The state on Tuesday approved nearly $16 million in brownfield tax incentives for the Detroit Pistons’ soon-to-built headquarters and practice facility in Detroit.
The approval by the Michigan Strategic Fund board allows for the capture of local and school taxes to fund the $107 million project, which includes the practice facility, the Henry Ford Health System Sports Medicine Building and a parking structure. An earlier estimate of $65 million only factored in the possible cost for the practice facility, team officials said.
“This to us is bigger than the arena that we play at because this is going to be our home for our basketball team and our company,” said Richard Haddad, vice president and general counsel for the Pistons.
The tax incentive approval comes a day after officials held a ceremonial groundbreaking on the Henry Ford-Detroit Pistons Performance Center, scheduled to open in summer 2019 in the New Center area. The state-of-the-art training, rehabilitation and sports medicine complex will be on Amsterdam Street at Second Avenue.
The team has agreed to hire Detroit residents for 51 percent for construction jobs and Detroit contractors for 30 percent of construction work.
The Michigan Economic Development Corp., which oversees the strategic fund, recommended approval for the incentives because the site will require significant excavation and removal of contaminated soil to prepare for construction.
The site is currently a surface parking lot and bus garage.
Beneath the existing parking lot and bus garage, there is contaminated soil that will have to be excavated and removed, according to a memo prepared by the MEDC.
“The eligible activities will alleviate brownfield conditions across the site and make it suitable for redevelopment, and protect human health and the environment,” the MEDC wrote in its memo to the strategic fund. “Without brownfield tax increment reimbursement, the cost burden related to brownfield conditions would make the project financially unfeasible.”
Public subsidies for the arena totaling hundreds of millions of dollars have come under criticism in a city that declared bankruptcy in 2013.
But Richard Barr, a lawyer who is working as a consultant on the project, said unlike other recent brownfield redevelopments, “this site really has an environmental history” and has been used as nothing more than a tax-free parking lot for the past 30 years because it was owned by a hospital.
“You’re going to have a facility with a $100 million investment, a substantial amount of income taxes, a substantial amount of property taxes,” Barr said.
The facility was part of a deal to get the Detroit Pistons to move downtown this season and play at Little Caesars Arena. The arena is also home to the Detroit Red Wings.
The Detroit Pistons will build a 167,000-square-foot building with ground floor retail and restaurant space, practice facilities and office space, according to the MEDC. The sports medicine and medical office facility will be 36,000 square feet. There will also be a 363-space parking deck.
The project will create 40 new permanent jobs with an average wage of $15 an hour, according to the MEDC.
The Associated Press contributed.