Train station's poor condition could help with tax breaks
Bill Ford Jr. says the Michigan Central Depot will become both a public gathering space and the genesis site of the next generation of transportation. The Detroit News
The derelict condition of Michigan Central Depot is the key factor Ford Motor Co. could use to secure tax incentives aimed at reviving the historic property, say two commercial real estate attorneys and other analysts.
"Without knowing their specific plans, so this is broadly speaking, but Ford could utilize the federal historic tax, some state and local credits that could amount to 35 percent" of the costs of the development, said Joseph Kopietz, a real estate attorney in the Detroit office of Clark Hill PLC.
Ford's executive chairman, Bill Ford Jr., told The Detroit News the automaker expects its Corktown plans to qualify for tax incentives that would be roughly proportional, percentage-wise, to the package recently awarded to a four-project, $2.2 billion construction package planned by Quicken Loans Inc. Chairman Dan Gilbert's real estate arm.
Those tax incentives come in various forms, Kopietz and others said. One way is by limiting the amount of property tax Ford pays in the future. It could come in the form of a construction grant from the state of Michigan.
And if Ford can prove its Corktown plans would bring new workers and residents into Michigan, those tax incentives could come from the state income taxes of future workers in the Corktown buildings. Those state income taxes usually go toward paying for such things as fixing roads and generally supporting state government departments.
Ford envisions renovating the historic 18-story, 500,000-square-foot building to anchor a new Corktown campus. It would give the automaker a hub near downtown, would add hundreds of employees to the neighborhood, and would resurrect one of the largest symbols of Detroit's fall from glory.
The last train left the train depot in 1988, and the station has sat empty since then. Weather and thieves have taken a heavy toll. Ford also purchased a former book depository building at 2231 Dalzelle St. near the train station. Other Corktown properties are still in play and Ford is considering building a parking garage on empty lots.
Michigan Central Depot is listed on National Register of Historic Places, said Dan Austin, who has written several books on Detroit historical buildings and runs the website HistoricDetroit.org.
Similar tax incentives aimed at reviving blighted and historic properties have been used for many major projects in Detroit. The public cost for the $863 million Little Caesars Arena sports and entertainment complex, which opened last fall, was $324.1 million.
Last month, $618 million — the largest tax subsidy ever awarded in Michigan — was awarded to Dan Gilbert's $2.2-billion plan to construct the tallest building in the city on the empty Hudson’s block on Woodward Avenue; to develop 3 acres of mainly vacant space on the Monroe Block; to renovate the equivalent of seven football fields of interior space at the long-dormant Book Tower and Building on Washington Boulevard; and to add an 11-story annex to the One Campus Martius building.
Developments throughout the city get tax credits in some form, but it's the major projects that get millions in incentives that can draw public criticism.
"It takes a large company with big capital to take on this type of project,'" said Richard Barr, an attorney who is a partner in the Detroit office of Honigman Miller Schwartz and Cohn LLP. He pointed out that Detroit has a community benefits ordinance, which requires developers who want tax breaks for large projects to sit down with residents before their plans receive city approval.