Committee recommends proceeding with downtown Ann Arbor conference center proposal
This story has been updated multiple times with additional information.
The city of Ann Arbor's Library Lot RFP Advisory Committee met today and decided to move forward with exploring a hotel and conference center proposal for a city-owned site downtown.
The committee voted 5-0 in favor of entering into a letter of intent with New York-based Valiant Partners, which proposes to build an 87,000-square-foot hotel with 150 rooms and a 26,000-square-foot conference center along South Fifth Avenue between Liberty and William.
The committee's recommendation is being forwarded to the Ann Arbor City Council for approval. A special council work session on the project is scheduled for Monday.
The letter of intent expresses the city's interest in Valiant's proposal — which has been under consideration more than a year — and lays the framework for negotiations leading to a more formal development agreement within four months.
Valiant's development would stand atop an underground parking structure being built by the Ann Arbor Downtown Development Authority. In addition to the hotel and conference center, it would feature a public plaza and 6,000 square feet of retail and restaurant space, as well as up to 48,000 square feet of office space and 22,000 square feet of condos, according to the letter of intent.
The RFP Advisory Committee includes DDA board member John Splitt, City Council Members Stephen Rapundalo and Margie Teall, Planning Commissioner Eric Mahler and Park Advisory Commissioner Sam Offen.
They heard a detailed report today from David Di Rita, an attorney and real estate professional with the Detroit-based Roxbury Group, a firm hired by the city to evaluate two competing hotel and conference center proposals from Valiant Partners and Acquest Realty Advisors.
The Roxbury Group recommended late last year that the city narrow its consideration to the Valiant proposal, which was seen as the better of the two. But some skepticism of the project remains in the community, and some doubt its economic viability.
About 20 residents crammed into a small meeting room on the fourth floor of City Hall to hear Di Rita's report to the committee today. Most of them were against the project, including local attorney Tom Wieder, who submitted a statement to the committee claiming the Roxbury Group was unqualified to evaluate the proposals.
Wieder interrupted Rapundalo, chairman of the committee, multiple times at the start of today's meeting. That led to an unpleasant back-and-forth exchange between the two men, and caused City Administrator Roger Fraser to chime in to ask Wieder to please be quiet.
"Mr. Wieder, I'm trying to run a meeting here," Rapundalo said at one point.
Wieder said he was objecting to the fact that residents in attendance weren't allowed to speak at the meeting to voice their concerns.
"The public would like to participate," he said.
"I've told you what the rules are we have been following and I'm going to proceed with the agenda," Rapundalo said.
"The process is disgraceful," Wieder said afterward. "There's a lot of rubber-stamping without any transparency, specifically on the issue of the city being off the hook financially. And I think it's ridiculous to have a body come in, hear a one-sided presentation, and then act without having anybody else look at it."
Also in attendance were Alan Haber and Alice Ralph, two Ann Arbor residents who continue to plead for consideration of transforming the Library Lot into a green open space — which they've been calling the "community commons" — instead of vertical development.
"There's a good proposal out there they have — in a biased, undemocratic way — shelved," Haber said. "The council ultimately has the decision, and we need to see how do we bring the concept of a public space, a park, a commons, paradise — whatever we come to call it — back onto the council agenda as an alternative to this bad idea."
Ralph said she's not impressed with the public plaza space offered in Valiant's proposal.
"The most that we have seen of the plaza is so meager that it doesn't really accomplish the goals of a public plaza," she said. "Plus, about half of the area contributed to it is really vehicle pathway rather than a people place. So unless there's drastic change to that approach, there's just no way it can meet the requirements that are intended."
The letter of intent does not offer figures for what Valiant might pay for air rights above the parking deck, but says the developer will pay the city or DDA "a mutually agreed-upon sum," as well as an unspecified percentage of gross sales revenue on the residential condominiums. Additionally, the city or a nonprofit of its choosing would own the conference center.
"It sounds too good to be true," Mahler remarked of the idea of the city owning the conference center without having to help finance it. "I'm leery of it."
The letter does state the developer would be solely responsible for the design, financing and development of the conference center. It also would be solely responsible for the operation and maintenance as long as it holds the management agreement.
The target date for the start of construction, as spelled out in the letter, is 15 months from the execution of a development agreement between the city and the DDA.
The city stipulates in the letter that the developer must reimburse the city and DDA up to $75,000 for costs of consultants and attorneys hired to help draft a development agreement. However, the developer doesn't have to pay that if construction financing isn't secured.
The letter spells out a shared vision for the site that includes "a public gathering space that could become a hub of activity for downtown Ann Arbor."
The letter stipulates that the DDA must initially reserve no less than 350 daytime and 250 nighttime parking spaces in the new underground structure for the hotel and conference center. That's roughly half the total spaces in the structure, officials said today.
The fact that the Roxbury Group did not complete a feasibility study of either proposal has been a point of contention. The firm originally was to determine if the projects submitted to the city were economically viable and make financial sense in the Ann Arbor marketplace.
"At some level, we had to take the reports at face value and evaluate them against a perhaps future establishing of feasibility," Di Rita explained of the process.
Valiant has done its own feasibility study showing its project makes sense, but a demand analysis being circulated around city circles by Ann Arbor-based hotel consultant Chuck Skelton seems to draw another conclusion.
Rapundalo said toward the end of today's meeting the project's feasibility will become a more important element as the city moves forward in discussions with Valiant. Di Rita said ultimate evidence of the project's feasibility will be its ability to secure financing.
Valiant reduced the size of the proposed conference center from 32,000 to 26,000 square feet in order to eliminate the need for city-backed bonds on the project. Di Rita revealed today it's possible the conference center could grow in the future, if and when the adjacent Ann Arbor District Library moves forward with an expansion project it has considered.
"They've unquestionably shrank the center," Di Rita said of Valiant's proposal. "They designed it in a way that, in theory, if they can form the kind of collaboration they're talking about with the library, it creates an opportunity to expand it in conjunction with the renovated library."
Ryan J. Stanton covers government and politics for AnnArbor.com. Reach him at firstname.lastname@example.org or 734-623-2529.