Bedrock seeks affordable housing deal in Detroit

Louis Aguilar and Ian Thibodeau
The Detroit News

Dan Gilbert’s Bedrock Detroit is working on a deal with the city that would allow the influential developer to pick and choose which of its residential projects would offer units reserved for people who can not afford the rising rents in greater downtown Detroit.

Bedrock has been working with Mayor Mike Duggan’s administration on a proposed affordable housing agreement. It would cover an estimated 1,350 residential units the developer plans to build in downtown, Brush Park and Eastern Market through a variety of projects. Up to 270 of the units, representing 20 percent of the total number of units, would be reserved as affordable, according to the proposal.

Generally, the affordable housing units appear to be aimed at singles with annual incomes ranging from $28,140 to $56,280; and couples whose annual incomes could range from $32,160 to $64,320, according to income data provided by the city and Bedrock. Those are income levels based on Wayne County residents and not the city of Detroit, where the median income is much lower. But the Wayne County standard is used by the city in affordable housing developments, officials said. The definition of affordable is based on relative annual income, the size of the residential unit and number of people living in the unit, according to the proposal.

Predicting what the monthly rent would be is a guessing game at this point because it depends on the square footage and the number of bedrooms in units that have yet to be built. But data provided by the city indicates monthly rents could be as a low for $650 for one person and maybe $900 for a couple. On the high end, monthly rent could be $940 for single person and $1,600 for a couple, according to the formula to be used in the proposal.

The proposal “is the right thing to do,” said Matthew Cullen, a principal of Rock Ventures LLC, which serves as an umbrella group to the many business affiliated with Gilbert, a billionaire. Since 2010, Bedrock has invested more than $2 billion in downtown development, acquiring more than 90 properties ranging from historic skyscrapers to parking garages. Bedrock is now becoming more involved in residential projects.

“The right thing to do is create an environment that is welcoming to everyone,’’ Cullen said.

The proposal also comes at a time when Mayor Duggan and the Detroit City Council have been seeking to ensure that any new residential development receiving tax incentives have at least 20 percent of units reserved for affordable housing. The Mayor’s Office and City Council are working on making those requirements city law.

The Bedrock plan was submitted to the City Council this week by Arthur Jemison, director of the city’s housing and revitalization department. A council subcommittee is expected to discuss the proposal next Thursday. The agreement needs council approval.

Jemison said in an email: “We are pleased with Bedrock’s pledge to meet the 20 percent affordable housing commitment. We look forward to a full discussion with city council.”

The proposal would give Bedrock the ability to exclude some of its residential projects from having affordable housing options while other projects would have a large number of those units.

One project that could be excluded is the former J.L Hudson’s site on Woodward, a development Gilbert has said in the past he wants to make an “iconic statement.” Early designs released last year for the Hudson’s site show a swooping glass-and-metal structure. The space will have 250 residential units, 225,000 square feet of mixed-use commercial or retail space, as well as a “programmed civic space,” according to public records. More details, including how much the Hudson’s development will cost, are expected by the end of the year.

Beyond the Hudson’s site, any condominiums or other units that will be sold instead of rented could be excluded from the affordable housing option, according to the proposal.

One of the projects that may have a large number of affordable housing units is a Capitol Park project called 28 Grand, a development that could have up to 200 “micro-apartments.”

Other projects that will have affordable housing units are Gilbert’s two developments in Brush Park and the adjacent Brewster-Douglass area. Another Brush Park project, which aims to bring 400 residential units to the neighborhood, will have the pending housing agreement applied retroactively.

The Detroit affordable housing proposal comes at a time when Gilbert is backing state legislation that would give tax breaks to major developments with at least $500 million in private funding.

Projects like the Hudson’s development would receive money by capturing a portion of the sales tax or use tax within the property and income taxes paid by residents who live there, according to a Senate agency analysis.

Rock Ventures is part of a coalition of developers and others supporting the legislation. Representatives for Rock Ventures have said with the state tax incentives the firm would be prepared to move forward with $2-$3 billion worth of projects.

The legislation could help pave the way for a redevelopment on the Hudson’s site, and a proposal to relocate the Wayne County Consolidated Jail project to Mound Road.

Twitter: @LouisAguilar_DN

Staff writer Christine Ferretti contributed.