steps to come up with the most workable plan for the community. The developer needs to undertake the first phase of an environmental analysis and a feasibility study as well, he said. In addition, “There’s a whole negotiation that needs to take place to determine who’s going to pay for what,” Dame said.

Besides asking the developer to look at creating a hotel on Lot 2, the conditions in the agreement include requiring the developer to contact Chase Bank about the availability of its property on St. Clair Street to see if that might be incorporated into the development; prohibiting the developer from putting a parking structure on the Neff Road side of Lot 3; requiring that the parking study come up with an estimated cost for any parking structure that might be under consideration; and mandating that the City hire an outside hotel expert to review the developer’s feasibility study.

Mayor Dale Scrace said that many other major projects in the City — including expansion at Beaumont Hospital-Grosse Pointe, the St. John facility in the Village and redevelopment of the former ACE Hardware store in the Village into businesses like the Whiskey Six — were also the result of lengthy talks and tweaking.

“We’re looking at a process,” Scrace said of the hotel proposal. “We’re just at the beginning. There’s a ton of work that’s got to be done over (the next) six months.”

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