State OKs $11M tax breaks for Detroit's Kahn, Walker-Roehrig projects

Michigan's economic development agency approved Tuesday $11.4 million in tax breaks to fund redevelopment projects in the city of Detroit.

School and local tax captures will support environmental clean-up efforts at the Albert Kahn Building in New Center and the Walker-Roehrig Building downtown to create new apartment units, retail space and a hotel.

Albert Kahn Building

The Michigan Economic Development Corp.'s governing body approved a 15-year, nearly $3 million tax break for the rehabilitation of the vacant Albert Kahn Building at 430 Second Ave. AK Owner LLC, a joint venture between Farmington Hills' Northern Equities Group and Birmingham's Lutz Real Estate Investment, owns the building.

The $69-million capital investment would redo the building with 108,000 square feet of retail and 190 apartments of 230,000 square feet. At least 20% of the units will be priced at not more than 80% of the area median income. A surface parking lot will be available to residents and customers. The project will create five full-time equivalent jobs with a $22 hourly wage.

The historic nature of the building raises construction costs to higher-than-normal, but "the City will see the rehabilitation of a historically significant property in an emerging commercial district of the City and significant square footage brought back to active use," wrote Brittney Hozkiw and Jake Winder, MEDC team and program specialists, in a memo to the Michigan Strategic Fund Board.

Almost $1.2 million in school tax breaks and $1.8 million from local tax increment financing will help remove lead, asbestos and mold from the 1.6-acre property. The tax captures are set to begin this year.

The city of Detroit also is providing 15 years of no increases in taxable property value, saving the developers an estimated $14.5 million.

AK Owner is requesting $9,025 in tax increment financing from the Michigan Department of Environment, Great Lakes, and Energy to assist with environmental-eligible activities, too.

Walker-Roehrig and Ashton

A new six-story, mixed-use building will rise on the parking lot behind 600 W. Lafayette Blvd., the former WWJ Building that houses the Michigan American Federation of State, County and Municipal Employees Council 25. The Michigan Strategic Fund Board approved a 22-year, $8.4 million-plus tax break that will begin in 2021.

Detroit's Means Group LLC, Detroit's Holdwick Development Group and Troy's Koucar Management are behind the $47 million project. The new 146,000 square foot building called The Ashton will include nearly 2,000 square feet of first-floor retail, and a 156-room Cambria Hotel from Choice Hotels International will occupy 86,000 square feet. A 151-space parking structure of 58,000 square feet will cover two levels.

A skyway will connect the new building to the adjacent 77,000-square-foot Walker-Roehrig building. It will be updated to offer nearly 55,000 square feet of office space, 14,000 square feet of hotel amenities, more than 6,000 square feet of restaurant space and more than 2,000 square feet of first-floor retail. The development is expected to create 265 jobs with a $28 hourly wage.

The incentives represent $4.6 million in school tax breaks and $3.8 million in local tax cuts through tax increment financing. The city of Detroit also approved a 10-year freeze on the properties' taxable value, a saving of an estimated $4.7 million, and another 12-year freeze because the developers are rehabilitating an obsolete property, a $3.3 million abatement.

Developers also are requesting $60,995 in tax increment financing from the Department of Environment, Great Lakes, and Energy. The building will have a "green roof" to help with stormwater management, according to an MEDC memo.

The Ashton originally was announced in 2016 to be an 83-unit luxury condominium complex.

bnoble@detroitnews.com