$19.2M Phoenix Center deal closes
Legal battles over after eight years, two settlement agreements
After eight years and two settlement agreements, Pontiac’s legal battles over the Phoenix Center are officially over.
The city closed on a $19.2 million deal on Monday with Chicago-based investment group Dearborn Capital Partners and the owners of the Ottawa Towers office buildings located off Woodward Avenue.
Pontiac purchased the towers, selling them for $7.4 million to the investment group while creating a new public-private partnership for the downtown amphitheater and parking garage.
The transaction solidifies a December global settlement agreement between the parties, resolving eight years of legal battles between Pontiac and the Ottawa Towers. Pontiac will retain ownership of the garage and amphitheater while Dearborn Capital, under a recently approved 100year lease, will manage and maintain the garage.
The Phoenix Center dispute began back in 2013 when
a former emergency manager ordered the demolition of the property, to which the tower’s owners had perpetual easement rights for parking. Pontiac signed off on a settlement agreement in 2018 to end litigation on the matter, but was required to repair the center for use by November 2020.
Those repairs never took place. The city administration sought to use bonds to pay for the project, which was repeatedly rejected by the city council. A pot of $7 million was set aside for repairs by city council, but ultimately was not used and this week became part of the second global settlement agreement’s payment. Members of the council have previously stated they felt administration was blocking their options to repair the center with other forms of funding.
As the city was facing what would have been its fifth round of court mediation on the issue, the new partnership with Dearborn Capital began to form.
Under the new agreements, the parking easement rights have been removed and replaced by the parking garage lease. Pontiac has also signed a new memorandum of understanding with Dearborn Capital to share the cost of repairing the center’s elevators and mutual access points as well as to bring jobs and job training to the development, according to Pontiac Mayor Deirdre Waterman.
“We are forever freed now from this long standing litigation started by the emergency manager and any default levy that could have caused every resident in Pontiac to pay for this (lawsuit),” Waterman said. “I told the citizens of Pontiac that we would work to once again hold events at the amphitheater. I can now say those days don’t have to be behind us any more.”
Depending on funding and construction timelines, events could return to the Phoenix Center as early as this summer, according to a representative from the city’s legal team. Previous estimates have shown the structure needs over $16 million in repairs.
Pontiac was originally scheduled to close on the $19.2 million deal in late February. A set of issues with the title company postponed the closing date, according to a city attorney, alongside a lawsuit looking to halt the deal. Larry Jasper, CEO of Omega Investment Ltd. and Randy Carter, city council member, asked for an injunction on the agreement claiming it was established illegally. Extensive court documents alleged racketeering, violations of the Open Meetings Act and more against the city’s administration and legal team. The case was dismissed earlier this month, according to Anthony Chubb, Pontiac city attorney.
The 100-year lease agreement with Dearborn Capital, written as a 20-year agreement with multiple extensions, that moved the deal forward was narrowly approved by Pontiac City Council in a 4-3 vote. Kermit Williams, president of Pontiac City Council, has been a dissenting voice on the deal for several months.
“It’s great that the lawsuit is going away, but we had this $7 million to do repairs. We were talking with the owners of the towers, including buying all their properties. But then this third party was brought on and now we’ve given them a 100-year agreement,” Williams said. “So they’ve gambled the future of our city on this one agency, who five years from now, could easily sell that property. We could have had a better deal for the citizens.”
There’s no set timeline in the agreements for either party to make repairs to the garage or the amphitheater. It’s likely that talks about the repairs will coincide with discussions about a potential two-way conversion of the five-lane Woodward Avenue proposed by the Michigan Department of Transportation. Waterman stated the road agency was working on scope of design for the project this week.