Editor’s note: An earlier version of this story mischaracterized Council member Greg Pawlica’s remarks. It has been corrected.
The Ferndale City Council authorized spending up to $1 million more on the mixed-use parking deck under construction downtown after the developer reported that funds needed to bid out the 25,000 square feet of office space that was a key part of the project had been left out.
The unanimous vote came near the end of contentious and lengthy back-and-forth between council members, audience members and City Manager Joseph Gacioch, who has run point on the project since 2015 and learned about the shortfall in mid-January. Mayor Melanie Piana called the issue an “unexpected and unfortunate challenge,” while council member Greg Pawlica was more blunt in his comments.
“This is a major flub up,” Pawlica said. “I’d like to use a different word, but this is a flub up.”
At issue was having the funds to construct a fourth-floor foundation atop the parking garage that would support three floors of office space and the structure’s decorative glass and metal facades. Without it, Gacioch told council members, the dot would look like an ordinary concrete parking garage and might not have any mixed-use components.
Compounding matters was the scheduled removal this week of a construction crane needed to do the work.
Part of the problem, Gacioch told Daily Detroit, lays with the project’s complexity as a public-private partnership with multiple funding sources. When completed, the city will own and operate the parking deck, while Versa Wanda, the developer, will operate and manage the retail and office space.
While the city had always hoped to add upper-floor office space, it wasn’t until the state in October awarded the city a $3 million loan from the Michigan Economic Development Corp., plus brownfield redevelopment funds, that the office space was assured as part of the project.
“In order to get approval from the state, the developer had to submit a bunch of costs to build the fourth, fifth and sixth floors,” Gacioch said. “At some point there was a disconnect in terms of the budget numbers that they were given.”
Council also directed Gacioch to finish negotiating final costs and come back with a comprehensive figures, likely in March or April. The development agreement stipulates that Versa Wanda reimburse the city for half of all costs related to the office space.
“It is a complicated project that is three years in the making with multiple financial partners,” Gacioch said. “It goes from the city, the DDA has contributed to this, the city’s brownfield fund has contributed to this, the state of Michigan has contribute to this and the developer has contributed to this. So trying to align five levels of financing toward one final vision that has been built over the course of three years and robust public engagement process, it’s — there’s a tendency to want to oversimplify it, but it’s frankly a very difficult project with a moving target because you’re always trying to secure that commitment from the state with the developer.”
Ferndale had previously approved issuing $21 million in municipal bonds to support the project.
The project has been controversial among Ferndale residents and business owners from the onset. Construction has been underway since February 2019 and has forced the city to scramble for alternatives after losing 138 parking spaces from the former surface lot where it’s being built. City officials have bemoaned a shortage of downtown parking spaces for years, but some residents argued in favor of building a less expensive concrete parking deck without any mixed uses.
In addition to the office space, the dot will feature about 400 parking spaces and around 11,500 square feet of what the city calls “entrepreneurial retail space,” to be offered at guaranteed below-market retail rates to encourage small business tenants, on the street level. About 20 small affordable housing units could be added later, and the project will also include a major streetscape project along West Troy Street.
Supporters argue the project will benefit the city by adding badly needed new office space, providing daytime foot traffic to the business district and creating a new retail strip with pedestrian amenities and landscaping. Construction on the project is expected to wrap up in May.