Detroit City Council panel advances Hudson's site tax break request

Candice Williams
The Detroit News

Bedrock's request for $60 million in property tax breaks for its Hudson’s site development moves forward following a public hearing Thursday before the Detroit City Council's planning and economic development committee. 

The committee referred the firm's request for a commercial rehabilitation exemption certificate to the full City Council with the recommendation to approve the measure. The City Council could discuss the matter as early as its Tuesday meeting. 

A QLine streetcar crosses Gratiot, heading northbound on Woodward, in front of the Hudson's site Tuesday. The project's price tag has grown almost $500 million to $1.4 billion.

If approved, the tax break would be effective Dec. 31, 2024, and result in a property tax savings of $6 million annually for 10 years, officials said. 

Bedrock continues construction on the 1.5 million gross-square-foot development downtown, which has ballooned to a cost of $1.4 billion, up from the $909 million estimate when the developer broke ground on the mixed-use skyscraper project five years ago. While the firm has said the request is not related to the price tag, it says it’s needed to make the development viable.

"The project has thin operating margins where this development would only be possible with the help of this tax abatement," Nevan Shokar, associate director for special projects for the Detroit Economic Development Corporation told the committee. "Large-scale developments such as this don't make financial sense in the near term. And you have to look at the project holistically and with a long-term viewpoint, and this developer is committed to Detroit."

Committee members Detroit City Council President Pro Tem James Tate, the committee chair, and Councilwoman Latisha Johnson voted to send the measure to the full council. Councilman Fred Durhal III w not present.

If the tax incentive is approved and the development is complete, property taxes for the site will rise to $2.6 million a year, Shokar said. The full taxes without the tax abatement would be more than $8 million. Once the abatement expires in year 11 the developer will begin to pay the full amount of property taxes, estimated at more than $10 million annually, he said.

The project received several questions Thursday, including how much taxing authorities would receive from the development during the 10-year tax abatement period. 

Derrick Headd from the city’s Legislative Policy Division said the taxing authorities would receive $89 million during the 10-year period, including property tax, income tax and state revenue sharing.

The City of Detroit would receive $71,611,746, and the Detroit Public Community School Detroit would receive an additional $11,931,751, Wayne County an additional $1,018,471, the State Education Fund an additional $4,449,038, the Downtown Development Authority, an additional $37,392, Wayne County Zoological Authority, an additional $3,771 and Detroit Institute of Arts, an additional $7,545.

There was also a question of how parking would be addressed with the influx of traffic expected from the development. 

"There is a lot of amenities, a lot of activities going on in this particular development," Tate said. "We're looking at office space, hotel ... residential. But then also a convention space, event space ... What does full capacity look like in terms of bodies?"

Construction continues on the Hudson's site project. When finished in late 2024, it will include Detroit and Michigan's second-tallest building.

Jared Fleisher, president of government affairs and economic development for Rocket Companies, did not have an answer for how many people the development could draw at one time. He said there are plans for the underground garage to have 600-700 parking spaces, with many of the spots available for the public. 

"Reflecting your point about the importance of parking, we're actually going to be using automated stacker technology and things of that nature to get the parking closer to 900 spaces," he said. 

Fleisher also said Bedrock would soon be announcing plans for the stalled Monroe Blocks project, a nearby development that would also provide parking downtown.

"The Monroe Blocks will include excess parking capacity meant to be part of the ecosystem solution," he said. "Monroe Blocks will be, you could say, overparked precisely to be a contributor to the overall solution."

Detroit resident Joanne Warwick asked about affordability for the residential units within the Hudson’s site development.

“I hope this isn't just like a gated community enclave that the public is funding,” she said.

Fleisher said the Bedrock has a binding commitment with the city to have at least 20% affordable housing across all of its projects. He said the rental rates would be based on Detroit’s average median income, not the region's.

Bedrock officials have said they will return before council for a neighborhood enterprise zone certificate for the residential portion of the project, a follow-up to a previously council-approved NEZ district for the site.

Detroit resident Rogelio Landon spoke favorably of the developer Thursday. Landon is a member of the project’s Neighborhood Advisory Council, the group tasked with negotiating with the developer for benefits for the neighborhood, including hiring preferences, recreational amenities and funds for home repairs.

He said the development has been mindful of the project's effect on area residents, including the disabled and seniors from construction noise and traffic disruption.  

“There is no single beneficiary as such,” Landon said. “It's a collective agreement on how to navigate the construction period, which as it was noted, is several years in the best possible way, with the least amount of infringement on quality of life. And we were very satisfied with what they came back with and their commitment to minimize and mitigate as much as possible inconvenience, access and quality of life issues and that would apply to the disabled that we have in our community."

cwilliams@detroitnews.com

Twitter: @CWilliams_DN