More details emerge for $1.5B District Detroit buildout and incentives
A fuller picture is emerging of the proposed $1.5 billion buildout of District Detroit. Developers are planning 10 new buildings or rehabs and are requesting about $800 million in development incentives.
The joint project by the Ilitch organization’s Olympia Development and megadeveloper Stephen Ross’ Related Companies is moving toward a possible Detroit City Council vote in March.
The project’s biggest subsidy request, a $616 million state-level tax capture over 35 years, known as a Transformational Brownfield, had its first hearing Monday before the Detroit Brownfield Redevelopment Authority.
The authority could vote Feb. 8 on whether to approve the subsidy request and forward it to City Council. If the council then gives its approval in March, a final vote on the subsidy could come in April from the Michigan Strategic Fund, and the groundbreaking for the first proposed building could happen in July.
On Monday, a new economic impact projection for the District Detroit buildout, done by HR&A Advisors, a national real estate consultant, was discussed. The projection forecasts that all 10 buildings would “support” about 12,450 on-site construction jobs.
And if all 10 buildings get built and are successfully leased, the consultant forecasts that nearly 5,800 permanent full-time-equivalent jobs would be created, paying average incomes of $95,000 a year.
The forecast also expects the buildout to result in $113 million new net revenues for the city’s general fund over the first 10 years, coming mostly in the form of city income taxes, city corporate income taxes and utility taxes. Over 35 years, the forecast expects $751 million in net new revenue for the city.
To be sure, all those jobs and tax revenues aren’t assured. To achieve the projections, the 10 buildings would need to fill up promptly with new office and residential tenants.
More:3 new office buildings would be unique to Detroit, have more amenities, developers say
The developers also intend to contribute $655 million in equity toward the $1.5 billion project, according to development documents that have not previously been reported. That contribution is above the 20% minimum equity requirement for Transformational Brownfields.
The written proposal discussed Monday added details for the project’s 10 new buildings, such as size and costs.
6 new buildings in the buildout:
- 2250 Woodward: A 20-story building to go next to Comerica Park and contain 287 apartments (20% set aside as “affordable”), 27,000-square feet of ground-floor retail space and a new underground parking garage with 206 spaces. Development costs: 217 million.
- 2205 cass: An 18-story residential building with 261 apartments (20% affordable) and 8,750 square-feet of retail space that would be part of the Detroit Center for Innovation campus. Development cost: $148 million.
- 2200 Woodward: A newly constructed 17-story office building with ground-floor retail next to Comerica Park, plus a new underground parking garage with 298 spaces. (It would share the same parking garage 2250 Woodward). Development cost: $321 million.
- 2305 Woodward or 2300 Cass: Two locations under consideration for an all-new, 22-story office building with ground-floor retail. Development cost: $283 million.
- 2300 Woodward: A new five-story office building with ground-floor retail. Development cost: $82 million.
- Hotel next to Little Caesars Arena: A newly constructed 14-story, 290-room hotel next to Little Caesars Arena at 2455 Woodward. Although the building was originally announced last June as an Equinox Hotel, the actual brand of hotel has yet to be determined. Development cost: $192 million.
4 rehabs in the buildout:
- 408 Temple St: The long-empty Fort Wayne/American hotel near the Masonic Temple would be redeveloped as an 11-story apartment complex with ground-floor retail. There would be 131 apartments, with 20% affordable. Development cost: $69 million.
- 2210 Park Ave.: Redevelopment of the old 10-story Detroit Life Building into 16 apartments with ground-floor retail. Development cost: $24 million
- 2115 Cass: Adaptive reuse of the former Moose Lodge building into a four-story business incubator as part of the Detroit Center for Innovation campus. Development cost: $55 million
- Fox Hotel: Adaptive reuse of the 10-story Fox Theater office building at 2211 Woodward to become a 177-room Fox Hotel. The project will not alter the Fox Theatre. Development cost: $123 million.
The development incentives being sought break out as follows:
- $616 million in Transformational Brownfield reimbursements of state-level taxes over 35 years
- $133 million in city tax breaks. Those tax revenues would otherwise be captured by the Downtown Development Authority, or DDA.
- $25 million cash reimbursement to the developers from the DDA for the cost of “infrastructure improvements” for the buildout, specifically road and utility upgrades and creating public spaces. This money does not need to be paid back.
- $24 million loan from the DDA to be repaid with 1% interest over 34 years to support the construction of deeply affordable housing, so that 20% of the planned 695 apartments would be set aside at below-market “affordable” rates for those whose incomes are no higher than 50% of the area median income, about $31,000 per year for an individual and $45,000 for a family of four.
- Federal Historic Tax Credits would be used to support the redevelopment of three buildings, with 4% Low Income Housing Tax Credits to be used for three other buildings. (No dollar value for the tax credits are cited.)
A series of public meetings in Detroit for the project’s Community Benefits began in late November and is scheduled to conclude in mid-February. The next meeting in the series is at 6 pm Tuesday at Cass Technical High School, 2501 Second Ave., and will also be broadcast remotely on Zoom.
City Council is not expected to consider the $616 million Transformational Brownfield request until after a Community Benefits agreement has been reached.
Only two other Transformation Brownfields have been approved since the program began in 2017. Those brownfields were for a group of four Bedrock developments in downtown, including the Hudson’s site, and redevelopment of an abandoned Vicksburg paper mill as commercial and residential space.
A separate but related project is a $250 million academic research campus in downtown for the University of Michigan, called the Detroit Center for Innovation, which is being developed by the Related Cos. on land provided by the Ilitch organization. That project is required to break ground before year’s end and may be renamed the Michigan Center for Innovation.
Contact JC Reindl: 313-222-6631 or [email protected]. Follow him on Twitter @jcreindl.
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