Summit Place Mall gets $13M tax break for demolition, redevelopment

Breana Noble
The Detroit News
A rendering of a residential and retail project to be built at 8001 Kercheval Ave. in Detroit's West Village. The Michigan Economic Development Corp. is supporting the project led by community development financial institution Invest Detroit with a $3.5 million loan.

The redevelopment of the closed Summit Place Mall in Waterford Township into a business center got a boost Tuesday when the state approved nearly $13 million in brownfield tax breaks over 23 years.

The abatements will go toward the $63 million project that would demolish the vacant mall at Telegraph Road and Elizabeth Lake Road. It would create 1 million square feet of space for light industrial users, research and development, engineering firms and office users in its place.

The development is projected to create 2,183 permanent full-time jobs with an average wage of $22.50.

"This is part of our speculative building program which is aimed at increasing the number of high-quality and move-in multi-use properties," Jeff Mason, CEO of the Michigan Economic Development Corp., said on a call with the news media.

Speculative projects typically do not have signed tenants yet, but making such properties available can be helpful in attracting companies to relocate or grow in Michigan. The tax breaks do require development to occur.

Plans to demolish the crumbling Summit Place Mall and build a 1 million-square-foot business park in its place got a boost from the Michigan Economic Development Corp. Tuesday, when its board approved a nearly $13 million tax abatement for the project.

Arie Leibovitz's Southfield-based real estate firm Ari-El Enterprises Inc. acquired Summit Place in September for an undisclosed amount, ending a years-long conflict between the township and the dilapidated mall's former owner California-based SD Capital LLC. At that time, the firm said its plans included a business park, casual dining and possibly a hotel, all of which are still possibilities, said Karen Atkins, Ari-El office manager.

Leibovitz, who owns 80 percent of the Summit 327 LLC project, declined to comment.

The brownfield tax cuts will help with demolition, lead and asbestos removal, and other eligible activities. Demolition costs are expected to be $4.6 million. The city has given the company a Sept. 25 deadline for that work to begin, though Leibovitz has said he expects construction to begin on the site in April with completion in December 2023.

The abatement includes nearly $4 million in local tax capture and an estimated $8.9 million in school tax breaks. Waterford Township has approved a 10-year, $4.9 million tax abatement, as well. Summit 327 also is requesting $620,866 in tax increment financing subsidies from the Michigan Department of Environmental Quality.

Ari-El also previously expressed interest in the creation of an Opportunity Zone for federal tax credits to help with the development.

The state economic development corporation has approved a few other building projects on spec, including the development at the former Hazel Park racetrack. The first building there has attracted Inc., automotive supplier Bridgwater Interiors LLC and LG Electronics Inc., bringing 350 jobs.

After opening in 1962, Summit Place Mall (then known as Pontiac Mall) was a popular destination for shoppers with major department stores such as J.L. Hudson and Macy's, a food court and a movie theater.

The township condemned the 74-acre mall in December 2014 after strip malls, internet shopping and the nearby Great Lakes Crossing Outlets mall in Auburn Hills took their toll, leaving Summit Place deserted.

DTE Energy Co. purchased the former Sears department store building on the site. The Detroit-based utility plans to build a new 50,000- to 60,000-square-foot service and storage center there.

Ari-El has a portfolio of approximately 4 million square feet of space mostly in Metro Detroit that includes industrial parks, office buildings, retail centers and apartments.

Ford Wixom Assembly Park

More development plans for the former Ford Motor Co. assembly plant site in Wixom also are in the works. They call for constructing new buildings on spec totaling 1.5 million-2 million square feet for industrial, warehouse and commercial office space.

The estimated $150 million investment received approval for $3.5 million in brownfield tax breaks over 17 years starting in 2020 by the Michigan Economic Development Corp.'s governing board Tuesday. The project is expected to create 850 permanent full-time equivalent jobs with an average hourly wage of $33.65.

Cleveland-based Industrial Commercial Properties LLC has purchased the remaining undeveloped 182 acres at the 317-acre site located on prime property at Interstate 96 and Wixom Road.

One proposed site plan would construct seven buildings, though that could change, said Chris Salata, chief operating officer for Industrial Commercial Properties. The company is removing the concrete floor slabs of the former assembly plant but expects to start development at the end of summer or early fall.

"We believe very strongly in the greater Detroit area," Salata said. "We believe it's one of the hottest markets in the country. There aren't many pieces of land with this type of access, visibility and land. "

The state's tax abatement includes $1.7 million in local tax capture and $1.7 million in school tax capture. Two brownfield Michigan business tax breaks originally that were approved in 2011 for Ford Motor Co. but went unused also will support the project, said Karl Dehn, strategic projects director for the Michigan Economic Development Corp.

The company also is requesting $8.8 million in tax increment financing subsidies from the Michigan Department of Environmental Quality.

Ford in 2007 closed its outdated 4.7-million-square-foot plant there, where it produced several models of Lincolns and Fords. The facility was demolished in 2012 for an assembly park. General R.V. Center Inc. relocated its headquarters and opened a showroom at the southern end of the site in 2015. The Aldi supermarket, home decor big box store At Home, workwear retailer Duluth Trading Co. and home improvement store Menards have since joined it.

Industrial Commercial Properties has more than 40 million square feet of industrial and commercial space in three states.

New West Village building

In Detroit, developers also plan to build a new mixed-use, four-story building in the West Village neighborhood. The $22.5 million project at 8001 Kercheval known as the Parker Durand building would include 92 residential units, half of which would offer rental levels between 50 percent and 80 percent of the average median income, and 6,225 square feet of ground-floor retail.

The Michigan Economic Development Corp.'s board Tuesday approved a 12-year, $3.5 million loan at 1 percent annual interest for the 79,519-square-foot development that would be one of the few recent new construction projects in the east-side neighborhood. A groundbreaking is expected this spring and an opening early summer

The city of Detroit also is providing $1.5 million in funds to support financing and has approved a Neighborhood Enterprise Zone tax abatement valued at more than $5 million. The project is a part of the city's Strategic Neighborhoods Fund initiative.

Community development financial institution Invest Detroit is leading the project and working with Detroit development firm Roxbury Group known for renovations to The Metropolitan, The Griswold and the David Whitney buildings in downtown.

Invest Detroit previously received a $730,933 state grant for another West Village project known as The Coe. Roxbury also had received financial support for its previous projects.