Eight years ago this week then-Mayor Kwame Kilpatrick declared Detroit's ugly, industrial-scarred riverfront a thing of the past and touted developments that included million-dollar penthouses. The national recession killed those projects.
It wasn't the first time the riverfront's rebirth was foretold. About 18 years ago, then-Mayor Dennis Archer began a plan to build the city's three casinos and an entertainment district along the downtown riverfront. It created a legal and bureaucratic quagmire, destroying what had been an eclectic area of restaurants and bars. The city condemned and bought property, but the plan collapsed because it was too costly. The casinos opened, but not on the riverfront.
Now, the promise of downtown's riverfront is playing a key role in the largest municipal bankruptcy in U.S. history. In recent weeks, the last two major holdout creditors agreed to stop battling the city in exchange for, among other things, prime pieces of riverfront property.
It's another sign the waterfront seems, again, poised to attract upscale development from the Ambassador Bridge to Belle Isle, said players in the downtown development scene. It's simple economics: The creditors need the riverfront property to generate income.
"The progress of downtown's riverfront is clear and it's why it would attract even a creditor who is determined to get money out of Detroit," said John Mogk, a Wayne State University law professor who closely follows Detroit's development scene.
"The riverfront could be the next major neighborhood," said Eric Larson, CEO of the Downtown Detroit Partnership.
Much progress has been made since Kilpatrick's declaration that the riverfront would become the city's next great development success. The riverfront has seen more than $1 billion in investment over the past decade and another $1 billion is expected to be invested in the next 10 years, city officials say.
While the previous attempts to transform the area failed, they did succeed in helping the city assemble land, some of which was the property that was offered to creditors. Ugly concrete silos have been cleared. And businesses and foundations created the Detroit RiverWalk, a pedestrian and bike pathway said to attract 3 million people a year.
That progress helped lure major holdout creditors to the riverfront, several downtown observers said.
Creditor gets Joe site
Syncora Guarantee Inc., a city bond insurer, agreed to a deal that includes Detroit's piece of the Detroit-Windsor Tunnel. A Syncora subsidiary will get a lease to the U.S. side of the international tunnel for 20 years. Empty land around the tunnel is part of the deal.
Last week, bond insurer Financial Guaranty Insurance Co. crafted a settlement that includes getting the land now occupied by Joe Louis Arena and its 2,100-space parking garage. The creditor plans to replace the aging arena, once it's vacated by the Detroit Red Wings, with a hotel, riverfront condominiums and retail. The Red Wings are moving into a new $450 million venue in 2017.
Joe Louis Arena is next door to Cobo Center, site of a $279 million renovation and expansion. Cobo officials have been eyeing the Joe Louis property for additional conference space and parking.
The regional authority that runs Cobo is a potential partner in the development, according to terms of the FGIC agreement.
"We'd love to look at the plans and sit down and talk about it," said Larry Alexander, president and CEO of the Detroit Metro Convention & Visitors Bureau. He also is chairman of the board of directors of the Detroit Regional Convention Facility Authority, which operates Cobo Center.
"We need both" parking and conference space, Alexander said. And preferably those additions, particularly the added conference space, would be connected to Cobo, he said.
5.5-mile path envisioned
Joe Louis Arena is just yards from the RiverWalk. Ultimately, the city expects the RiverWalk to consist of a 5.5-mile path from Belle Isle west to the Ambassador Bridge. About 80 percent of the path is complete, and it's marked with plazas, pathways, pavilions and green spaces.
The West RiverWalk recently opened less than a mile west of The Joe. That area was home to the now-demolished newspaper printing plant on West Jefferson.
Last week's deal may allow FGIC to build mixed-use development, including a hotel with at least 300 rooms, plus condominiums and retail. The housing and hotel sectors downtown are red hot. Various studies show nine of 10 apartments and other housing downtown is filled even as rents continue to steadily rise.
In downtown hotels, the current occupancy rate is a respectable 70 percent, according to convention officials.
While downtown's hotel scene is healthy now, a hotel at the Joe Louis site would not open until 2022, according to terms of the agreement. There are about 4,500 hotel rooms downtown today, and within a few years convention officials expect that number to reach 5,000.
"Who knows if downtown's hotel scene will be healthy then," said Chuck Skelton, a hotel industry analyst who is president of Hospitality Advisors Group in Ann Arbor. Skelton pointed out the downtown hotel scene is still heavily influenced by the three casino hotels. That makes it tough for other hotels, because the casinos can keep hotel rates low — operating their hotels at a loss to lure gamblers, he said.
The condo part of proposed development joins another big residential development planned for the riverfront. A $61 million plan called Orleans Landing, which calls for 278 housing units and about 10,500 square feet of new retail/commercial space, is working its way through the bureaucratic approval process.
Some of that development could be built near the land where eight years ago officials thought million dollar penthouses would arise.
Some of the last empty buildings near the riverfront are the once thriving bars and eateries that got cleared out for the casinos, which eventually were built elsewhere.
Staff Writers Christine Ferretti and Robert Snell contributed.