Discuss Detroit » Active Archive » Book Tower Developer goes bankrupt « Previous Next »
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Jnot
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Username: Jnot

Post Number: 2
Registered: 01-2007
Posted on Friday, May 25, 2007 - 10:15 am:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

yikes!
http://www.woodtv.com/Global/s tory.asp?S=6564629&nav=0Rce
i wonder what this will do to the development
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Charlottepaul
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Username: Charlottepaul

Post Number: 1040
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Posted on Friday, May 25, 2007 - 10:21 am:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

Probably nothing; the Book Tower is what it is.
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Charlottepaul
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Username: Charlottepaul

Post Number: 1041
Registered: 10-2006
Posted on Friday, May 25, 2007 - 10:22 am:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

Doesn't seem as though much was invested in the Book Tower in recent years. It is probably time for a new developer for that building.
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Viziondetroit
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Username: Viziondetroit

Post Number: 1067
Registered: 11-2003
Posted on Friday, May 25, 2007 - 10:23 am:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

I thought the Pagan Group bought the Book Tower last year? Did that deal fall through?
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Johnlodge
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Username: Johnlodge

Post Number: 472
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Posted on Friday, May 25, 2007 - 10:28 am:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

The Pagan Group, who couldn't pay their electric bill for months, thus prompting DTE to shut the power off for the building for a few days a couple months back? Yeah, they bought it.

As Tim and Eric would say... GREAT JOB!
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Quozl
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Username: Quozl

Post Number: 709
Registered: 07-2005
Posted on Friday, May 25, 2007 - 10:29 am:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

Well that just sucks. I guess I will not be moving into my condo there anytime soon. Thanks for nothing Northeast Commercial Services Corp.
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Dougw
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Username: Dougw

Post Number: 1697
Registered: 11-2003
Posted on Friday, May 25, 2007 - 10:52 am:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

So... is the Pagan Group part of or related to the Northeast Commercial Services Corp? A google search on the two names combined turned up nothing.
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Swingline
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Username: Swingline

Post Number: 828
Registered: 11-2003
Posted on Friday, May 25, 2007 - 1:33 pm:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

A very short mention in the Freep. http://www.freep.com/apps/pbcs .dll/article?AID=/20070525/BUS INESS06/705250377/1019/BUSINES S

A couple of obvious questions arise from the information in the AP article. First, what kind of transaction occurred to transform Susan Lambrecht from a seller of the Book property into an unsecured creditor? Second, it's well known that Kraemer Design performed some work relating to the proposed renovation of the property. But, at the pre-financing stage, what could they have done to earn a $7 million fee? (Can one assume that their claim is secured as a result of a filed construction lien?)

The bankruptcy is disappointing, but maybe it will create an opportunity for a developer with more resources. Stay optimistic.
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Quinn
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Username: Quinn

Post Number: 1333
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Posted on Friday, May 25, 2007 - 1:42 pm:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

SHIT! I wonder if the building will go back to Lambrecht. She was a great champion for the building and at least paid to keep the lights on!

Susan come back!

Thank god Kraemer has a secured claim. What does that mean? The US Government pays for it?
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Jelk
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Username: Jelk

Post Number: 4400
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Posted on Friday, May 25, 2007 - 2:05 pm:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

I don't believe you Quinn.
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Quinn
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Username: Quinn

Post Number: 1334
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Posted on Friday, May 25, 2007 - 2:32 pm:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

Well I don't know that about keeping the lights on to be honest...but I never heard of a story about the building loosing power when she was there.

I did meet here when I was in school in the early 90's when my friend and I asked if we could look at rental space. She was a great source of info then, both on history, and where to eat and drink downtown. I thought she was cool.

If she's listed as an unsecured creditor, doesn't that mean that they owe her money?

Swingline, I agree with you and I don't think these things get done without someone who has deep pockets. It'll take alot of money to get that building up to snuff...no weekend, mom-n-pop fixer-upper.
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3rdworldcity
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Username: 3rdworldcity

Post Number: 662
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Posted on Friday, May 25, 2007 - 2:35 pm:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

That ain't all folks.

