Dearborn City Council, Mayor at Odds with Severstal Donation

Plans to earmark an $8.5 million corporate donation from Severstal North America for the Dearborn Administrative Center will go before the Dearborn City Council on Tuesday.

The donation is part of a contribution agreement the city established with Severstal in 2008 aimed at providing funds for naming rights of a conference center at the Hyatt Regency Hotel, according to information provided to the city council.

The conference center was envisioned to boost traffic and economic development in Dearborn. The $8.5 million donation (1/3 of the estimated cost of building the center) included $155,000 for feasibility and pre-development studies to construct the conference center, with the remaining cost earmarked for project funding and operational start-up costs.

In 2009, however, Dallas-based owner Ashford Hospitality Trust Inc. ceased making payments on the hotel's $29.1 million mortgage, and agreed to put the Hyatt into receivership to avoid foreclosure. According to the city, the decision to build a conference center has since been put on hold.

"Severstal's preference for improving the Dearborn community sooner rather than later ... can be accomplished by switching the donation for the conference center to the Dearborn Administrative Center and Artspace projects," Barry Murray, director of Economic and Community Development for the city of Dearborn, said in a memo to the city council.

Murray said the city and Severstal have agreed to use the $8.5 million to fund the redevelopment of the former ADP building at 16901 Michigan Avenue into the Dearborn Administrative Center ($5 million). Other funds can be used for the development of a Veterans Memorial Park adjacent to the DAC ($1.5 million); a contribution to Artspace for the pre-development feasibility and re-design study of the current city hall ($345,000); and a $1.4 million donation to Artspace.

Artspace plans to purchase the existing city hall building at 13615 Michigan Ave. for $1.6 million and convert it into a living, working and exhibit space for artists.

Council President Tom Tafelski said before any decision is made on the Severstal funds, he would like Mayor John B. O'Reilly, Jr. to elaborate on what the money can be used for.

"Can the money be used to put more police cars on our streets or for the city pools?" Tafelski asked during the Committee of the Whole meeting on May 9. "I want the current intention to be spelled out before we make a decision."

O'Reilly said the money can be used for other purposes besides the Dearborn Administrative Center.

The mayor said a contract has not yet been signed with Artspace. In the event the company does not go forward with purchasing 13615 Michigan Ave., O'Reilly said the $8.5 million from Severstal can be applied to upgrades at the current city hall building.

The council will discuss the donation at its meeting at 7:30 p.m. May 14 in the council chambers.