Warner Norcross + Judd LLP represented 600 Ventures II LLC, 600 L Hotel, LLC and certain affiliated entities in the recently announced $49 million redevelopment project in an opportunity zone within Detroit’s central business district.
The project includes the construction of a 158-room Cambria hotel and the redevelopment of existing retail buildings at 600 W. Lafayette Boulevard and 659 Howard Street in Detroit.
Choice Hotels International, Inc. (NYSE: CHH) signed a franchise agreement with 600 L Hotel for the branding and operation of the Cambria Hotel and provided financing for development of the hotel. The underused Albert Khan-designed building at 600 W. Lafayette is part of the redevelopment.
Construction has already begun on the project which, in addition to the hotel, will include office and first floor retail space, upscale dining and a rooftop lounge and is expected to be completed in late 2020. Four different parties, including TCF National Bank, Detroit Investment Fund, L.P., PACE Equity, LLC and Choice Hotels International, were involved in the financing of the project. A 15-member Warner team managed a host of legal issues for the project, including support for the complex four lender capital stack and opportunity zone issues.
“It’s gratifying to be a part of the revitalization of Detroit, especially when we can help a client save one of Detroit’s architectural treasures,” said David W. MacDonald
, a Warner partner who led the firm’s effort.
In addition to traditional financing, the team leveraged newer, progressive incentive programs like Opportunity Zone and PACE, or Property Assessed Clean Energy, which provided tax benefits and helped control costs.
In 2017 Congress passed the Tax Cuts and Jobs Act, which includes a provision called the Investing in Opportunity Act that allows investors who invest eligible capital into property within designated qualified opportunity zones to receive certain tax benefits, including the deferral of taxes on capital gains. The program is intended as a catalyst for targeted development and has already encouraged approximately $150 million in investment in and around Detroit.
The PACE program was approved in Wayne County in 2013 and first implemented in the city of Detroit in 2017 to help property owners finance efficient energy systems thereby minimizing upfront capital expense by spreading the cost to over 15, 20 or 25 years. Additionally, project owners utilizing the PACE program can reap significant benefits from lower monthly energy costs provided by their improved, state-of-the-art systems.
By providing discerning and proactive legal advice, Warner Norcross + Judd builds a better partnership with its clients. Warner is a corporate law firm with 230 attorneys practicing in eight offices throughout Michigan: Grand Rapids, Southfield, Midland, Macomb County, Kalamazoo, Muskegon, Lansing and Holland. To learn more, visit www.wnj.com
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