On April 24th 2 Plaintiffs (one controlled by Peter Beer) filed a lawsuit against Susan L., Community Bank of Dearborn, the Book Tower companies, and 4 others in Wayne Cty Cir. Ct. (case # 07-71105-CK.)

The Complaint is amateurishly drafted, but the scenarios complained about are hilarious.

According to the Complaint, SL had sales pending w/ three prospective purchasers at the same time, and none of them knew about the others, and all had signed purchase agreements. She gave a deed to the bldgs to one prospective purchaser to induce it to start paying the electric bills, which SL was unable to pay. According to the Complaint the Plaintiff paid $468,000 of DTE bills which have never been repaid, and accuses SL of fraud for double dealing it while attempting to close on sales to 2 other prospective purchasers.

There are numerous accusations of fraud, civil conspiracy, tortious interference and double dealing etc.

Apparently, SL did close w/ one buyer (unnamed in the Complaint - probably Pagan) for a sale price of between $8 and $8.5 million. (The bldgs are worthless - they are not assets, they are liabilities.) It's unclear from the Complaint if SL ever got any cash out of that deal.

[If Pagan paid $10 out-of pocket for those buildings they got screwed and deserve to lose every dime.]

I can't begin to summarize here all the allegations and intrigue alleged in the lawsuit but for anyone interested enough to obtain a copy of the Complaint, it's well worth reading for its Keystone Kops melodrama.
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Thejesus
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Username: Thejesus

Post Number: 1292
Registered: 06-2006
Posted on Friday, May 25, 2007 - 2:40 pm:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

"Thank god Kraemer has a secured claim. What does that mean? The US Government pays for it?"

wow
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Dexterpointing
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Username: Dexterpointing

Post Number: 60
Registered: 05-2007
Posted on Friday, May 25, 2007 - 2:40 pm:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

don't worry, another will take his place.
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Jnot
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Username: Jnot

Post Number: 3
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Posted on Friday, May 25, 2007 - 2:45 pm:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

3rdworld, where could you get the Complaint?
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Jelk
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Username: Jelk

Post Number: 4402
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Posted on Friday, May 25, 2007 - 2:49 pm:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

quote:

SHIT! I wonder if the building will go back to Lambrecht. She was a great champion for the building and at least paid to keep the lights on!



quote:

Well I don't know that about keeping the lights on to be honest...



So in other words Quinn you don't know a fucking thing and you keep proving it over and over and over again.

I hate to ruin another stellar DY thread with facts but according to pending litigation:

quote:

At this time, the utilities were still in (plaintiff's) name, but Lambrecht was supposed to make the payments....In February of 2006, Lambrecht (and other defendants) continued to supply plaintiffs with reassurances of closing, but Lambrecht failed to make any payments on the utility bills that remained in (plaintiff's) name.



You can read all about it here: http://tinyurl.com/yqzegn (hat tip to Andy)
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Bvos
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Username: Bvos

Post Number: 2181
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Posted on Friday, May 25, 2007 - 3:07 pm:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

A secured claim means that the Kraemer has the ability to go to court and get the amount their owed out of the building. This can be done through selling the building and receiving $7 million from the proceeds of the sale. It can also mean that they can choose to have $7 million in equity in the building (which would effectively make them the owner of the building). This is essentially how a home mortgage works. The mortgage company has a secured loan against your house for the amount of the mortgage. I'm guessing Kraemer's $7 million stake is a construction lein and/or a construction loan.

The senior loan is a loan that is not neccessarily backed by an actual asset, but would result in being paid first above and beyond all other unsecured creditors. It's a line of credit usually based on operating revenues rather than the value of the building.

