Printable View
Interesting little piece being reported by channel 7 news. Seems Evans and Wayne County are begging Dan Gilbert to come to the rescue here. This would be interesting to see him picking up the fail jail site as he's always wanted, while adding to his portfolio the most beautiful building in Detroit.
We all know how much he loves to light up those buildings on his scale model. :rolleyes:
http://www.wxyz.com/news/region/detr...rdian-building
How much is the Guardian Building worth?????
Seems like this is a perfect win-win for everyone: WC [[would) get badly needed $, Gilbert gets a beautiful building and his desired prime jail site location...
Hmm. What does Quicken/Bedrock want to do with the jail site? What would become of County employees at the Guardian building if it were purchased by Quicken/Bedrock? Is the old County headquarters building still up for sale? What’s going to happen to that?
Yes please.
I can see how maybe the county went in on the GB on bad terms, but I cannot see why leaving it in such a hurry will solve anything, and I am even more befuddled when they talk about building some new HQ up in New Center or whatnot. That sounds like an unmitigated disaster waiting to happen, and the local consultant that made that recommendation should be ashamed of themselves.
Can't they refinance the GB given the promise of increasing downtown land/office values so that they own it on better terms?
Obviously Bedrock will provide the bailout, if you want me to bet on this...gift him fail jail in exchange for buying the GB at the price the county paid for it. Then rent on sweet terms from Bedrock to keep all the employees in place. That's what will go down.
Does anyone know what's going on with the 375 proposed alternatives? Last I heard a meeting was postponed in late 2014. Any alternatives could really affect what Gilbert would do with the jail site.
Quote:
Originally Posted by Hypestyles
Seems like win for Gilbert if WC isn't asking for some ridiculous amount of cash for the Guardian.
That seems like a likely outcome regarding The Guardian, they get cash, lose the burden of management and don't have to move.Quote:
Originally Posted by Mackinaw
The jail is a messier issue. If they take whatever they can get for it they will save a couple million a month, but they're still a couple hundred million in the hole, and they'll probably get sued.
They don't have the money to finish it. They don't have the money to move to another site. Meanwhile, the old jails are still crumbling and still releasing inmates because they don't have enough guards to watch them.
:confused:
What makes you think they'll ask a reasonable price? Considering the county paid way too much for the Guardian to begin with. The deal for the jail didn't happen because they were asking too much for it. What makes you think they'll sell the jail and the Guardian building for a price Gilbert is willing to pay?
They ended up in the Guardian thinking they'd save money. They sold the old Wayne county building to save money. They then didn't like the rent they were being charged after the sale and bolted to the Guardian. They overpaid for the building and had to pay a ton of money to get the building upgraded to modern standards.
It's obvious the people the county has making their property management/real estate decisions are completely clueless. They are just grasping at straws to bail their sorry asses out of the deep hole they've dug for themselves.
All of this is correct, Ndavies, but isn't their default best move staying put and letting the property appreciate? Seems inappropriate to bail on unrealized value, and seems doubly inappropriate to go building new somewhere [[and pulling up roots from downtown in so doing). Obviously it's worth asking someone like DG to buy at an overmarket breakeven point, and that's nice if they can get it, but short of that they are stuck.
The county's budget issues are incredibly structural and I dislike that it's HQ building is being overplayed as some sort of golden bullet for solving it.
Now the jail site, that's another story...
old county building was sold last year to someone out eastQuote:
Originally Posted by Hypestyles
Yes Mackinaw, I agree. They need to just suck it up and keep the Guardian. They should be moving as many county employees into the Guardian as possible. Hopefully allowing them to terminate leases or sell off other properties.
I don't understand why the county keeps trying to do these building sale/lease back deals. I thought they were mainly done for tax purposes. Where's the benefit, Since the county doesn't pay taxes.
Yes, Gilbert buy those buildings. Make your metropolis grow!
Are there still rumors of a soccer stadium on that site?Quote:
Originally Posted by Hypestyles
I think all soccer stadium talk is on hold or otherwise up in the air as the local moneyed persons likely to get behind a franchise decide what franchise to invest in [[DCFC is making a great power play) and push for MLS status.
Gilbert seems like a natural owner. Gores maybe. Dan Duggan maybe [[but hopefully he cashes out on the Bucks and gets behind our FC).
I would really dislike stadium use on this site unless it were surrounded by a high-rise housing component. A portion of the Brewster site might be well suited for a 25k soccer arena surrounded by housing, though, and some have floated west riverfront as prime for this. Who knows.
