Downtown hotel deal delayed over land costsWritten by George J. Tanber, TheNewsmeister.com | | email@example.com
A deal that would bring a Courtyard by Marriott Hotel to downtown Toledo is on hold because the developer believes the asking price for the property is too high.
The developer, Edward Walsh of Ann Arbor, bid on a property at Jefferson Avenue and Water Street owned by the Reuben Co., a Toledo real estate and property management company, according to Lucas County Commissioner Pete Gerken.
Walsh and a group of developers intended to build the Courtyard on the property, currently a 1.6-acre parking lot behind Fort Industry Square. The deal is valued at $16 to $18 million, Gerken said.
Rueben’s president, Tim Wade, said there was an interest in the property in June or July by an intermediary but declined to provide specifics.
“An interested party came to me and said they wanted to acquire the property. I contacted a licensed appraiser to appraise it and offered it for sale at that price,” he said. “I have not received a legitimate written offer.”
According to a source close to the negotiations, Walsh initially offered $1.5 million for the property. But Wade’s appraiser said the property is worth $2.4 million. Walsh would have gone to $1.7 million, the source said, leaving the developer and Wade $700,000 apart.
“No one could make the numbers work,” the source said. “So we’re re-evaluating it.”
Walsh said there was no guarantee it was going to be Marriott. He said he first had to get the site then decide which hotel. Walsh, who is with Alpine Realty, said he currently is building his first Courtyard. The developer was attracted to the location because of its proximity to the Maumee River, the SeaGate Convention Centre, Fifth Third Field, and the new all-purpose arena, Gerken said.
“He liked this market. He thought there was an opportunity for a branded, self-service hotel that the Marriott Courtyards are.”
Gerken, who became involved along with the Toledo Lucas County Port Authority through his role as the county’s representative on the Lucas County Improvement Corporation, said the county initially offered to swap with Reuben a county-owned parking lot on Summit Street between Perry and Lafayette streets for the Water Street property. The county then could have leased the property to Walsh and earned income from the deal, Gerken said.
Wade declined the offer.
“We thought it would be an advantage for [Wade] to do a land swap and avoid capital gains [taxes],” Gerken said. “Apparently, that did not have the value for him we thought it might.”
Reuben initially acquired the Water Street property along with a parking lot bounded by Adams, Superior, Huron and Jackson streets in a land swap with the city in the early 1990s. Owens Cornings’ corporate office is currently located on part of the former Reuben property.
Once the deal with Reuben stalled, Walsh looked at other downtown properties but found none to his liking, Gerken said. Gerken then approached the city of Toledo about offering its vacant property at Jefferson and Summit – site of the former Federal Building – to Walsh.
City officials decided against the proposal two weeks ago.
“They wanted to keep open the property’s access to the river,” Gerken said.
The city’s director of development, Dave Amstutz, could not confirm why the city wouldn’t sell the property to the hotel developers.
“The city does not have that property up for sale at the moment,” he said. “The reasoning, I’m not 100 percent sure. It’s just that when we discussed that [project] we determined not to sell it.”
Gerken said that although the Water street deal is between Walsh and Wade, he’ll continue to search for other viable sites for a Downtown hotel that might interest Walsh.
“Obviously, if someone wants to bring $16 to $18 million to downtown Toledo, I’m going to facilitate every possibility that makes sense to him,” said Gerken, adding that area business leaders have been complaining for years that the Downtown is lacking appropriate hotel space.
Wade said the Water Street property remains for sale, but indicated he’ll remain firm on his asking price. He has not heard from Walsh, whom he has never met.
“I have no idea if they would come back to me or not,” he said.