The unsecured interest of Susan Lambrecht probably exists due to financial needs of Ms. Lambrecht (she needed the tax write off, investment, etc.) or due to the financial needs of the building purchaser (couldn't afford to fully buy her out, was adventageous to have another party in ownership of the building, etc.). Ms. Lambrecht's position was as a minority partner in the ownership of the building and as an unsecured stake. It would be like having a credit card loan. If you declare bankruptcy, credit cards are pretty much out of luck. Ms. Lambrecht will likely see nothing out of the Book deal now unless she has some very good lawyers.
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3rdworldcity
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Username: 3rdworldcity

Post Number: 663
Registered: 01-2005
Posted on Friday, May 25, 2007 - 3:21 pm:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

Jnot: A friend sent me the Complaint 2 or 3 weeks ago. However, Jelk has posted a link to the Complaint, above. Thanks, Jelk.

Jelk: Did you find the lawsuit as humorous as I did (not that I have any ill-will towards SL, or wish her distress, which I don't)?

I've been involved in one way or another in many real estate transactions, including some very complicated ones, but I've never heard of anything like this one.
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Mbr
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Username: Mbr

Post Number: 162
Registered: 03-2005
Posted on Friday, May 25, 2007 - 4:20 pm:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

3rdworldcity said:
(The bldgs are worthless - they are not assets, they are liabilities.)

That is a very naive way of describing the buildings and I hope you weren't serious. Just because a building or business loses money does not make them worthless. They clearly have value in many respects as an office property, a potential residential property, or some other use. At the very least the underlying land is a scarce resource downtown that can fetch quite a bit of money.
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Focusonthed
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Username: Focusonthed

Post Number: 992
Registered: 02-2006
Posted on Friday, May 25, 2007 - 4:39 pm:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

If anything is a scarce resource downtown, it is not land. LOL. Maybe cops.
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Danny
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Username: Danny

Post Number: 5920
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Posted on Friday, May 25, 2007 - 5:05 pm:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

It's time for the Pagan Group to sell the Book Tower to another owner. The ones who have the money.
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Bobj
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Username: Bobj

Post Number: 2246
Registered: 11-2003
Posted on Friday, May 25, 2007 - 5:28 pm:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

What a mess - hopefully someone with financing will step in and redevelop these buildings.
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3rdworldcity
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Username: 3rdworldcity

Post Number: 664
Registered: 01-2005
Posted on Friday, May 25, 2007 - 6:59 pm:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

Mbr: There's nothing naive about my statement that the buildings have no positive economic value.

Travelers Ins. Co had a mortgage on the properties years ago and was foreclosing it. (The Book properties have been economically distressed for 30+ years.) Toward the end of he redemption period Travelers offered the buildings to me for $300,000. I passed because I felt the same way then as I do now. Subsequently, John Lambrecht (RIP) took the deal from Travelers. A very big mistake. [Actually, a small one at the time, if he'd have dumped them before puting in good money after bad.

The buildings have no viable ECONOMIC use; there is no office market in downtown Detroit; one fool after another has tried that for years. The costs of converting one or both of the building to residential use, even w/ the huge taxpayer subsidies used in the B-C and Pick Fort Shelby deals (far, far from economic viability at this stage), are far too high.

If the underlying land was vacant, of course it would have some value ($49 per square foot currently, adjustable a little upward probably because of its corner location and proximity to the People Mover.) The cost of demolishing those building would be in the $10,000,000 area. That cost per square foot of land area would be many, many times the value of the land.

Another developer coming along? Slim and none. But, of course, The greater fool theory of real estate investment is alive and well, so one never knows. How about you, Mbr? Got a few (many) million to prove you're right and I'm wrong.
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Ramcharger
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Username: Ramcharger

Post Number: 281
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Posted on Friday, May 25, 2007 - 7:27 pm:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

It sounds like the legal BS could have the buildings title tied up for years. All the while, the buildings continue to deteriorate. This is very bad news.

One idea to save the building could be to make it the new Detroit School Board building. Perhaps a deal could be worked out similar to the one the county used for the old courthouse where a private developer renovates the buildings and then the School Board leases the space for X number of years. That would probably be cheaper than what they are currently paying for space in the new center area.
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3rdworldcity
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Username: 3rdworldcity

Post Number: 665
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Posted on Friday, May 25, 2007 - 8:04 pm:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

Ramcharger: In other words, shift the entire burden of those buildings to the taxpayers? At a cost of millions more than to build a new building somewhere?

