Metro Detroit’s first Cambria Hotel – a $49 million project – is planned for 600 W. Lafayette (at Third Street) in Detroit. The new construction and partial redevelopment of the former headquarters of the Detroit Regional Chamber will transform an underused building on the west side of downtown’s central business district. Construction is expected to be complete in 2020.
Local developers for the hotel include Koucar Management and Means Group Inc., collectively called 600 Ventures II LLC. A previous plan for the site included condominiums, but the deal was never consummated.
The 154-room hotel will include locally sourced ingredients on the menus and design elements, and include a restaurant featuring chef Fabio Viviani, a rooftop lounge, and office and retail space.
The hotel will also include improvements in plumbing and domestic hot water, lighting and electrical systems, and HVAC and building envelope including roofing, windows, masonry, and air barrier protections, making the building energy and water efficient. Over 20 years, the owner is expected to save $6.5 million in utility and operational savings along with nearly $3.5 million in tax benefits.
PACE Equity in Wisconsin has completed $6.8 million in funding toward the capital stack for the hotel. This is the first new construction PACE project in Michigan, and the largest in the state to date. The project will use a $25 million construction loan, an economic development loan, developer equity, and equity from the opportunity zone program. PACE is funding the remaining 14 percent of the capital stack.
“PACE Equity funding is a great tool for developers to bring in additional, low-cost funding to revitalize communities by either preserving functionally obsolete buildings, adaptively reusing existing buildings, or constructing new buildings in an environment where capital resources are scarce,” says Sonya Delley, Michigan managing director for PACE. “Our capital replaces more expensive funding such as short-term loans or mezzanine, and outside or joint venture equity that developers do not have to raise or source. In this case, PACE Equity also worked alongside state incentives while filling a gap in the capital stack for a project that will continue to make downtown Detroit more walkable and refurbished.”
Providing the developer a turnkey service for the public and private partnership process, PACE completed Lean and Green Michigan approvals, capital stack consent, weekly closing call participation, document management, and its energy engineering study. Through the study, PACE confirmed the amount of funding that was committed upfront, complied with all Lean and Green Michigan requirements, exceeded the state savings-to-investment ratio, and provided the energy savings guarantee.
Funding through PACE also contributed to financing high energy efficient equipment that reduces utility costs and results in energy savings. Lean and Green Michigan works with counties, cities, and nonprofit partners across Michigan and serves as an independent party to review projects, state statute compliance, and country requirements to approve project funding.
PACE stands for Property Assessed Clean Energy and is a way to finance energy efficiency, renewable energy, and water conservation upgrades to commercial buildings. It can pay for new heating and cooling systems, lighting improvements, solar panels, water pumps, insulation, and more.