Ilitches’ Eddystone revival efforts get jump-start, but skepticism persists
Detroit — After more than a year of delay, efforts are finally underway to give new life to a long-vacant historic hotel in the shadow of Little Caesars Arena.
An agreement inked this spring between the city and Olympia Development of Michigan, an arm of the billionaire Ilitch organization, guarantees the Eddystone Hotel on the northwest corner of Park and Sproat will be redeveloped.
But some argue the project lag that prompted the new deal is a foreshadowing of what might never come.
The hotel is part of a 50-block entertainment district, dubbed District Detroit, that was expected to transform the area surrounding the new hockey venue by 2017. Deadlines outlined in a master agreement came and went, and little has materialized.
"It's over a year behind schedule, and they opened the arena ahead of schedule. It underscores where their priorities lie in terms of rebuilding a neighborhood that was supposed to be part of District Detroit," said Francis Grunow, chairman of the Neighborhood Advisory Committee established for the arena project.
"Eddystone, in my mind, is an example for the rest of the district. If we can't get started with a building like the Eddystone, what hope do we have for the rest of the district?"
The hotel is the sole property in the overall arena district plan that the city of Detroit has enforcement rights over. Its authority is tied to a 2015 compromise on a rezoning plan that resulted in a second historic hotel — the Park Avenue — being razed.
Olympia, however, hasn't faced any penalties or blight violations for failing to have the Eddystone ready for commercial and residential tenants within a year of the 2017 completion of the arena, said Arthur Jemison, Detroit's chief of services and infrastructure.
The city spent about a year negotiating with Olympia, with the goal of "causing a development to occur." The original letter outlining redevelopment, he added, "did not make any comment about whether or not we could fine or ticket them."
"This is a case where we wanted to use our energy to get a development to happen," Jemison told The Detroit News. "The test that we'd like to take is have we turned the Eddystone into something that has enforceable elements to it, and I think that we have."
Tiffany Crawford, a spokeswoman for the city's Building Safety Engineering and Environmental Department, added "during negotiations of this nature, the city does not issue violations, unless it involves an immediate life safety issue."
Olympia in May won approval from Detroit's Downtown Development Authority on its new, $40.8 million plan to transform the Eddystone with about 100 residential units, 20% of which offered at affordable housing rates. It includes 10 key milestones and is slated for completion in 2021.
The deal also features a unique protection for the city: a $33 million performance bond that will allow the city to have a third-party vendor to step in if the still-to-be-named developer defaults on the project.
Ed Saenz, a spokesman for Olympia, said the company has provided the assurance "to further demonstrate our confidence and commitment" to redeveloping the hotel.
"We are highly confident that we will accomplish each step and are committed to achieving each of the milestones," told The Detroit News.
Work at the hotel has been underway since last year, Saenz said. The project timing was partially impacted by a proposed development partnership that ultimately fell through.
A Detroit News analysis in May revealed the Ilitch companies own or control at least 60% of the properties in the footprint of the entertainment district they are hoping to transform.
The investigation found 24 vacant buildings and 46 vacant lots under Ilitch control, spread throughout the district. Olympia had aimed to transform the area by 2017, but more than a dozen of the 50 blocks are now more vacant than when the plan launched in 2014, The News found.
Two years ago, the hotel was one of six buildings that Ilitch officials declared would create nearly 700 residential units, one of the largest projects of its kind for the city in decades. None of it has taken shape yet.
In April, an HBO sports show was critical of the still-unfulfilled promises by the Ilitch family to build five new neighborhoods around the arena as part of the District Detroit.
In response, the billionaire owners of the Detroit Red Wings, Tigers and Little Caesars Pizza disputed the piece, claiming it was inaccurate and sensationalized.
When asked about its confidence in the Eddystone project and delays thus far, the DDA, in a statement, touted plans for the hotel's future.
“What matters most is that the former Eddystone Hotel will be redeveloped for commercial and residential use, with 20% of the units reserved as affordable housing,” said Detroit Economic Growth Corp.CEO Kevin Johnson. “Olympia is now required to meet certain milestones in accordance with the DDA’s timeline and revised development agreement. This will ensure the project proceeds.”
So far, Jemison said, Olympia has stayed on track with securing windows of the 13-story hotel and has a couple of milestones in July — roof and masonry repairs — that "they seem capable of meeting on the basis of the work we've seen."
Saenz said Tuesday that the temporary window enclosures are complete, 48 40-yard dumpsters of material were hauled away and Olympia remains on schedule with other milestones.
Eric Williams, a member of the arena project's advisory committee, argued that the hotel "clearly is blighted" and more should have been done to hold Olympia accountable.
"The city of Detroit has gone out of their way to give Olympia Development whatever they want," he said. "It's a joke. Economic development in Detroit is on the verge of becoming a scam."
But Jemison insists that there hasn't been any special treatment extended to Olympia.
The city, he said, has used its enforcement power for "significant ticketing" of other properties near the arena owned by Ilitch entities.
Three apartment buildings on Henry Street received nearly two dozen blight tickets for rodent infestation, failure to inspect for lead paint and dangerous living conditions.
The Downtown Development Authority owns the arena, and commitments regarding the development of certain properties within the arena district are outlined in the project's mater agreement, which was crafted while the city was under emergency management. It's unclear what enforcement, if any, the development authority has imposed for other missed deadlines.
In response to critics, Saenz acknowledged "we have work to do" but said Olympia remains committed to "developing the kind of projects that benefit our community."
Keith Bradford, vice president of operations for Olympia Development of Michigan, said the company is pleased to be moving forward.
"The Eddystone will complement new development in the area including the Mike Ilitch School of Business at Wayne State University, Little Caesars Arena and the new Detroit Medical Center office building that we just broke ground on a few weeks back," he said.
Grunow said the performance bond is the first solid act of accountability on the hotel project, and it's the first like it for the arena district. But the deal was born, he said, from Olympia's past failures.
"It's really the only building they've agreed to, through a contract, to renovate," he said. "They've promised to do a number of other buildings but the city has no recourse on any other projects."
Last week, an unrelated deadline for Olympia to submit a development plan for another section of the district elapsed. That milestone, Jemison said, is tied to the master agreement for the arena that the mayoral administration doesn't have jurisdiction over.
Charlotte Fisher, a spokeswoman for the DDA, confirmed that there's no plan before the DDA for the parcel but said discussions are ongoing to identify next steps.
Eric Kehoe, president of the board for Preservation Detroit, said Olympia tore down the Park Avenue with the assumption that the Eddystone would get new life. He's confident that now, with the accountability of a performance bond, it will.
"We're excited to see this finally get developed," he said. "I hope moving forward that the city uses this as a way to make sure developers meet commitments in the future."