TOLEDO, Ohio - A deal that potentially would bring a new hotel to downtown Toledo is on hold because the developer believes the asking price for the property is too high.
The developer, Ed Walsh of Alpine Reality in Ann Arbor, Mich., bid on a property at Jefferson Avenue and Water Street owned by the Reuben Co., a Toledo real estate and property management company, according to Lucas County Commissioner Pete Gerken.
Walsh intended to build a Courtyard by Marriott on the property, currently a 1.6-acre parking lot behind Fort Industry Square, according to Gerken. He said the deal is valued at $16 to $18 million.
Walsh confirmed that he was interested in the Water Street property but declined to give specific details.
"There's not much to comment on other than we weren't able to make a deal," he said. "We have been interested in a few downtown properties but haven't been able to make a deal with anyone."
Reuben's president, Tim Wade, said there was an interest in the property in mid-summer by an intermediary but declined to provide further details.
"An interested party came to me and said they wanted to acquire the property. I contacted a licensed appraiser to appraise it and offered it for sale at that price," he said. "I have not received a legitimate written offer."
According to a source close to the negotiations, Walsh initially offered $1.5 million for the property. But Wade's appraiser said the property is worth $2.4 million. Walsh would have gone to $1.7 million, the source said, leaving the developer and Wade $700,000 apart.
"No one could make the numbers work," the source said. "So we're re-evaluating it."
Walsh was attracted to the location because of its proximity to the Maumee River, the SeaGate Convention Centre, FifthThird Field, and the new all-purpose arena, according to Gerken.
"He liked the market. He thought there was an opportunity for a branded, self-service hotel that the Marriott Courtyards are."
The developer said it's premature to think that a Courtyard would be built on the site.
"To put a hotel there, [yes]. Any naming of the hotel would be way too preliminary," said Walsh, noting that the site has to be secured before a developer can apply for a franchise license.
Gerken, who became involved along with the Toledo Lucas County Port Authority through his role as the commission's representative on the Lucas County Improvement Corporation, said the county initially offered to swap with Reuben a county-owned parking lot on Summit Street between Perry and Lafayette streets for the Water Street property. The county then could have leased the property to Walsh and earned income from the deal, Gerken said.
Wade declined the offer.
"We thought it would be an advantage for [Wade] to do a land swap and avoid capital gains [taxes]," Gerken said. "Apparently, that did not have the value for him we thought it might."
Reuben initially acquired the Water Street property along with a parking lot bounded by Adams, Superior, Huron and Jackson streets in a land swap with the city in the early 1990s. Owens Corning's corporate office is currently located on part of the former Reuben property.
Once the deal with Reuben stalled, Walsh looked at other downtown properties, but found none to his liking, Gerken said. Gerken then approached the city about selling its vacant property at Jefferson and Summit - site of the former Federal Building - to Walsh.
City officials decided against the proposal two weeks ago.
"They wanted to keep open the property's access to the river," Gerken said.
The city's development director, Dave Amstutz, could not confirm why the city wouldn't sell the property to Walsh.
"The city does not have that property up for sale at the moment," he said. "The reasoning, I'm not 100 percent sure. It's just that when we discussed that we determined not to sell it."
Gerken said that although the Water Street deal is between Walsh and Wade, he'll continue to search for other, viable sites for a downtown hotel that might interest Walsh.
"Obviously, if someone wants to bring $16 to $18 million to downtown Toledo, I'm going to facilitate every possibility that makes sense to him," Gerken said.
He said areas business leaders have been complaining for years that downtown lacks sufficient hotel space.
Walsh conceded there's a risk building a hotel in downtown Toledo.
"The hotel market does not do well there," he said. "There might be an opportunity, but it's certainly not a home run for a hotel."
Wade said the Water Street property remains for sale, but indicated he'll remain firm on his asking price. He has not heard from Walsh, whom he has never met.
"I have no idea if they would come back to me or not," he said.
Walsh would not comment on whether he'll re-bid on the property, but said he's running out of options.
"We've lost a lot of interest there. There are not a lot of sites that are available and large enough to build on," he said. Reported by George J. Tanber email@example.com