The old courthouse deal was nothing more than out-in-the open corruption. The developer made countless millions w/ no risk. The extra costs to the taxpayers has been astronomical. The County has been trying to get out of the deal for years. (I've been trying to get into one, w/o success.)

Same w/ the 36th District Court deal.

Think through your suggestion. Who would benefit? Who takes the risk?
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Bits
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Username: Bits

Post Number: 6
Registered: 02-2005
Posted on Friday, May 25, 2007 - 9:08 pm:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

How could Kraemer have a $7 million claim on a building that sold for $5 - $8.5 million ? (depending on who actually bought it first according to the claim) They were working for Pagan, who now it seems may never have actually owned it. Perhaps this is why they are filing bankruptcy.... What a mess
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Apbest
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Username: Apbest

Post Number: 544
Registered: 03-2006
Posted on Friday, May 25, 2007 - 10:00 pm:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

I think that claim is in reference to the company and not the book tower/building.
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Eric_c
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Username: Eric_c

Post Number: 979
Registered: 11-2003
Posted on Saturday, May 26, 2007 - 10:10 am:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

So what's the answer?

I agree there is no market for office space right now. I too, can imagine that converting a cleared and gutted hotel building into hotel/residential would be easier than converting a functioning office building to such use.

But still...here is a building that has never been unoccupied. The heat has always worked, the pipes never burst. The roof has never come crashing down. It needs EXTENSIVE modernization and rehabilitation of its systems, but still...

Location is good. It's a landmark. It's architecturally significant. What market exists for the Book Buildings?
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Pffft
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Username: Pffft

Post Number: 1280
Registered: 12-2003
Posted on Saturday, May 26, 2007 - 10:18 am:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

I know at least two tenants who had to move out of the Book because of the ongoing turmoil with the utilities, one was a tenant of 25 years. So there are tenants out there...I think putting significant retail on the lower levels might help fill it out though.
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Lmichigan
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Username: Lmichigan

Post Number: 5544
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Posted on Saturday, May 26, 2007 - 5:48 pm:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

It's going to take much more than ground floor retail to 'fill it out' or even make a significant dent in the money the building needs to operate. That said, it definitely couldn't hurt.

Soft and perpetually stagnant office market, or not, I think people too often place more weight on the market than ownership. There are lesser office buildings that, logically, shouldn't be open in this market, but are. It comes down to ownership and how much time and effort they want to put into it. Former ownership of the Book (if we are to assume it was actually sold) is the only reason the property lasted as long as it has, instead of vacating much better taken care of buildings such as the Broderick and David Whitney. The same goes for the Stott, which also shouldn't be open all things considered. Some call it brave, and other's call it foolish, but if you want to make something work, you can, if even in a different function.
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Kraemerdesigngroup
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Username: Kraemerdesigngroup

Post Number: 64
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Posted on Saturday, May 26, 2007 - 8:22 pm:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

All - the AP article is incorrect. KDG has a lien on the building for unpaid architectural services of about $100K.

I only wish it was the $11M.

For those who want to know, secured means a claim on an asset - typically the building. However, one must stand in line. Primary mortgage holder gets first dibs.

It is our belief that SL sold Pagan a bill of goods and screwed his over. The DTE bills were from before they owned the building, along with many other bills.

All in all, a good building worth redeveloping. BK
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Chalu64
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Username: Chalu64

Post Number: 189
Registered: 08-2005
Posted on Saturday, May 26, 2007 - 11:33 pm:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

Good Ole' Susie Lambrecht. I have no respect for her.
She yelled at me once when I worked at a Dry Cleaners in the 80s. (I was basically a kid working 2 jobs to pay my way thru college.)Susie was requesting a cleaning option we didn't offer at the plant. She had the attitude that, "i'm from Grosse Pointe, do as I say..."
I'd love to run into her someday... What a brat she was!
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Lukabottle
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Username: Lukabottle

Post Number: 50
Registered: 12-2004
Posted on Monday, May 28, 2007 - 8:09 pm:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

On a side note, The Broderick's sub basements have experienced on and off flooding for years. The people mover was built above a major water pipe that had been leaking into the subbasements and was finally corrected several years ago. Also, there was a minor sewage leak. If this flooding was allowed for an extended amount of time, could this affect the integrity of the building? It seems as if there has been some significant cracking around the 5th floor.