As I recall, DG's stance on Fail Jail was that he wanted all of the criminal justice apparatus gone from that neighborhood. I hope he has reassessed that view. While some of the buildings should certainly be-redone [[the complex just north of Greektown is a real ugly waste of space), there is no justification to move the court and the existing jail, and it would actually be bad policy. At the very least, these courts should not be anywhere except downtown [[hey-- maybe they should move back into the old Wayne County bldg.? wasn't it in part a courthouse before? There must be some beautiful courtrooms waiting to be used).
I'm going to contradict a post I made many months ago about a soccer stadium.Quote:
Originally Posted by Mackinaw
I really think putting a soccer stadium near the 'fail jail' site would be a big mistake. Gilbert could put anything there he wants at that site.
Brush Park is 'too residential' for a sports facility but there is plenty of room in the Cass Park area.
The kicker [[????): Now that the arena is going up, maybe one or two of the holdout land owners behind the Fox might be willing to sell now. A MLS stadium there would go a long ways to eat up all of that surface parking...
Yeah except another stadium would ruin the street grid between Fox and Grand River, whereas fail jail site is already off-grid, as is Brewster.
In other words, less cityscape damage. Would you be against a soccer stadium on FJ site if it was accompanied by multiple uses like housing. That would be hard not to like given the magnitude of the site and its location on the downtown fringe.
Are you saying that a soccer stadium would work there [[fail jail) because there is so much space that allocating some for a soccer stadium doesn't minimize the entire development project?Quote:
Originally Posted by Mackinaw
BTW, why wouldn't a soccer stadium work at say:
Clifford between W. Adams and say W. Columbia [[and it wouldn't need all of that land)???
Are there unobtainable parcels in that area? [[I can't remember what parcels Ilitch Holdings was unable to acquire for the arena).
Would someone holding out for years agree to sell their necessary parcels now? If not now, they might be sitting on them for 10 or 20 years...
Mackinac posted:
“Can't they refinance the GB given the promise of increasing downtown land/office values so that they own it on better terms?”
No. There is no lender in the world that would make a loan on “…the promise of increasing downtown land/office values..” Who, exactly, would make good on that “promise”? No, informed lenders use actual Net Operating Income [[aka NOI – profit after all expenses paid) of the subject building. And Wayne County has been doing a lousy job of owning and managing the building. Read a similar thread here:
http://www.detroityes.com/mb/showthr...ng-Up-For-Sale
Besides, Wayne County owes a bond debt of about $60 million for the property – that equals a debt of $130 per square foot. Meanwhile, Gilbert had been picking up buildings around town for about $25 to $30 psf, but he did pay about $98 psf for One Detroit Center and that had a nice existing rent roll. So again, what lender is going to refinance the property at 103% [[or more) loan to value?
Mackinac posted:
“ but isn't their default best move staying put and letting the property appreciate? Seems inappropriate to bail on unrealized value….”
I know what you are getting at here, but what do you think causes “appreciation”? It is NOI again. If the property is not maintained or poorly managed, then NOI drops. If NOI drops then so does the value and thus appreciation.
As part of this equation are the rents paid by the tenants. If any building has a bunch of long-term leases at [[what are now) below market rents, then appreciation will be VERY limited. The shorter the term of the leases and/or the ability to increase gross rents via CPI and escalators to pay additional RE taxes or other expenses will increase NOI, then value and thus, appreciation.
However, Wayne County has a history of complaining about “high” rents. So you know how this will go.
Ndavies posted:
“…I don't understand why the county keeps trying to do these building sale/lease back deals. I thought they were mainly done for tax purposes. Where's the benefit, Since the county doesn't pay taxes.”
Sale/lease backs are also very useful for those owners who what to concentrate at their business at hand and do not have the skills or knowledge to manage real estate. In another post you said, “It's obvious the people the county has making their property management/real estate decisions are completely clueless…” and I am in complete agreement with your assessment.
Currently the Guardian Building is 25% vacant when the rest of downtown is on fire. So you just have to wonder how incompetent they really are. And they should not be in the real estate investment business. They need to concentrate on fixing all of the outstanding issues that have Warren Evans pleading for financial oversight by the State.
Public entities do sale/leasebacks when they want to trade off immediate capital expenditure for long-term operating costs and for some reason don't want to finance the expenditure in the bond market. Usually this is for the purpose of making their financial position look better than it actually is.
Since this generally makes no economic sense [[the rent they pay the buyer has to cover taxes that the public entity wouldn't pay, and has to cover taxable rather than tax-exempt interest rates on the money that buyer would pay for the building) they generally shouldn't do it. What they should do own the property and hire a management company to take care of it. Of course, some cynical people might not trust them to hire a good management company, but but the same token you may not be able to trust them to sign a good lease either. Incompetent management will find a way to screw things up, so it seems to me that they might as well try to do the right thing.