Convention project still waiting on GMAC
Mick McDowell and Larry Soehren are accustomed to taking risks. You do that in the real estate business. With your own money.
They are having almost none of that with the public’s money. In fact, they are having precisely $235,000 of it, and no more.
The Public Facilities District board Thursday approved the $55 million construction contract for the new Spokane Convention Center Exhibit Hall. Members then stepped onto the Azteca Restaurant parking lot and broke ground for the long-awaited project. If all goes as planned, by early 2007 the community will have two facilities fit to accommodate the U.S. Figure Skating Championships; the exhibit hall and Spokane Veterans Memorial Arena.
If all goes as planned.
The PFD, after overcoming some early flak about the choice of sites, has in hand a striking design for the hall, and contractors eager to start. What it does not quite have in hand is the land itself. Purchase of the Azteca property is expected to close in early August, and the restaurant is already preparing its new digs just across Spokane Falls Boulevard. But acquisition of the Doubletree Hotel parking lot awaits the consent of GMAC, which holds the mortgage. GMAC has expressed no reservations about the project, but wants to review all the pertinent documents. Documents take time to read and, even with a target completion date three years out, delays are bothersome.
Irritating too, when the $3 million deal for the lot is such a winner for the Doubletree and GMAC, who stand to see the value of their hotel property perhaps double when the exhibit hall brings thousands of customers right to its doorstep. Hence the pique of McDowell and Soehren, as well as other board members, who think they have a winning proposition for everyone, but are dealing with New York-based attorneys who have a reputation for taking their sweet time.
Or, as board Vice-Chairwoman Sandy McCauley said, “They let you twist in the wind a little bit.”
That wind could become a hurricane, however, if GMAC suddenly raises a red flag with construction already begun. That’s where the $235,000 comes into play.
Contractor Dave Garske says the Hoffman-Bouten joint venture has subcontracts for that amount to cover preliminary excavation, some demolition and installation of outdoor lighting. The work can go forward until mid-August. The next step would be demolition of the Azteca building, which the board is reluctant to do unless the deal with the Doubletree is closed.
The hotel chain, by all accounts, is doing what it can to move the process along.
Without a firm — and modest — fix on how much the district would spend should the delays last into mid-August, Soehren and McDowell were concerned about the PFD signing the $55 million construction contract. Anything above that would be absorbed by Hoffman-Bouten. The district has the right to cancel the construction contract, a possibility should the GMAC issues be unresolved — which is highly unlikely.
Despite her experience with GMAC foot-dragging, McCauley says the company has never reneged on a deal once it has given preliminary approval.
Soehren says the uncertainty created by GMAC is something he could accept if private money was at stake. So would McDowell, who says board members must be extra prudent with public dollars.
“There is a limit to the risk the Public Facilities District is willing to take,” he says.
Soehren says he is uneasy because action by GMAC is among few factors beyond the board’s control.
“It’s a little strange for us not to own the land,” he says.
Both say they hope the construction contract clause giving the PFD an out if delays persist will goose GMAC.
“We’re just another file,” Soehren says. “We’ve got to get to the top of the pile.”
Garske, for his part, puts the situation in the category of typical construction delays. Timetables can be adjusted, bearing in the mind that the completion date is fixed. “The key is to remain flexible,” he says, and the willingness of Hoffman-Bouten to sign the contract indicates their faith the initial obstacles can be overcome.
Garske is enthusiastic about the project and the 1,000 jobs it will create while construction is under way. The builders will use as many local resources as possible, right down to making copies at the Kinko’s across the street, he says.
The project, one of the biggest public works in a very long time, has momentum, which adds to the PFD board’s frustration with the land ownership snag. Everyone wants to turn the bulldozers lose. Voters who approved the ballot measures that put the exhibit hall project in motion should be reassured by how cautiously the PFD has applied the throttle so far.
Board Chairman Rick LaFleur says the exhibit hall will become “Crown Jewel No. 2” to go along with No. 1, the Arena.
It just takes time to make a diamond.