Developers behind the $1.5 billion District Detroit project took a major step Tuesday toward securing $797 million in public subsidies with the finalization of a community benefits package.
A group of residents living near the proposed development sites voted 8-1 to formalize the benefits it negotiated with developers over the last three months into a legal agreement that will be signed next week and sent to the Detroit City Council. The deal, which includes $12 million in cash contributions to community initiatives from developers, was heralded as either “historic” and “transformational” or “hostile to community” by Detroiters who attended Tuesday’s meeting.
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City Council approval of the benefits deal is required before the developers can receive tax incentives for large projects under a Detroit law created in 2017 by the will of voters. The law is meant to give residents living in the shadow of massive developments a voice in negotiating certain guarantees, like affordable housing and job opportunities and measures to address potential negative impacts.
The City Council also has to sign off on a $616 million transformational brownfield plan and $133 million in tax abatements sought by the development team of the Ilitch organization’s Olympia Development of Michigan and Stephen Ross’ The Related Companies. Tuesday’s vote by the neighborhood advisory council, seated to represent impacted residents, was an important step for developers to show the public subsidies will create a positive impact on Detroit.
In the benefits plan, the developers have committed $12 million in cash contributions to projects identified by the neighborhood council, like support for job training programs, a new athletic field at Cass Technical High School, traffic and parking studies and markers at historic sites. Other commitments secure 139 “deeply affordable” housing units, parking discounts and acceptance of Section 8 vouchers for affordable units. The District Detroit benefits package includes approximately $167 million in total value, according to the development team, which is being touted as Detroit’s largest community benefits plan to date.
“I would say we weren’t necessarily surprised by any of the requests,” said Keith Bradford, president of Olympia Development of Michigan. “At the end of the day, as we’ve said many times, we’ve spent the last two years talking to the community and they were already informing us what they were looking for. This (neighborhood advisory council) did a wonderful job and echoed everything we’ve been hearing. This is a direct response from the community, and I think that’s why we were able to get the results tonight.”
Chris Jackson, a developer and businessman who chairs the neighborhood advisory council, said Detroit’s law allows for the creation of benefits that otherwise wouldn’t exist. He lauded the deal struck Tuesday, particularly provisions that support minority-owned businesses.
“Different people have different views of community benefits agreements, but ultimately it seems like they are proving to be a good thing,” Jackson said. “I pat ourselves on the back and I disagree with the hecklers that (say) we didn’t use our power, because nothing like this has been negotiated with projects of this magnitude in the history of this city.”
Jackson said he “absolutely” feels an obligation to advocate before the City Council for approval of the tax incentives sought by Olympia and Related Cos.
“It’s all part of it, they had to negotiate this deal with us because they were getting the tax incentives,” Jackson said. “Without one, you don’t have the other. Some of the benefits were able to be negotiated because they want the incentives.”
Barbrie Logan was the lone member of the group to vote against the deal. Logan said the city is in a better position to negotiate since the Illitch-owned Little Caesars Arena opened in 2017 and failed to deliver on promised developments in the area. Logan said the neighborhood council shouldn’t feel obligated to accept the agreement as-is.
Halima Cassells, a Detroit artist who observed the community benefits process, counts herself among the residents who feel the deal lacks imagination. Cassells, who served last year on the neighborhood council for the rehabilitation of Fisher Body Plant 21, said the benefits process is flawed; neighborhood advisors, she said, aren’t given the time or resources to argue from a strong position.
“We should take a deeper, data-driven approach in Detroit to the community benefits process,” Cassells said. “We need time to even know what the possibilities are, how has this been implemented in other cities and what’s possible? Why is it being made to feel like there is such a rush on these? There is a lot more breadth of what can be considered a community benefit.”
Cassells said the neighborhood group should have negotiated for a racial equity framework, a post-construction environmental impact study and a plan to ensure property value increases won’t displace existing residents.
Melody Martin has lived in downtown Detroit for more than a decade, and in that time has seen her rent more than double for a one-bedroom apartment from $650 to $1,350. Martin, who is retired, said she spends around 80% of her income on housing and worries she will be priced out once the District Detroit projects are completed.
“We don’t mind them coming, but don’t force us out because of the prices,” Martin said. “They’re trying to make it like New York or Chicago, but us Detroiters just don’t have that kind of money.”
An earlier draft of District Detroit’s benefits package included $250,000 for the Detroit Public Library, but that didn’t make it into the final agreement. Cassells said denying funding for an important public resource is ironic while the developers expect to receive $797 million in publicly-funded subsidies.
“It’s a great storyline for dystopian absurdist theatre,” she said. “It’s really unfortunate that this is real life.”
