Developers behind a plan for $1.5 billion in downtown projects proposed a record-breaking community benefits deal, but some don’t agree with how the value of public investments are being calculated.
Olympia Development of Michigan and Related Companies shared the community benefits proposal this week as part of ongoing negotiations with neighbors impacted by the projects. The conversations are required under a city law that aims to secure community investments in exchange for tax incentives and other public subsidies. But the development group’s $167 million benefits total encompasses publicly-financed loans and planned investments by the City of Detroit that weren’t negotiated through the community benefits process; a sticking point for residents who are skeptical of the prosperity promised by “District Detroit” developments.
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The combination of public funding, city investment and developer contributions is being touted as Detroit’s largest community benefits plan to date – more than triple the $50 million that the project’s neighborhood advisory council proposed as a target. However, some Detroiters are objecting to the inclusion of funds that aren’t coming directly from the developers.
“We have to back up a little bit and have a proper understanding of community benefits,” Tonya Meyers Phillips, director of Community Partnerships & Development at Detroit’s Sugar Law Center, said this week during a meeting of the project’s neighborhood advisory council.
“Community benefits are not public funding that we’re providing to the developer to make more money,” she said. “Community benefits are not what the City of Detroit is doing as a public body.”
District Detroit developers are also seeking a massive infusion of public subsidies for its project – $797 million in tax incentives and reimbursements. The Detroit Brownfield Redevelopment Authority took the first step toward approving a $616 million subsidy for the project by voting in favor of a “transformational brownfield plan” on Wednesday.
That plan allows costs to be reimbursed by property taxes collected from development sites over the next 35 years. Developers cited the $167 million in community benefits as evidence they are responding to Detroiters’ concerns.
The community benefits estimate includes a $12 million cash contribution toward a series of programs identified by the neighborhood advisory council, $100 million for hiring Detroit-based contractors and $4 million for cultural programming.
It also factors in $50 million in taxpayer funded loans from the Downtown Development Authority for affordable housing and infrastructure improvements, and another $2 million in city spending to improve bus shelters and parking in the Brush Park neighborhood.
Andrew Cantor, executive vice president for Related Cos., said the $167 million figure accurately represents benefits created by the 10 projects, which include two hotels, 695 residential units across four buildings, office and retail space.
“We are being really transparent about what we think are the comprehensive benefits,” Cantor told BridgeDetroit. “We came to this process having done two years of work and listening to try to develop a series of projects that we thought were responsive. It seems kind of wrong and counterintuitive that you should come in with a project that isn’t community friendly, (so that) you can (make it community friendly) during the meetings. It really shouldn’t matter in my mind whether you do it before or after, as long as the end goal is actually listening and achieving the desired outcome.”
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.
Conversations around the community benefits agreement are ongoing. The developers have proposed investments in education, housing, jobs training, business incubation, arts and culture programs, green space and parking. The proposal covers a wide range of ideas, including support for a new football field at Cass Technical High School and allowing Section 8 vouchers for apartments offered at reduced rent.
Neighborhood Advisory Council member Terrance Reid asked the developers to distinguish between investments “that were already anticipated” versus investments that were created in response to conversations with the advisory group.
Cantor said the project would still be the largest benefits deal, even with only the $12 million in direct contributions counted.
Other developers who have gone through Detroit’s community benefits process committed an average of $2.2 million in benefits, according to the city. Only two projects came close to the proposed deal – the Stellantis automotive plant ($11.4 million) and Ford Motor Co.’s Michigan Central Station ($10 million).
Keith Bradford, president of Olympia Development of Michigan, said the project will bring thousands of jobs, affordable housing units, increased tax revenue “and help to transform the City of Detroit.”
“We do feel that this is the largest CBO that’s been brought forward, particularly when you can look at the cash contribution that’s coming forward,” Bradford told BridgeDetroit. “It’s extremely strong in that area.”
The debate over the true value of community benefits, and what items were specifically born from negotiations with residents, could be critical to decisions by city officials. Multiple public bodies will weigh in on the $797 million in tax incentives and reimbursements being sought.
The subsidies would reimburse developers for roughly half of the estimated cost of the project.
