Pontiac deal ends Phoenix Center ordeal
Mayor signs complex pact for parking lease, resale of towers
After a decade of legal wrangling, false starts and secret negotiations, the mayor of Pontiac this week signed a complex deal that includes a 100-year lease of the city’s giant
Phoenix Center parking deck, as well as the purchase and immediate resale of the deck’s adjoining office towers.
Mayor Deirdre Waterman called the deal “one of the watershed moments in our history, something that shows Pontiac has turned a corner.” The agreement frees the city from the threat of a default judgment in Oakland Circuit Court, which could’ve topped $30 million and “cost every resident of Pontiac at least $800” in higher taxes, Waterman said Wednesday.
Instead, Pontiac was able to end a decade of adverse court rulings stemming from two office buildings — called the Ottawa Towers — by buying the buildings and paying compensation for the owners’ investment losses. Pontiac paid the California-based owners $19.9 million, $5.6 million of which the city will finance over the next seven years, Waterman said.
Those figures were confirmed Wednesday by Mike Stephens, manager of the Ottawa
Towers and son of Chuck Stephens, who heads a California-based family trust that bought the towers about a dozen years ago. The family trust bought the towers from a landlord of GM, which sold the property during GM’s bankruptcy, according to previous Free Press reports. GM at one time housed its OnStar subsidiary in the towers, and the buildings are said to be wired with one of metro Detroit’s most advanced fiber-optic networks.
After Pontiac bought the Ottawa Towers, this week’s three-way deal called for the city to sell the towers to an investment group “for something in the neighborhood of $7 million, cash,” Waterman said. The new owners now must pay “between $17 million and $18 million, according to their engineers and the ones we hired,” to repair and upgrade the big but badly deteriorated Phoenix Center parking deck, still owned by the city, she said.
Their incentive to spend that much on a crumbling structure? The new owners must have it fully open and available to future tenants of their office towers if they want their investment to succeed, the mayor said. Most floors of the towers had been vacant for years because large portions of the parking deck were deemed unsafe and closed off, Mike Stephens told the Free Press last year.
Because Pontiac has kept ownership of the Phoenix Center deck, the city can resume hosting events on the deck’s rooftop amphitheater as soon as the needed maintenance is done, Waterman said. The city will have full access to the amphitheater, where residents a generation ago watched many an open-air concert, she said, although the new owners have leased the deck “effectively for 100 years, or the useful life of the structure, which is probably 40 or 50 years,” she said.
Members of the city council had voiced skepticism about the deal for months, and Council President Kermit Williams continued to express concerns Wednesday.
“I hope this all works out, but I feel it was not as favorable to the city as it should’ve been,” Williams said. “My main concern is that 100year lease. I know a lot of people are saying we should squash the deal, but the council really has no clawback means possible.”
Williams said the mayor ignored the council’s resolution that passed last week, requesting that she and her staff share with council members the deal’s latest documents, including all revisions to the deal, and that she invite council members to witness the deal’s closing when the buyers and sellers were to sign the agreement. Williams and other council members had complained for weeks that they were being left out of the mayor’s negotiations and were unable to view revised versions of documents they approved last fall.
Waterman said Wednesday that the closing took place over the internet, and that despite her initial hope to include council members, it turned out to be impractical. The deal was signed by eight people “in several different states” over the course of the last two weeks, she said. She said “the final documents” were on their way to council members.
The Phoenix Center had been a costly white elephant in downtown Pontiac almost since the 1970s when it was erected with the goal of reviving the city’s downtown. Its urban renewal promise backfired badly, convulsing not only the city’s budget but also its image.
One of the best things about this week’s deal is that it “takes Pontiac out of managing the parking business, which the city has never been good at,” Waterman said.
“One year, I happen to know, the city lost about $400,000 on our downtown parking. It was just eating cash,” she said, adding: “Thank goodness those days are over.”