Ann Arbor could become one of the first cities to get a new Sports Illustrated-branded hotel, convention center, and condominium complex.

The proposal for a Sports Illustrated Resort on the site of the former Kline’s department store on Ashley Street at William Street downtown calls for a hotel of about 218 rooms, along with 80 condominiums and 50,000 square feet of dedicated conference center space as part of a $250 million project, according to Chris Schroeder, the Ann Arbor-based CEO of Clearwater, Fla.-based Sports Illustrated Resorts LLC.

There is other space in the proposal, such as an indoor basketball court, that could also be converted to additional conference space as needed, bringing that total to approximately 70,000 square feet instead of 50,000. It could accommodate conferences of 1,500 to 2,000 people, depending on configuration, Schroeder said.

A much more limited amount of conference space was included in an original proposal on the project, but the city administration requested that Schroeder and his team — SHV A2 Development LLC, a joint venture between an affiliate of Schroeder’s company and Sugar Land, Texas-based Cobblestone Development & Consulting LLC — add a more expansive conference footprint, filling a need in Ann Arbor, Schroeder said.

SHV A2 Development is 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 said.

Schroeder said 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. 

“This is an iconic, legacy project,” Schroeder said. “The decisions the city makes now affect generations to come, whether the city is going to try to generate the kind of tax revenue it’s going to have.”

Crain has requested an interview with a city representative seeking additional details. 

If the EDC does not sign off on the 40-year bonds, which would be repaid with hotel, parking, and conference revenue, the project in its current form dies, Schroeder said.

The bonds are needed because of a difficult commercial real estate financing market, Schroeder said. Public bonds through the EDC, with an AAA rating, have interest rates about half that of private financing, Schroeder said, noting that his team also anticipates seeking brownfield reimbursements for cleanup on the site.

The 17-story project — which is the subject of a Jan. 29 informational meeting at 7 p.m. at Guy C. Larcom Jr. City Hall — could start in the fall, with the needed EDC and municipal approvals, and take about 2 ½ years to complete.

The Ann Arbor project joins a similar proposal in Tuscaloosa, Ala., home of the University of Alabama. Sports Illustrated Resorts, Travel + Leisure Co. said in September that the Alabama project would open in late 2025.

“All of our projects are elsewhere,” Schroeder said. “We have projects in the Caribbean and Orlando. It’s almost one of those ‘duh’ factors like, ‘Why aren’t we doing this in Ann Arbor,’” Schroeder said.

A project in the Dominican Republic opened in 2022 and the Orlando project is slated for completion this year.

The city would continue to own the old Kline’s site, which is about 1.22 acres and currently serves a 143-space surface parking lot. 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.

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.

Public bonding to pay for components for broader private real estate development isn’t uncommon but is sometimes met with apprehension or opposition. 

In recent years, voters in Birmingham shot down a $57.4 million bond proposal for parking downtown as part of a large mixed-use project that would have been anchored by an RH gallery store, and a Miami-based developer has proposed using $45 million in public bonds to pay for infrastructure improvements for a redevelopment of the Lakeside Mall site in Sterling Heights.

During the Great Recession, the city of Allen Park issued $31 million in bonds to pay for a site and infrastructure improvements that would have brought a movie studio to a former Visteon Corp. property. The bond payments came close to bankrupting the Wayne County city when the $2.6 million annual payments came due and there wasn’t the revenue from the project to support them. 

In 2013, the Michigan Strategic Fund issued $450 million in bonds for Little Caesars Arena in Detroit. Of that, $200 million was backed by the Ilitch family’s Olympia Development of Michigan, which paid them off in 2017 and made them a private debt on the company’s books. The remaining $250 million in bonds were backed by the Downtown Development Authority’s property tax capture.