Mayor Mike Duggan announced on Tuesday at the Detroit Regional Chamber's Detroit Policy Conference that the District Detroit development is expected to be the first project to get a loan through a new financing tool for affordable housing in downtown Detroit. (Photo by Nushrat Rahman)

Detroit Mayor Mike Duggan on Tuesday announced a new financing tool for developers to build more affordable housing in downtown Detroit, and the first project expected to get loans to create new subsidized units is the District Detroit development with a $24 million investment.

This story also appeared in Detroit Free Press

Detroit’s Downtown Development Authority, or DDA, must approve the final guidelines for the loan program, which would mark the first time since the entity was created in the 1970s that it would target financial backing for affordable housing, officials said.

Under the program, developers can get loans for projects where at least 20% of the residential units are reserved for households making between 50% and 70% of the area median income (AMI), a regional measurement that translates to $31,350 to $43,890 for one person.

Developers must offer rents to residents earning incomes below 70% AMI in the downtown development area. Detroit’s median income, according to 2021 Census estimates, was $34,762 for a household. The program also calls for multi-unit residential developments within the DDA’s footprint that include at least 10 affordable housing units.

“We have a clear vision to create a city, including our downtown, where Detroiters of all income levels can afford to live side by side in the same buildings as people of much higher income. This new fund gives us the ability to make downtown living accessible to Detroiters of all income levels,” Duggan, who chairs the DDA and appoints board members, said in a news release. Three DDA board members other than the mayor are also part of the city’s administration, according to a DDA document.

The DDA — which seeks to support private investments and business growth to increase economic activity in downtown Detroit — is expected to consider the loan program during a meeting Wednesday. The DDA’s funding comes from grants, contracts, interest on loans and captured tax increments on approved developments, according to its website. 

Tax increment financing allows authorities to collect property tax revenue increases in a determined area to develop the area or finance specific projects.Incremental taxes may be captured from county taxes, school taxes, community college district taxes, and taxes levied for libraries and parks, according to the Citizens Research Council of Michigan. 

Duggan, who made the announcement at the Detroit Regional Chamber’s Detroit Policy Conference, said the investment would come from downtown tax captures.

The DDA is also expected to vote to approve the first loans under the program for the District Detroit project amounting to about $23.8 million, according to a news release. The project is a joint endeavor between New York-based Related Companies, the real estate firm of mega-developer Stephen Ross, and Olympia Development of Michigan.

Last fall, the Ilitch organization presented the new $1.5 billion plan for the District Detroit near Little Caesars Arena. The area is bounded by Mack Avenue/Martin Luther King Boulevard to the north, I-75/I-375 to the east, Michigan Avenue, Macomb and Monroe Streets to the south and M-10 to the west. 

The plan proposes 10 renovations, including mixed-use residential buildings, commercial office space and hotels. Included in the plan are 139 units of housing at 50% AMI, out of 679 units at three buildings. A person living in one of the apartments would pay about $850 a month in rent if market rate rents are closer to $2,400, according to a news release. The three projects are on 2250 Woodward Ave., 2505 Cass Ave. and 408 Temple St.

A rendering for a proposed residential building at 2250 Woodward (Olympia Development of Michigan and The Related Cos.)

“Although these residents will be paying much lower rents, thanks to this program, they will enjoy the same amenities as those paying market rate, which is the beauty of mixed income housing,” said Kenyetta Bridges, executive vice president of the Detroit Economic Growth Corporation (DEGC), which staffs the DDA’s board.

The maximum loan amount that developers could get per affordable unit would be $200,000 based on a sliding scale. Larger loans would be available for those that make units for those with lower incomes. For instance, the loans aren’t an option for units priced for people with incomes at 80% AMI (or $50,160 for one person), but projects for 60% AMI (or $37,620) could get loans for roughly a quarter of hard construction costs.

The DDA program could also offer some loan forgiveness to developers who rent affordable units to Detroiters who have been city residents for at least three years.

Under the city’s Community Benefits Ordinance, developers with projects valued at $75 million and above that receive at least $1 million in property tax abatements or get $1 million in value of a city land sale must conduct several meetings and engage with residents in the planning process. The first meeting for the District Detroit took place in November, where developers fielded questions and concerns around housing affordability, hiring plans for Detroiters and street parking in neighborhoods around LCA on game and event nights.

Full details of various tax breaks and tax increment financing for the District Detroit project were expected at a community benefits meeting Tuesday evening.

Free Press staff writer JC Reindl contributed to this report.

Nushrat Rahman

Nushrat Rahman covers issues related to economic mobility for the Detroit Free Press and BridgeDetroit as a corps member with Report for America, an initiative of The GroundTruth Project.

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