Bedrock officials: Monroe Block plan needs tax breaks
Detroit — When another blockbuster development plan for downtown Detroit was unveiled by Dan Gilbert’s Bedrock Detroit on Wednesday, the word “transformational” was used often. It’s a sign Bedrock wants state legislators to give such projects tax breaks, or else the plans may have to be downsized.
Mayor Mike Duggan’s representative on the board of the city’s Downtown Development Authority called the Bedrock real estate development company’s plan for the Monroe Block “transformative.” And Bedrock’s Steve Rosenthal said the word several times to the DDA board and to the media.
“We do need these economic tools to build these transformational projects,” said Steve Rosenthal, a principal at Bedrock Detroit, after the DDA board approved the outlines for the development.
It’s part of a lobbying effort to convince the state legislature to pass legislation that would give “transformational” projects across Michigan lucrative tax breaks, according to the proposal.
Bedrock officials says if those tax breaks are not gained, the Monroe Block deal and other upcoming major developments planned by Bedrock could be downsized. That includes Bedrock’s plan for the former J. L Hudson site downtown on Woodward, where Gilbert has said in the past he wants to build an “iconic” development, which reportedly includes a new skyscraper and other mixed uses.
On Tuesday, the Michigan Senate approved a package of proposals that seeks to jump-start redevelopment of contaminated, blighted or obsolete “brownfield” sites by redirecting up to $50 million a year in state tax revenues back into qualifying mixed-use projects.
The legislation would create a mechanism to capture sales and use taxes from retail sales on a qualifying property and up to 50 percent of the income taxes paid by any residents who live there. Developers, owners or authorities who meet an initial minimum investment could be reimbursed for eligible when construction is finished.
The proposal is now headed to House and eventually needs approval by Gov. Rick Snyder.
Without the tax breaks, many big urban projects that involve new construction or simply major structures “don’t make economic sense,” said Matt Cullen, a principal at Gilbert’s Rock Ventures LLC.
“We would be prepared to move forward with $2 billion to $3 billion worth of projects” in Detroit if the legislation was approved, Cullen said. While Gilbert’s Bedrock has bought and renovated more than 90 downtown properties in the past six years, the difference in the upcoming projects is that they require erecting new buildings and other structures, Cullen said.
Gilbert’s Bedrock helped pushed for the legislation and it has plenty of support statewide by more than 20 economic and business leaders, including various city officials. The coalition of supporters sent Snyder and state legislators a letter, urging the passage of the proposal.
“As economic development and business leaders from across the state, we are asking you to support the innovative brownfield TIF (tax increment financing) proposal needed to unlock large scale, transformational investments in our communities,” reads part of the letter.