Ground lease a no-go at Woodward and Maple

By Grace Lovins

A ground lease proposal to a private developer for city-owned property located on the northwest corner of Woodward Avenue and Maple Road was denied by the city commission during the Monday, July 11, meeting.

Select Commercial Assets Hospitality (SCAH) had aimed to acquire a lease to develop a five-story mixed-use building with underground parking on the vacant lot. The ability to expand their development into the vacant lot would allow the developers to maximize on-site parking and establish a more efficient layout of the proposed building.

The Hunter House restaurant, which has operated in Birmingham since 1952, sits on one of the land parcels owned by SCAH. The proposed design for the multi-use building allocates a space for the restaurant to continue operating; however a long-standing dispute between the two owners has generated issues about the restaurant’s right to operate given an agreement made between the parties in 2005.

The vacant lot owned by the city that has remained undeveloped for the past two decades is currently being leased to The Hunter House restaurant by the city of Birmingham for surface parking, however it does not comply with current zoning regulations, 2016 Plan regulations or multi-modal transportation plan recommendations.

Additionally, after an appraisal sought on behalf of the city, the land was found to be valued at $12.42 per square foot, or $60,500 annually. The current monthly lease of the property to The Hunter House has the restaurant paying $2.97 per square foot, generating an annual revenue of $9,540 for the city.

Part of the issue surrounding the leasing of the property is a difference of opinions between the developer and owner of the property, Hesham Gayer, of Grand Blanc, and the owner of the Hunter House business and building, Kelly Cobb. The dispute between the private parties reared its head during the meeting, ultimately leaving commissioners disinclined to approve the lease.

Cobb stated to commissioners that he would be more than happy to increase his payment to lease the land and match the appraised value of the land provided to the city. He also noted his attempts to meet with city manager Tom Markus and assistant city manager Jana Ecker to renew the lease agreement he previously held that would establish a yearly agreement as opposed to a monthly agreement, but was never given a decision by the city.

Commissioners were repeatedly advised by city attorney Mary Kucharek that the city should not expand their discussion beyond what was in front of them: Whether a ground lease of public property is in the best interest of the city.

“I would strongly advise that what the commission focuses on is what is before you. … This agreement between the parties spells out the obligations of each other to each other, the rights of the Hunter House restaurant and what it can and cannot do in relation to Dr. Gayer’s development,” Kucharek said.

“We should not be a party to that [agreement] – we were not a party to it. We should not be focusing on a win-win for everyone. That is not the commission’s role. That is not the city’s role. In fact, if you want to be drawn into litigation, that’s a sure way to get us there.”

With Kucharek’s advice, commissioner Andrew Haig noted he was still skeptical of rescinding a lease with The Hunter House to create a lease with the property owner while the two parties were in a dispute.

“I’m not interested in doing something until these parties have resolved their issues, so here’s the question, are the two parties going to resolve the issues outside of here? Do we need to help support them to get an answer? What is necessary to understand a win-win, because right now it’s a win-lose for somebody … and it’s not working,” Haig stated.

Mayor Therese Longe echoed Haig’s concerns and comments made by commissioner Katie Shafer as to the best interest of the city with regard to the fabric of the community.

“I think it’s important to consider the question in the context of the culture and fabric of our community and the interest of our residents, because while it is a vote on whether we wish to lease public property, the vote itself would have immediate implications about advantaging the current property owner to move forward to the potential detriment of The Hunter House,” Longe said.

“This commission and the previous commission have asked repeatedly that these two parties come to us with an agreement. … I wish that we had a project in front of us that was guaranteed to maintain the business of The Hunter House that’s currently on that property in a way that the residents of Birmingham would be happy, that the business would be happy and that the developer would be happy.”

Following roughly two hours of deliberations, the motion was struck down in a 3-4 vote, with commissioners Haig, Shafer, Longe and Brad Host voting against the approval of a ground lease.