Detroiters who spoke Tuesday during public comment were opposed to the benefits deal, some accused the neighborhood council of missing their chance to do something more meaningful.
“I’ve monitored all of the community benefits agreements and this is the worst one yet,” said Eden Bloom, an organizer with the Detroit People’s Platform. “Those who have come here gave you all the tools you need to do something different, to do something that matters … What are you doing? You have power. Why won’t you pick up the power?”
Theo Pride, another Detroit People’s Platform organizer, called the removal of library funding shows the agreement is “hostile to the community.” Tax captures from the library, if approved, total $4.7 million under a 35-year brownfield plan. Meanwhile, the library is expected to have a $3 million budget deficit over the next several years.
Neighborhood advisory council member Rogelio Landin said there was healthy opposition to the deal but “at the end of the day, we came together on what is a historic and precedent-setting agreement.”
“There’s a sense of lost revenue here, but the city has established none of this is coming to any expense of libraries, schools or the city tax base,” Landin said. “I’m not sure why anyone would insist that it is. We’ve got a cache of folks in the city who are somehow committed to creating and disseminating disinformation for any number of reasons, to undermine what I believe is positive and progressive development in the city.”
Andrew Cantor, executive vice president of development for Related Cos., said conversations with the neighborhood council were “constructive and detailed.”
“We’re really excited because it’s one step forward toward us being able to deliver on the affordable housing, on the job creation and on the overall benefits that this transformer project will allow,” Cantor said. “We look forward to working with the City Council as we head into the next phase. This (vote) is an important milestone, and I think it reflects the collaborative and inclusive way that we sought to move forward with this project.”
The District Detroit plan calls for 10 projects, which include two hotels, 695 residential units across four buildings, office and retail space.
If completed as planned, the projects are expected to create 12,450 temporary construction jobs with an average income of $70,000 per year and 5,790 permanent jobs with an average income of $95,000 per year. The job estimates were part of an impact analysis the development team commissioned from New York-based firm HR&A.
The city is also expected to benefit from increased property tax revenue created through the transformation of vacant lots and underutilized buildings.
Developers estimate $113 million in net revenue will go to the city’s General Fund in the next decade and a combined $751 million in net revenue for the city over the next 35 years. The state is estimated to receive $1 billion in net revenues over 35 years.
What’s in the benefits deal?
The benefits package includes seven categories of projects identified by the neighborhood council: Housing, employment, retail and local business incubation, arts and culture, green space and accessibility, education, and traffic, transit and parking.
The $167 million benefits total incorporates $1.3 million in spending by the City of Detroit, $49 million in loans from the city’s Downtown Development Authority and $100 million from the developers to hire disadvantaged and Detroit-based construction contractors.
The benefits package includes a commitment to lease at least 20% of residential units for people earning at least 50% of the area median income for Southeast Michigan, which ranges from $31,350 for a single person and $44,750 for a family of four.
The deal would ensure 139 affordable units are available for 30 years. The developers also committed to offering renters in affordable units with an option to renew a lease unless there is good cause to reject them. Developers declined to extend this option to all renters.
Developers also agreed to accept Section 8 vouchers for affordable units. The federal program provides rent subsidies for very low-income families, potentially allowing more people to access the discounted units. Residents who live in the affordable units will be granted one parking space at half-cost, which is expected to cost developers $3.5 million.
Developers committed to hire third-party consultants to ensure the design of residential units go beyond the requirements of the Americans with Disabilities Act. The developers must also construct at least 5% of residential units with features that improve the usability and quality of life for persons with disabilities, under the deal.
For jobs initiatives, the developers committed to a $1.5 million “Fast Track” training program in collaboration with the city’s workforce training department and pledged not to test employees for marijuana, though said they can’t control the testing policies of other companies associated with the project.
They will support Detroit’s Grow Detroit’s Young Talent program, which hires residents between the ages of 16 and 24 for paid summer internships, and will expand paid internship opportunities for Detroit students. Most of the education spending in the benefits plan comes from a $1 million contribution to the renovation of Cass Technical High School’s football field.
Other commitments include a $1.5 million bond fund for minority-owned contractors, a $1 million fund for disadvantaged and Detroit-based retail businesses, and a $1.3 million investment in co-development opportunities for local contractors.
The developers agreed to create a “Council on Construction Operations” to increase retention of Black and Hispanic construction employees and provide wraparound services to employees.
Other initiatives include a $175,000 parking study to assess residential parking needs and another study on traffic management, design studies for the revitalization of Cass Park and to host community meetings about a new community plaza near Comerica Park.
Local arts and culture projects are supported through a $50,000 study to identify historic sites and place markers that honor legacy Detroiters, plus $500,000 in support for public art projects. Developers also committed $2.5 million for 10 years of programs at the community plaza.