Council Member Gabriela Santiago-Romero told developers at a Tuesday meeting that tax incentives weren’t approved for Dan Gilbert’s Hudson Site project last summer because the community benefits agreement was considered insufficient. A $60 million tax abatement was narrowly approved in 2022 after improvements were made to affordable housing provisions in the benefits package.
Virtually all Detroiters who called in to comment during the Brownfield Redevelopment Authority meetings this week objected to the tax incentives. Organizers with the Detroit People’s Platform and Democratic Socialists of America had a heavy presence at a Monday public hearing and at Wednesday’s vote.
Dozens of residents argued the project offers little for Black residents, saying most can’t afford to live in the new housing and a majority of construction jobs won’t go to Detroiters.
“This is overwhelming and near-unanimous public opposition to these tax breaks,” resident Chris Gilmer-Hill said during Wednesday’s meeting. “We shouldn’t need to bribe the wealthiest people in the entire state to get them to decide to come down to our level and build downtown. We know that’s already how they make their money.”
Susan Steigerwald, who identified herself as a resident since 1976 and homeowner since 1998, said it’s unethical to offer developers a $616 million tax break while thousands of Detroiters are facing evictions due to tax foreclosure.
“This development is upward wealth distribution, taking away from the institutions of Detroit and giving those resources to billionaires,” Stiegerwald said.
Detroiters opposed to incentives said the tax captures particularly harm the Detroit Public Library. The developers proposed giving the library $250,000 to support reopening branch locations but tax captures from the library total $4.7 million under the brownfield plan.
Developers and city officials have pushed back against the perception that tax incentives take money away from public institutions. Brownfield plans work by collecting a portion of property tax revenue from entities like local schools, the Detroit Public Library and county jail over a period of time. The taxes are then used to reimburse developers for construction costs and make it “economically viable” to charge affordable rental rates.
“The net benefit that we’re talking about, that doesn’t exist without the dollars being invested upfront and the project moving forward with your approval,” Cantor told the brownfield authority on Wednesday.
Other residents highlighted the poor track record of the Illitch family’s development team to execute past promises for District Detroit. Landis Spencer, an organizer for the Democratic Socialists of America and 2021 candidate for Detroit’s Board of Police Commissioners, said developers should not be rewarded for their inaction over the last several decades.
“The reason why this property tax abatement is so egregious is that the Ilitches have not been good community stewards,” Spencer said. “They have let their properties rot in order to speculate on property and in order to buy more property. They have taken our money and have not given us what they promised.”
Brownfield Redevelopment Authority approved the $616 million incentives plan with a 5-2 vote, with members Maggie DeSantis and Eric Dueweke voting against the plan. The brownfield package now moves to the Detroit City Council for consideration. It if succeeds there, it will go to the Michigan Economic Development Corporation for review and approval by the Michigan Strategic Fund.
Brownfield Redevelopment Authority Board Member Stephanie Washington, who also serves as chief of staff for Mayor Mike Duggan, said the project is “needed in the city.”
“I know there is opposition to it,” Washington said. “However, the jobs it brings, the education, affordable housing, it brings; I support it. I’d like to move forward … so we can have public hearings, more dialogue with the neighborhood advisory council, with council members (and) with the community.”
DeSantis said she voted against the plan because it’s “terrible public policy” to offer public incentives for a part of the city already experiencing “massive development” and gentrification. She also objected to developers factoring public funding into their total community investment.
“It’s the wrong use of tax dollars,” DeSantis said. “I also am concerned about what feels like a rush. My colleague board members didn’t want to take any more time to hear all this detail.”
Dueweke said it’s “a little bit disingenuous” to consider loans from the DDA as a benefit coming from the developers.
Dueweke said he also would have liked more time to fact check aspects of the proposal. He had several unanswered questions about the University of Michigan’s involvement. A planned U-M research and education center, dubbed the Detroit Center for Innovation, is considered “a significant component” of the brownfield plan. However, the U-M project isn’t seeking brownfield funding and isn’t part of the community benefits negotiation.
Dueweke collected 93 signatures on a petition asking the neighborhood advisory council to pass a resolution urging U-M to enter a voluntary community benefits process regarding its Center for Innovation project. It was signed by U-M students, alumni, staff and faculty who live in the city.
“I might still have voted yes if I had some more information, but I guess the train is moving,” Dueweke said.
The District Detroit Deal is a bad deal. Trickle down-economics has never worked and it will never work!
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