Phoenix Center deal heads to close
City agrees to 100-year lease for garage, replacing easement rights for Ottawa
In a narrow vote, Pontiac City Council this week approved a new 100-year lease for the Phoenix Center parking garage.
The deal will give Chicago-based investment group Dearborn Capital Partners, who intend to buy the adjacent Ottawa Towers, a 20-year lease with optional extensions. It also leaves operation and maintenance of the center’s amphitheater to the city, while transferring those responsibilities to Dearborn Capital for the garage.
The lease agreement is part of the city’s ongoing efforts to close on a $19.2 million global settlement agreement with the owners of Ottawa Towers. Pontiac has been in litigation over the center for about eight years.
The city was scheduled to close on the deal on Friday, Feb. 26. Deirdre Waterman, mayor of Pontiac, was not available for comment on the matter. She did however state early Friday afternoon that the process was still moving forward.
The global settlement agreement was approved by Pontiac City Council in No
vember. Since then, two changes have been made to deal including removing the city from a coborrower status on a loan for Dearborn Capital. The second removed a land contract for the garage. Both changes have yet to be included in public documentation and will become part of the final closing schedule agreement, according to a city attorney.
Under the agreement, Pontiac will buy the Ottawa Towers office buildings and immediately sell them to Dearborn Capital. Dearborn Capital will help the city pay for its global settlement with the Ottawa Towers owners and form a new public-private partnership with the city of Pontiac. Pontiac’s already placed a nonrefundable $7 million into escrow for the deal. Dearborn Capital will purchase the towers from the city for $7.4 million.
The new parking lease was approved in a 4-3 vote with council split over the length of the lease and other concerns with how the deal has come together. One city council member, Pro-Tem Randy Carter, has joined a lawsuit looking to halt the global settlement agreement and replace it with another proposal entirely.
Larry Jasper, CEO of Omega
Investment Ltd., and Carter filed an emergency injunction and temporary restraining order against the city and some members of council this week. It’s a partial re-submittal of a previous lawsuit the pair filed earlier this month.
Jasper is one of three developers who sent in a proposal to Pontiac during its RFP process for Phoenix Center plans. All the applicants were rejected by a city committee, including Jasper’s proposal for a $16 million private partnership to create a new urban residential, commercial and manufacturing center.
The circuit court complaint alleges the city’s mayor, attorneys and others breached its RFP process, committed fraud in the creation of the global settlement agreement and repeatedly violated the Open Meetings Act by holding talks behind closed doors. It also claims city administration purposely misrepresented Jasper’s plans for the Phoenix Center to the public.
It calls for the forced resignation of the mayor, city and council attorneys, and councilmembers Patrice Waterman, Mary Pietila and Doris Taylor Burks. Lastly, it asks the court to grant an equity estoppel for Jasper’s losses by transferring the public private partnership to Omega Investments.
Jasper said he believes a hearing could take place as early as Wednesday, March 3.