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Wayne County lease talks near impasse

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Wayne County lease talks near impasse

History buffs fear for 1897 building

April 9, 2004

BY JOHN GALLAGHER AND BEN SCHMITT

FREE PRESS STAFF WRITERS

Wayne County government first moved into a landmark civic building in downtown Detroit 107 years ago. But tradition may not mean much when money's at stake.

For months, Wayne County Executive Robert Ficano has been involved in a dispute with the private owners of the Old Wayne County Building over rent and upkeep costs. Things have gotten so nasty that Ficano is threatening to move county offices out of the building for good. He asked other developers and building owners to suggest alternate sites.

The dispute has preservationists concerned that a landmark many rank second only to the state Capitol among historic Michigan structures might become just another vacant building. But Ficano says such considerations must take second place to more pressing concerns.

"We're not in a luxury situation right now with tax revenues," he said this week. "There are a lot of pressing priorities, from West Nile virus and a new criminal justice complex, cutting down our infant mortality, cutting down AIDS. We're not in office to glamorize ourselves, but to make this an area where our children and our grandchildren want to raise their children."

Some suggest Ficano may be using the threat of moving to win concessions from the landlord, a private partnership led by Southfield developer Burton Farbman. But he insists he's serious.

The dispute arose because of the unusual private ownership of the Old Wayne County Building. While governments routinely lease office space for some of their operations, it is rare for a major ceremonial civic building, such as Detroit's City-County Building or the Oakland County government campus in Pontiac, to be held by private owners.

Designed by John and Arthur Scott as an exuberant example of Beaux Arts Classicism, the structure at 600 Randolph, on the east end of Cadillac Square, housed the county's main offices from 1897 until 1954. Then the county moved most of its operations into the new City-County Building. The older structure sat underused for many years.

In the mid-1980s, the private partnership Farbman heads took over the building and renovated it as the new home of the county executive and other county staffers. The latest lease will expire in 2007, and, like any tenant in a soft real estate market, Ficano wants the landlord to make concessions on the rent. The two sides disagree over most of the figures involved, but the county pays roughly $4 million to $5 million a year in rent and maintenance and repair costs. The county executive insists he needs those costs reduced in order to renew the lease.

"My preference, sure, would be to stay here," Ficano says. But he adds, "We're going to be just as tough in negotiations as the private sector. We're not asking them to take a loss. We're just saying that the profit margin just isn't going to be as high."

Don Tanner, a spokesman for the private owners, said the group was pleased to hear county leaders say they hope to work things out. But he added, "Their actions continue to suggest otherwise."

Tanner said the owners offered to reduce rental payments about 6 percent. "Staying makes good economic sense, to say nothing of the historic significance of this building to the City of Detroit," he added.

As a sign of how contentious the dispute has become, Ficano complains that the rent per square foot is the highest in town, while Tanner says the rent is among the lowest. The two sides can't even agree publicly on how much square footage the building contains. Ficano says the building measures 118,000 square feet; the partnership says it measures 250,000.

The difference, and the key to the dispute, lies in the distinction between "usable" and "gross" square footage. Any office building has areas that aren't used for actual office space, such as lobbies, hallways, stairways, mechanical rooms, and the like. In most office leases, each tenant pays a portion of these "common area" expenses, such as heating and electricity.

But in a single-tenant building like the Old Wayne County Building, the one tenant, in this case the county, bears all of the common-area costs. And since the building has extra-wide hallways, grand staircases, and other ceremonial spaces, the percentage of space available for desks and chairs is relatively smaller than in most office buildings.

Proponents of keeping the county in the building say the higher costs are simply part of living with such a unique structure. Nancy Finegood, executive director of the Michigan Historic Preservation Network, calls the Old Wayne County Building the second most significant work of historic architecture in Michigan after the state Capitol. County commission vice chairman John Sullivan said, "Personally, I don't think it would be a good idea for the county to move. It's a historic building, and I've received e-mails and calls from historic preservationists who would be very upset if we moved."

Contact JOHN GALLAGHER at 313-222-5173 or [email protected] BEN SCHMITT at 313-223-4296 or [email protected]ress.com.

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