This week in the notebook:
- Tax breaks for riverfront hotel
- East riverfront biergarten dashed
- Housing values on the rise
- Alarm raised on senior housing
Welcome back. I’m still Malachi Barrett.
The City Council approved $142 million in tax breaks for a riverfront hotel planned for the former Joe Louis Arena site.
Community benefits negotiations and requests for tax subsidies are usually contentious issues. That wasn’t the case Tuesday. Council members applauded the Sterling Group for delivering a generous community benefits package.
The $397 million Hotel at Water Square is the latest development along Detroit’s riverfront. A day earlier, General Motors announced plans to move its global headquarters inland from the Renaissance Center to Hudson’s building.
The Sterling Group plans to build a 25-story four-star hotel with 600 rooms, 50,000 square feet of meeting space, and three new restaurants. The average one-night stay will cost $345.
City officials say the new hotel will help Detroit book conventions and major events. A pedestrian tunnel will connect the building to Huntington Place.
“This is something the city needs, and to move our city forward I believe it’s an easy ‘yes,’” said Council Member Fred Durhal III.
Durhal said NBA Commissioner Adam Silver told him that Detroit won’t host an All-Star game without more hotel space.
An economic benefit study found Detroit fumbles 12 events per year due to a lack of hotel capacity at Huntington Place.
A matching high-rise apartment building on the former Joe Louis Arena site was completed without tax subsidies. Sterling Group was required to follow Detroit’s community benefits process after seeking tax breaks for the hotel.
Past community benefits deals encountered tough criticism from community groups that argued developers didn’t offer enough neighborhood investments in exchange for tax breaks.
Council members held up the latest agreement as an example of the process done right.
The deal includes 35 commitments from developers valued at $1.15 million in direct contributions and $10 million in spending on Detroit businesses. It was negotiated by a group of residents who live near the project.
Some highlights of the benefits agreement include:
- $500,000 for upgrades to the Detroit People Mover’s west riverfront station
- $250,000 in scholarships for students in District 6
- $100,000 in donations to the Grow Detroit’s Young Talent internship program
- $100,000 in donations to nonprofit organizations in Corktown
- $100,000 in donations to organizations that provide shelter to domestic violence and human trafficking survivors
Developers committed to hiring 100% union contractors for construction work. The hotel is expected to create 354 permanent union jobs that pay an average wage of $50,792.
They also partnered with the Detroit Bird Alliance to implement safety standards to minimize the risk of birds colliding with the building.
Council Member Gabriela Santiago-Romero said she unsuccessfully pushed for additional investments, but it largely addresses community needs.
“Frankly, I wish more processes were as smooth as this one, processes that don’t require council members to ask more because developers are already meeting the needs of the community,” she said. “I highly encourage more developers to engage and invest in communities. It makes your jobs and our jobs easier.”
The city is planning $5 million in infrastructure improvements to connect downtown to the riverfront. Changes are aimed at reducing traffic speeds and making West Jefferson more pedestrian-friendly.
Sterling Group acquired the 5-acre riverfront site from one of Detroit’s bankruptcy creditors through a $14.1 million deal.
The City Council authorized a state renaissance zone allowing for a $130.6 million tax cut during the next 30 years. Final approval from the Michigan Strategic Fund is still needed.
The state will reimburse Wayne County Community College and the Detroit Public Library for all tax revenue lost.
Another $11.6 million tax cut was approved to reduce taxes on the value of improvements to the site for 10 years after construction is finished.
The Hotel at Water Square is expected to create $2.5 billion in economic impact for Detroit during the 30-year tax break. This includes $25.4 million in annual tax revenue for the city and $123 million for other taxing jurisdictions.
Council Member Angela Whitfield-Calloway said she appreciated that Sterling Group Chairman Gary Torgow attended Tuesday’s meeting in person.
“I have not seen Mr. Gilbert come here, I have not seen Mr. Ilitch come here – they send their designees and their representatives and surrogates,” Whitfield-Calloway said. “The person whose name is on the dotted line is here. I support you because you support the people. You always come giving, hardly ever asking.”
What page are we on?
Today’s notebook describes the April 16 formal session. Council Member Latisha Johnson was absent.
Dig into the agenda, read Detroit Documenter notes or watch the recording for more details.
The council will go on recess from April 22 through 29 due to the NFL Draft.
Mayor Mike Duggan will deliver his annual State of the City address tonight at 7 p.m. The event is not open to the public but will be broadcast live online.
Detroit’s Planning and Development Department is forming a citizen advisory group to weigh in on the city’s master planning process. Applications are open until April 19.
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Housing wealth on the rise
A new report from the University of Michigan found the net value of owner-occupied homes nearly doubled from 2014 to 2022.
The net value of homes increased from $4.2 billion to $8.1 billion during those nine years. Black residents own most of Detroit’s housing wealth.
Home values grew the most in neighborhoods with the lowest property values and highest poverty rates in 2014.
Neighborhoods with high concentrations of Hispanic and Latino residents experienced large increases in home values.
The net value increased by 80% for Black homeowners, but was much higher for white (127%) and Hispanic homeowners (181%).
Those gains caused Black homeowners to represent a smaller share of Detroit’s housing wealth, dropping from 82% to 77% since 2014.
Duggan attributed the growth to the hard work of neighborhood associations, city departments and nonprofit organizations.
Blight cleanup, infrastructure investments, side lot sales, home repair funding and eviction defense programs all played a role, he said.
The report includes several examples of areas that experienced the most growth in home values:
- Middle East Central, a predominantly Black neighborhood where the median home sale value grew from $8,908 to $104,000, a 1,067% increase
- Condon, a mixed Black and Latino neighborhood where the median home sale value grew from $7,533 to $71,760 in 2022, an 853% increase
- Jefferson/Mack, a predominantly Black neighborhood where the median home sale value grew from $11,987 to $67,600, a 464% increase
- Davison, which contains a mixture of different ethnic groups (including a large Bangla community), grew from $23,580 to $104,000, a 341% increase
Senior housing emergency
Several council members have called attention to poor housing conditions in senior buildings throughout the city.
Council President Mary Sheffield and Council Member Mary Waters held a Monday press conference to highlight maintenance issues, unsanitary conditions, and pest infestations at senior buildings.
Whitfield-Calloway held a protest last week over housing violations at apartment complexes in Palmer Park.
Sheffield said they’re working with city departments to address complaints and blight tickets.