The team behind a proposed Sports Illustrated-branded hotel and conference center on a downtown Ann Arbor parking lot owned by the city has scrapped that effort following public pushback earlier this week.
The developer says that doesn’t mean it’s pulling the plug entirely on efforts in Ann Arbor and Southeast Michigan.
During a two-hour public meeting on Monday, residents raised concerns with the city and developer about everything ranging from the process for exploring putting the proposed $250 million, 218-room hotel on the former Kline’s department store lot to why earlier plans for much-needed affordable housing on the site were no longer on the table.
“The project is so strong for Ann Arbor but there are a group of citizens that, from what I’m told, seem to be the regulars at community meetings, that think the building is too big and there should be affordable housing there at that site and are really being quite nasty about it,” Chris Schroeder, the Ann Arbor-based CEO of Clearwater, Fla.-based Sports Illustrated Resorts LLC, said in a Wednesday morning email to Crain’s.
“We decided we aren’t going to submit ourselves, the city administrator and the brand to people who are so committed to disinformation. We have positive things going across the country and it is just best to find another site in Ann Arbor,” Schroeder continued.
The decision may be just cutting losses.
The Ann Arbor News reported the day after the Jan. 29 meeting that it appeared the project was dead-on-arrival with the City Council, as a four-member bloc needed to kill the effort came forward publicly saying they weren’t in favor of it.
Lisa Wondrash, communications director for Ann Arbor, confirmed in a Wednesday morning email to Crain’s that “the developer has officially notified our City Administrator, Milton Dohoney Jr., that they are withdrawing their interest for the site.”
As it was envisioned at Ashley Street and William Street, the development would have included 218 rooms, plus 80 condominiums and 50,000 square feet of dedicated conference center space. Other space in the proposal could have been configured on a temporary basis to create another 25,000 square feet of conference center space.
The development team is called SHV A2 Development LLC, which is a joint venture between an affiliate of Schroeder’s company and Sugar Land, Texas-based Cobblestone Development & Consulting LLC.
The project was seeking Ann Arbor Economic Development Corp. approval of issuance of approximately $150 million in revenue bonds to pay for the hotel, conference center and a 350-space above-ground parking deck, while the condos would be privately funded, Schroeder told Crain’s in a January interview.
Schroeder said earlier this month that over the 40-year life of the bond, the city would receive $240 million in tax revenue from the project in addition to millions in ground-lease payments. The project would also allow the city to hold more conferences and events, bringing in visitors and associated revenue.
During Monday evening’s meeting, the vast majority of those who spoke during public comment raised concerns about a variety of issues related to the project, even if they supported the idea of adding conference center space in general or developing the site overall.
Some said they felt the land, currently a 1.22-acre, 143-space surface parking lot, was best used for address the city’s long-standing affordable housing crisis.
Others expressed dismay that there wasn’t a public request for proposals for the site, and some questioned whether the city should allow a project associated with a brand commonly known, in addition to its sports journalism, for its annual swimsuit edition that has long sparked controversy for, among other issues, its depiction of women.
Other residents were concerned about the development’s proposed size and design.
Schroeder said it’s too soon to tell how a revamped proposal for the project might look and whether any components would be reconfigured, but he did say the idea of a large EDC-backed bond to support the project is now off the table.
“Ideally we could take as much as we’ve done so far and configure on a different site,” Schroeder wrote. “It truly is a unique building with incredible spaces. It depends on the site, we may have to reconfigure altogether.”
Other sites he is turning his attention to are primarily privately owned, but Schroeder did say there was a University of Michigan-owned site in the mix. He declined to say which properties were under consideration.
An email was sent to the university on Wednesday morning.
In addition, Schroeder said another city is on his radar: Detroit, where the Lions, Pistons, Tigers and Red Wings all play within a few blocks from one another downtown.
Under the Kline lot proposal, the city would have continued to own the land. Ann Arbor would lease the property to the developer and collect rent payments; and would own the hotel, conference center space and parking space. The condos would be privately owned and financed.
Sports Hospitality Ventures is part-owned by Authentic Brands Group, which is the parent company of Sports Illustrated, paying $110 million for it in 2018. Authentic Brands also owns the branding of Marilyn Monroe, Shaquille O’Neal, Muhammad Ali, Greg Norman and David Beckham.
Authentic entered into a 10-year licensing agreement in 2019 with Arena Group for the Sports Illustrated media brand. Arena Group is now controlled by Simplify Inventions, majority-owned by Farmington Hills-based billionaire Manoj Bhargava, who owns 5-Hour Energy. Arena Group had no involvement in the resort project.
Sports Hospitality Ventures is majority owned by Experiential Ventures Hospitality, also based in Clearwater, Fla., and Cherokee, N.C.-based Kituwah LLC, the economic development arm of the Eastern Band of Cherokee Indians.
Additional questions arose after the fate of Sports Illustrated itself became murky earlier this month, when Arena Group laid off all of the magazine’s staff after Authentic Brand Group scrapped Arena’s licensing agreement after a missed nearly $3 million interest payment late last year, Crain’s reported earlier this month.
Schroeder has said that the drama that unfolded at Sports Illustrated earlier this month had no relation to his project as it is affiliated with Authentic Brands Group, not with Arena Group.
