Project phases I, II and III

ESCANABA — Following a lengthy discussion of the redevelopment plan and sale documents for the former jail and Delta County Chamber of Commerce building sites, the Escanaba Planning Commission voted unanimously to recommend the city council move forward with the sale of the city-owned property.

“We’re not commenting on the contract or the development agreement itself, it’s on the ability of the city to sell the property for development,” Planning Commission Chair Kel Smyth said of the planning commission’s role in the process.

In addition to the portions of the jail site owned by the county, Proxima Management Group, which is based in Indiana but has staff working locally, intends to purchase the city’s portion of the jail site, the Chamber building, and a parcel directly to the east of the Chamber building from the city. The land will be used to construct a four-story, 80-90 room, upscale or upper mid-scale hotel and retail spaces at a total cost of around $18,350,000.

Once open, the hotel would be run by one of Proxima’s development partners: Intercontinental Hotel Group (IHG), Hilton, Hyatt or Marriot.

Based on their current timetables, Proxima believes the hotel would take 18 months to construct, would be completed in October of 2021, and would be financially stable (i.e.), have predictable cashflow) in October of 2024. The retail space would be financially stable in October of 2023.

The hotel and retail space mark on the first phase of Proxima’s vision for the city’s northern shore. In concept drawings shown to the planning commission Wednesday, the development group showed plans for a development at the city of Escanaba’s Municipal Dock. Commissioners raised concerns over the inclusion of the land on the drawing, both because there was no mention of the land in the supporting documents and because they were unsure the land could or should be sold.

“Phase III is the future. It’s in the planning stages. If we have access to purchase that land, we would appreciate it, but it’s not in front of us today,” said Ravi Patel of Proxima.

However, according to City Manager Patrick Jordan, sale of the Municipal Dock is not on the table. Following the meeting, Jordan told the Daily Press he had informed Proxima the land was “unapproachable,” adding that even if the city wanted to sell the land, it was encumbered by the state.

Multiple issues with the sale contract were also raised by planning commission members, especially by those that had served as attorneys or judges in the past. While some were focused on the language of the contract, such as what classifications of discrimination should be included in non-discrimination clause, two issues predominated the discussion.

The most heated discussion revolved around a clause that would force the city to put a moratorium on the development of new, competing hotels or motels for a period of three years after Proxima was issued a Phase I Certificate of Completion.

“I have extreme problems legally with any type of moratorium. You’re asking for a depravation of First Amendment Rights of free speech, for anybody speaking about this, and second I see it as a direct violation of the Sherman Antitrust Act of (1890),” said Planning Commissioner Paul Caswell.

The contract section exempted currently operating hotels and motels, the House of Ludington, any projects where negotiations regarding development, construction, or operations of lodging businesses were already underway; and an expansions on current local hotels and motels. However, commissioners raised concerns over developments like a proposed hotel at the site of the former Super One Foods or developments in neighboring townships.

“I agree with (Caswell) wholeheartedly, for different reasons. It’s not for us as the city to pick winners and losers. If we say people cannot do anything with any sort of hotel, motel, or other lodging for a period of three years, we’re picking a winner. And we’re telling others you’re going to have to wait,” said Planning Commissioner Stephen Davis.

Patel said Proxima would be interested in moving forward with the development even if the entire section of the contract was struck.

Another chief concern for the commission was the lack of details related to the lease of the Chamber building to Proxima. While the ultimate goal for the developer is to purchase the property, a section of the contract outlined rules for the leasing of the property. However, the section did not specify dollar figures for the lease agreement.

In the course of discussion, it was stated the plan was to allow Proxima to lease the property and use it for offices while the hotel is constructed in Phase I. At the end of the construction project, Proxima intends to purchase the Chamber property.

Despite concerns over the contract itself, the commission felt the project was consistent with the city’s master plan, and praised the fact the project was not contingent on potential grant funding. Patel said Proxima was interested in grants, if they became available, and the only tax credit Proxima currently intends to pursue is a brownfield designation for the jail property.