Bedrock bundles Detroit projects in bid for state funds
Billionaire developer Dan Gilbert, whose Bedrock real estate arm has led the way in a booming downtown, unveiled a $2.1 billion plan on Wednesday that packages four developments together so that the projects can be considered as one for a new state tax incentive.
Each of the developments in Detroit’s central business district has been previously announced, but Gilbert and Mayor Mike Duggan announced new details for each of the massive projects.
They include the $900 million plan for the former Hudson’s department store site on Woodward that would create the city’s tallest building; the $830 million overhaul of the largely vacant Monroe Blocks between Greektown and Campus Martius; the $313 million revival of the long-unoccupied Book Building and Tower on Washington Boulevard; and a $95 million addition to the One Campus Martius building.
At a press conference in Book Tower attended by Duggan and other city officials, Gilbert said the projects will rely on $250 million from the new state tax incentive that Gilbert heavily lobbied Lansing politicians to pass. The $250 million would amount to 12 percent of the $2.1 billion overall investment. Bedrock will invest equity and potential outside debt totaling $1.9 billion, or 88 percent of the project costs.
“It’s developments like these that will allow us to compete for opportunities that don’t come around often,” Gilbert said, which appeared to be a reference to the drive he’s leading to bring Amazon’s second headquarters in Detroit. “We have to compete, and the only way to compete is through public-private partnerships working together.”
The $250 million in state tax incentive would come from the new Michigan Thrive legislation, commonly called MIthrive. It would allow Bedrock to recoup a portion of state income and sales taxes generated by the projects.
The $5 billion total incentive allows for Michigan cities to compete for the money. Given that only one major downtown project per city is eligible, that resulted in Bedrock packaging the four previously separate developments as one big plan, company officials confirmed. But Bedrock officials added that MIthrive funding also allows for neighborhood projects, which means other Detroit projects could apply for the tax incentive.
Bedrock would be the first to apply for the MIthrive funding, company officials said. About a dozen other cities and communities have expressed interest in using the funding, including Sault Ste. Marie, Pontiac, Lansing and Southfield.
The development plan, which would take up to five years to finish, could create up to 24,000 jobs, including 15,000 construction jobs and 9,000 permanent jobs, officials said.
No potential employers or businesses have been named to move into the developments’ office space, but there has been some early interest, according to a Bedrock spokeswoman. She said they arrived at the estimate of 9,000 permanent jobs by using a formula of one employee per 200 square feet.
Detroit Mayor Mike Duggan emphasized that no city tax breaks or school district tax breaks are involved in the funding. “This is a bill where essentially the state income taxes are being used,” Duggan said. “That’s what’s in the package. The workers who work on this building — the state income tax they pay — will be part of this.”
Detail for each of the developments include:
■A 1-million-square-foot redevelopment of the Hudson’s site, which includes restaurant, retail and office space.
■Revamping the Monroe Blocks between Greektown district and Campus Martius Park. The project calls for a 35-story, 814,000-square-foot office tower with 482 residential units.
■Refurbishing the Book Building and Tower, with 95 residential units,180,000 square feet of retail space and a hotel.
■A 310,000-square-foot expansion of the former Compuware building at One Campus Martius.
“The economic impact these projects will have on our city is larger than anything we’ve seen in generations,” Duggan said. “Not only will it produce thousands of new jobs and opportunities for Detroiters, it will reshape the city’s skyline and attract even more re-investment in Detroit.”
Bedrock and its affiliates have invested more than $5.6 billion in more than 100 properties in downtown Detroit and Cleveland.
The building boom in downtown Detroit has created a challenge for contractors to find and hire qualified workers. In March, a dozen contractors on the Little Caesars Arena project had been fined a total $2.9 million for frequently not hiring at least 51 percent of Detroit workers.
When asked Wednesday if there would be enough workers from Detroit to fulfill the construction jobs, Gilbert and Dan Mullen, president of Bedrock, said they didn’t think so. “This is the biggest opportunity to eradicate unemployment for anybody who wants it,” Gilbert said.
To combat the labor shortage, Duggan and Michael Aaron of the Laborer’s Local 1191 touted training programs such as those at the newly renovated Randolph Career and Technical Center to prepare adults and teens for careers in the skilled trades.
“We feel we can train people for these projects,” Aaron said.
Gilbert also addressed the city’s pitch for a second Amazon headquarters during Wednesday’s press conference. Earlier this month, Duggan tapped Gilbert to lead a task force to explore the option.
“I think Detroit is a legit contender to win over Amazon...,” Gilbert said. “This is another thing this mayor has just immediately gotten behind, as has the governor, as has (Wayne County Executive) Warren Evans and Wayne County, as has the University of Michigan, Michigan State, Detroit City Council. The environment we have here, we just have to keep it going and take advantage of it. Everybody is about what is best for Detroit and the region.”
Gilbert said large consulting firms are donating their time toward the Amazon effort. He also mentioned Windsor’s desire to join Detroit in its pitch.
“An international, two-country effort, that’s something no one can compete with,” he said.
Staff Writer Charles E. Ramirez contributed.