Royal Oak Hotel Developers Win Financial Aid / by Kelsey Courtley

Observer and Eccentric Newspapers and Hometown Weeklies
By Nathan Mueller

ROYAL OAK — It took multiple meetings, various proposals and an assurance letter, but the
Royal Oak Downtown Development Authority has finally approved its financial assistance plan for the 400 N. Main property.

The developers of the site, made up of Southfield-based Versa Development, Royal Oak-based
CG Emerson, T.H. Marsh and Krieger Klatt Architects and Hotel Investment Services in
Plymouth, have been working with the Michigan Economic Development Corporation to secure
funding through the Community Revitalization Program.

In order for the MEDC to consider the project, they need to see support from the local community as well. In this case, the DDA’s support is via a tax increment financing plan that would allow the developer to capture the incremental ad valorem real estate taxes for up to 10 years, with the amount of the capture being capped at $3 million, plus interest. It’s a change from the 12 years and $4 million with interest cap that was proposed at previous meetings. DDA member Bill Harrison said he wants to make it very clear that this is a reimbursement program and not a donation.

“It’s a refund,” he said. “We are not giving them the money we have, we are giving them the
money we have only if they build the facility.”

The DDA will still retain 20 percent of new tax increment revenue generated by the development
and will continue to receive 100 percent of the revenue it receives today off the property.
Planning Director Tim Thwing said that, while the developers will receive $3 million without
interest, the DDA could receive $2 millionm and other taxing jurisdictions (Detroit Zoo, DIA, Royal Oak Schools, education entities) could receive approximately $6.35 million during that time span.

City Manager Don Johnson hammered Harrison’s point home, saying there is no out-of-pocket
money being used for the project.

“This is reimbursing part of the additional tax money that won’t exist if the project isn’t built to
begin with,” he said. “Nothing is coming out of the DDA’s future budget or the city budget. It is
giving back the developer some of the extra taxes they will be paying.”