Developer: ‘Committed to success’ of Packard Plant

Jennifer Chambers
The Detroit News

Detroit — More than three years after purchasing the Packard Plant property, with its 43 broken buildings and 45 acres of decayed landscape yet deep automotive history, developer Fernando Palazuelo on Tuesday declared “it’s time to get to work.”

Palazuelo, hard hat atop his silver hair and a shiny shovel in hand, stood with Detroit city officials and community leaders outside the massive former auto plant at 1580 E. Grand Blvd. to kick off the first phase of his $500 million investment into the property which has lain broken and abandoned for decades.

He said the site will rise again as a mixed-use development with office and commercial space, restaurants and a gallery/event space. Palazuelo told The Detroit News a nearby 17,000-square-foot building will house a barbecue restaurant operated by a Detroit company already in the business but he declined to identify the tenant.

“I'm committed to the success of this project. I assure you, we will not fail,” said Palazuelo, 62.

The first phase of the project, which focuses on the property’s four-story administration building and one nearby building, will cost $23 million and take two years. Palazuelo’s vision for the property will be done in four phases, he said.

“We have to approach the project like the military approaches a battle,” Palazuelo said. “You have to have strategy, very clear; tactics, finally logistics and money and cash flow.”

Palazuelo said he has all those things, including the money. On Tuesday, he told The News he is financing the entire project himself and is not taking on any investors for any of the phases.

“We are moving funds from our mother company (Arte Express and Co.) in Peru and paying for this ourselves,” Palazuelo said.

Whether the project needs investors depends on the speed of development, he said.

The entire project, which has four phases across the property’s 45 acres, is expected to take up to 15 years.

“If we are going to do it in five years, we would need someone else on board. If we take it more relaxed, I think we can do it on our own,” he said.

In a project separate from his plans at the plant, Palazuelo — along with three other partners — is pursuing a housing project around the plant’s perimeter called “Packard Village.” It would be done independent of the work at the complex.

“It’s about 100 blocks around the plant, outside the footprint of the facility. Mainly east side. We already bought the land. About 52 different parcels, which is close to 100 plots,” he said.

Palazuelo, who filed for bankruptcy in June 2008 after the recession devastated the real estate market, said his main goal is to protect the area’s history and bring it back.

“This is what we have been doing in Lima,” he said. “For me, the main goal is to have friends and enjoy life and protect the history and convert buildings that could be in danger.”

Palazuelo bought the complex from Wayne County in 2013 for $405,000 at a tax foreclosure auction and promised to revive the massive ruin, a symbol of Detroit’s history of lost manufacturing and a magnet for dumpers and trespassers. Construction was slated to begin in fall 2016, but was delayed while Palazuelo tried to get clear title of the property.

For phase one, the administration building on the 3.5 million-square-foot commercial complex will be transformed into a community of mixed-use spaces including multifamily residential units, recreation, artist work space and light manufacturing.

Kari Smith, director of development for Arte Express Detroit, Palazuelo’s development company, said on Tuesday that $4 million in private money already has been invested in the property and jobs for Detroit residents already have been created.

“For Fernando and his team, the predevelopment of this project has taken patience, an incredible amount of persistence and a great deal of hard work by many people to arrive at this moment,” Smith said. “This project will be transformative for the lower east side of Detroit, bringing amenities, safety and security.”

The scope of phase one involves the historical restoration of the administration building to preserve the outer structure and façade to appear as it did when the building was first constructed in 1911. Albert Kahn Associates, the original designers of the administration building, will do that work.

The administrative building, the most contaminated building on the site, has extensive asbestos and will be completely cleaned up by the end of July, Palazuelo said.

Tests also have found arsenic and selenium in the soil on the site.

Starting in August, Palazuelo said, windows, doors, facades and infrastructure systems will appear at the administration building.

How the remaining buildings will be repurposed for the remaining phases of the project, has yet to be determined, Palazuelo said.

“I notice the strength and determination of the people here in Detroit that is unlike any other,” Palazuelo said Tuesday.

Palazuelo’s crew has cleared more than 1,500 yards of contaminated debris from the property, removed 25 dangerous reinforced concrete columns and installed 24-hour security.

According to documents filed by Smith with the Brownfield Redevelopment Authority, the project will incorporate “a new age of environmental and social awareness,” using green building and sustainable design technology. That could include a green rooftop that will provide amenity space for tenants, prolonging the life of the building and result in less waste.

For years, the former Packard facility deteriorated into a hazardous playground for artists, thieves and tourists eager to explore one of the city’s most notorious ruins.

The site is named after the dead automaker that ended production at the east side plant in 1956. Dozens of smaller businesses worked out of part of the plant until the late ’90s. Then the city foreclosed on the property and the facility began to be torn apart by scrappers and vandals.

Arte Express has secured letters of intent from several prospective tenants, which account for nearly 60 percent of the functional space at the administration building.

Improvements are needed to parcels adjacent to the administration building to ensure public health and safety, according to a city brownfield report. Once cleanup is done there, it will be turned into parking spaces for tenants and outdoor courtyard amenities.

According to marketing materials provided by Smith, seven tenants and Smith’s Arte Express Detroit have signed letters of intent to lease space inside the refurbished administration building.

Douglas Marketing Group, Silveri Architects, Detroit Training Center, Testing Engineers and Consultants, Sterling Security, and Environmental Consulting and Technology are listed on publicity materials as tenants. There will also be room on the first floor for a coffee shop and an art gallery/event space.

Arte Express has agreed to lease an entire floor to the Detroit Training Center. The company will offer vocational training to local residents to support employment initiatives for adults.

Bishop Corletta J. Vaughn, who leads the 300-member congregation at the Holy Ghost Cathedral down the street from the plant, said the project is a prayer answered.

“Today, we kick off a new phase of hope and joy,” Vaughn said.

Wayne County Executive Warren Evans added the Packard redevelopment is “a project of projects” that is bringing construction jobs and permanent jobs to the neighborhood.

“We have lots of good things going on in the city of Detroit,” Evans said. “We see this is a region that needs to be viable. We aren’t looking at it as whose turf it is. It’s everybody’s turf.”

Tania Bennett Allen, who lives in Detroit and grew up in an east side neighborhood near the plant, said she is happy to see any type of development at the spot.

“Obviously, it’s a huge undertaking, and a lot of people have their doubts. But everyone says Rome was not built in a day,” Allen said. “I’m happy to see anything, whether it’s a brick or a building.”