Honestly, I do not know shit about architecture. I just know what I saw as a part time employee of the the restaurant. We constantly were getting gas for the sump pumps to try to get some of the water out of the basements.

I am sure all those buildings have experienced substantial flooding for prolonged periods of time.
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Burnsie
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Post Number: 993
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Posted on Monday, May 28, 2007 - 8:22 pm:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

The Book-Cadillac also had major basement flooding, lasting for years.
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Lmichigan
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Username: Lmichigan

Post Number: 5547
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Posted on Monday, May 28, 2007 - 8:29 pm:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

As did the Statler, and Fort Shelby, and...
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Detroitstar
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Username: Detroitstar

Post Number: 631
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Posted on Monday, June 04, 2007 - 5:59 pm:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

Is there any update on this situation? Is there electricity in the building? Is the building abandoned yet?
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Bobzilla
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Post Number: 79
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Posted on Tuesday, June 05, 2007 - 8:18 am:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

I'm in my office in the Book Tower right now. I have been a tenant here for 4.5 years, and I love my office.

It was an inconvenience a few weeks ago when the electricity was shut off -- but it was on again about 24 hours later, and it has stayed on since then.

The Book Building and Book Tower are cool. And if Mr. Pagan isn't able to renovate and improve the buildings, I assume that there will be new ownership reasonably soon that can get it done.

With the B-C coming back in all its former glory down the street (with condos on top), it makes sense for the Book Building and Book Tower to follow suit.

Hopefully the tenants won't get inconvenienced by any lawsuits regarding Susan Lambrecht or any financial problems that Mr. Pagan may be having. Maybe I'm being too optimistic, but unless the power gets shut off again for more than 24 hours, I'm not planning to abandon my office.

And there are still a decent number of tenants in the Book Tower -- plus Bookie's, Zef's Coney Island, a test prep center, Detroit Film Center, Zemco Fabric, and other businesses at ground level.
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Warrenite84
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Username: Warrenite84

Post Number: 108
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Posted on Wednesday, June 06, 2007 - 1:07 am:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

That's one place I'd love to see be part of Preservation Wayne's Skyscraper tour.
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Bobzilla
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Username: Bobzilla

Post Number: 80
Registered: 11-2003
Posted on Wednesday, June 06, 2007 - 8:47 am:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

Try the PW tour of Louis Kamper buildings. It's part of the same series of "Tuesday Tours," and that tour includes the B-C, the Book Building and Book Tower, Broderick Tower, and more. I'm the tour guide. The Kamper tour is offered on 6/26, 7/31, and 9/4.
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Raptor56
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Username: Raptor56

Post Number: 10
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Posted on Friday, June 08, 2007 - 3:23 pm:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

speaking of tours, how does one get information on these tours and signup? there wouldn't happen to be a website?
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Charlottepaul
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Username: Charlottepaul

Post Number: 1103
Registered: 10-2006
Posted on Friday, June 08, 2007 - 3:32 pm:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

Raptor56, this might be a place to start: http://detroittourconnections. com/
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Gistok
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Username: Gistok

Post Number: 4496
Registered: 08-2004
Posted on Friday, June 08, 2007 - 4:21 pm:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

Better than that, the PRESERVATION WAYNE website would be the one you want for Louis Kamper Tour and other weekly or annual tours. The granddaddy of downtown tours is the Historic Downtown Theatre Tour every August, which runs 4 1/2 Hrs.

http://www.preservationwayne.o rg/
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Raptor56
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Username: Raptor56

Post Number: 14
Registered: 05-2007
Posted on Friday, June 08, 2007 - 4:53 pm:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

exactly what I was looking for. Thank you both for the Info!

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