Residents living near the massive $1.5 billion District Detroit project want developers to make the largest commitment yet under a city law that guarantees neighborhood benefits.
The Neighborhood Advisory Council (NAC) for the project agreed this month to set a $50 million target for the investment in community benefits they’d like to see from Olympia Development and Related Cos. Early negotiations between the advisory council, District Detroit developers and the mayor’s office provide a window into the divide of how community benefits are viewed.
Detroit’s community benefits ordinance requires developers seeking public tax breaks for large-scale projects to engage with residents to negotiate benefits for impacted neighbors.
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City officials said Tuesday that past deals haven’t always attached a dollar amount to each benefit and that residents should consider “the right mix” of monetary and non-monetary commitments.
Neighborhood Advisory Council Chair Chris Jackson, a businessman and developer, said the $50 million figure is a “placeholder amount” that could change based on the ongoing negotiation process. Jonathan Kinloch, a Wayne County commissioner and fellow advisory council member, suggested the price tag. The NAC, he said, needs to start narrowing down tangible demands.
“You’ve heard from residents; a lot of commitments have been made in the past,” Kinloch said Tuesday during a meeting at Cass Technical High School. “We want to be able to have a clear understanding of what those public commitments are and how the citizens will benefit. There is a value associated with that. The $50 million is a starting point as we begin to assess and evaluate commitments.”
The NAC agreed on categories of benefits they’d like to see from the developers, including: Retail and local business incubation, employment, green space, culture and education as well as job training, housing, transportation and parking, food security, health and safety.
Jose Lemus, a senior advisor for Mayor Mike Duggan’s Jobs and Economy Team, said most benefits that developers have agreed to on other projects under the city ordinance are for services that don’t have a dollar amount attached.
City officials noted that $50 million is a much larger commitment than what other developers invested in the past 12 community benefits agreements. Developers committed an average of $2.2 million in benefits, while eight of the 12 resulted in a commitment of less than $1 million.
The District Detroit plan, a collaboration between the Illitch family and Stephen Ross’ New York-based development company, is also more expansive than past projects. Developers have 10 projects planned, including new offices and housing, commercial and retail space and two hotels, mostly located west of Comerica Park and south of Little Caesars Arena.
Developers are seeking to have a significant part of the development cost reimbursed through public incentives after the projects are completed. District Detroit is seeking $616 million in “transformational brownfield” funding and $133 million in tax abatements. The city’s Downtown Development Authority also approved $48.7 million in loans for the project.
Duggan administration officials said the price tag of community benefits should be reflective of the type of project. The return on a developer’s investment is a factor that has influenced other community benefits agreements, said Luke Polcyn, deputy group executive for the city’s jobs and economy team.
Polcyn said $48 million in two loans authorized by the city’s Downtown Development Authority will “create public goods,” namely affordable housing and public infrastructure improvements coinciding with construction of the District Detroit projects. Polcyn said the $23.7 million DDA loan offered to developers in exchange for 139 affordable housing units should be considered as “an investment in community benefits, in our view.”
One-fifth of the housing units will be offered at a monthly rent that’s meant to be affordable for a two-person household earning $35,800 or less. Rents will be set between $627 per month and $1,007 per month, according to developers.
“Affordable housing really is only possible when a government gives money and supports development with subsidies specifically designed to create public good,” Polcyn said. “Affordable housing does not make financial sense to develop. The return is not there. You cannot, in a market-based way, develop meaningful and deeply affordable housing at this kind of scale.”
The other DDA loan will help pay for a new plaza in front of Comerica Park, sidewalks and pedestrian infrastructure and a public park near the Detroit Center for Innovation, a $250 million University of Michigan graduate school campus planned for a lot west of the Fox Theatre.
The NAC spent much of Tuesday’s meeting discussing how bringing more people downtown will further strain the existing lack of parking in the area.
Keith Bradford, president of Olympia Development, said an underground garage will add 500 parking spaces for residents who live in the attached building on Woodward Avenue across from Comerica Park. Bradford said the Olymipa garages charge $225 per month for a parking pass.
Henry Williams, an NAC member who lives in senior housing in Brush Park, said the price is “outrageous.” Unaffordable parking passes are a major reason residents in his neighborhood are forced to park on the street, Williams said. Those spots are hard to come by when events are going on downtown and residents complain that parking on the street leaves them exposed to theft, he said.
Jackson said people who are lucky enough to get one of the affordable units can’t manage $225 per month for parking.
“Let’s just be real,” Jackson said. “If you’re going to have affordable housing you’re going to have to have affordable parking.”
Bradford said cutting the cost of parking becomes “quite an expensive benefit,” and asked the NAC to consider where parking ranks on their priority list. Bradford said the NAC needs to decide if the investment should go toward something that would “only impact 139 residents.”
“Do we want to focus on that few or look broader at other solutions, whether it’s parking or other community benefits that impact a broader aspect of the community, versus 139 (residents),” Bradford said. “If this goes to the top of the list, then we’ll figure it out. There may be other things that are more important.”
Andrew Cantor, executive vice president of development for Related Cos., said workforce development and job training could be more impactful investments. However, Cantor said the developers aren’t saying no to anything at this point.
“There are valid questions to be discussed about whether creating high-paying jobs is more valuable than subsidizing parking for 139 people,” Cantor said.
Members of the NAC have kept a major focus on the affordability of housing in the area. Barbrie Logan said Detroiters often can’t afford units that are considered affordable based on flawed income calculations that pull in wealthier areas outside the city. Logan also is concerned about the potential for displacement.
“I don’t discourage development,” Logan said. “But now that they’ve developed the downtown area, it seems to me that they feel like you guys don’t deserve to enjoy the benefits of our development because you can’t afford it.”
Cantor said “there’s no displacement of anyone” and each residential building will have 20% of its units set aside for reduced rent.
“I’m not saying there isn’t a broader, challenging problem, but we’ve tried to be really intentional about that,” Cantor said.
Summer Boxley, program and policy coordinator for the Metro Detroit Black Business Alliance, had several suggestions to support the local economy. Boxley asked developers to commit a percentage of retail space to Black vendors, increase the number of Black-owned franchises at Little Caesars Arena, create a scholarship fund for Detroiters to pursue graduate degrees and make a multimillion dollar donation to a no-interest loan fund for Black-owned businesses and nonprofits.
The Detroit People’s Platform, a community advocacy organization, submitted a letter recommending a contribution to the city’s Housing for the Future Fund for each year that property taxes are discounted though deals with Detroit and the state of Michigan.
Alternatively known as the affordable housing trust fund, the program provides low-interest loans and grants to the development and preservation of affordable housing. The fund had a balance of $46 million as of September, with $28.6 million committed to 11 projects.
Developers are scheduled to continue meeting with the NAC at 6 p.m. each Tuesday at Cass Tech until a community benefits agreement is finalized in late February.