Detroit residents voice concern over proposed $143M housing project

Detroit — A long-awaited plan to transform blighted houses and a sprawling medical complex in a west side neighborhood is finally about to get underway amid concerns from residents.

Within weeks, a developer from New York is expected to begin work on the first batch of the 113 vacant houses he plans to rehabilitate as part of an eight-year, $143 million project in Detroit's Virginia Park neighborhood that includes the former Herman Kiefer Hospital complex.

Detroit's City Council is set to vote Tuesday on establishing a tax abatement zone needed to be in place before the developer can get started.

Mary Turner, center, listens to Detroit Council President Pro Tem Mary Sheffield addresses concerned residents of the Virginia Park neighborhood about a rehabilitation project that has been under intense review by the community.

"It's crucial for us to start," said Ron Castellano, managing member of Herman Kiefer Development LLC. "We've waited this long. We have crews ready to work. ... We're ready to start and see improvements besides the grass being cut and trees getting trimmed. It's now we can get going on some houses and get some people in the neighborhood." 

In addition to the residential component, Castellano told The Detroit News that he expects to bring in brokers for the first time this week to market the commercial portion of the project. The developer has plans for a boutique hotel, grocery store and potentially a roller rink.

This project has been under intense review by the surrounding community. Some long-time residents are eager to give Castellano a chance to rejuvenate the neighborhood. Others are critical of what he’s done so far or feel they’ve been shut out of the process.

George Adams Jr., a resident and a member of the Neighborhood Advisory Committee set up for the development project, said that he and other neighbors are frustrated with the lack of progress.

“Most people in the community are saying there’s nothing being done,” he said. “I don’t think the neighborhood voices have really been heard."

Even though he’s an elected member of the committee for the project, Adams said it's been “arduous” to get “information and transparency” from the city on the massive project.

'Exceeding milestones'

Herman Kiefer Development has a multiyear development agreement to rehabilitate and reuse seven medical complex buildings and the 462,605-square-foot main hospital building, the former Hutchins and Crosman schools, as well as the JTPA nursing school.

Plans for the site have been in the works since 2014 when Castellano bid on the project and spent nearly 19 months hammering out an agreement with the city. He acquired the complex in a $925,000 deal approved by Detroit’s City Council in fall 2015. The hospital ceased operations in October 2013.

While the city worked through title issues to transfer ownership of the complex, Castellano said he immediately began securing the campus grounds and maintaining the neighborhood landscaping in the surrounding area. His company also boarded up the Detroit Land Bank Authority homes it has the option to purchase. 

Castellano said he also maintains a personal residence in the neighborhood and is on site five days a week. 

He’s taking on maintenance of 300 empty lots and 100 vacant homes in Virginia Park, city officials said.

"They're meeting and exceeding their milestones from their agreement in terms of overall investment," said Arthur Jemison, the city of Detroit's group executive for Planning, Housing and Development. 

Herman Kiefer Development closed on the complex in February 2018, according to the city. The company also has ownership of the first 21 of 113 Land Bank structures it plans to purchase in the deal as well as six lots. 

Developer Ron Castellano rides his bike near the former Herman Kiefer Hospital site and around the Virginia Park neighborhood.

Neighborhood zone plan

The first visible signs of development for the project will be the rehabilitation of 21 homes in the neighborhood. Castellano said the first phase of homes should be completed by June 2020. 

Homes for rent will cost about $751 per month, and the homes for sale will cost an average of $72,000, according to the city. 

Castellano said his goal is the keep the neighborhood housing stock intact, and he's willing to lose some money renovating some properties to do that.

"When we came in, nobody wanted these houses," said Castellano, adding 50 to 75 percent would have been demolished. 

Herman Kiefer Development will privately fund the first phase, which is expected to cost between $1.5 million and $1.6 million, he said. A teacher from Randolph Career and Technical Center will oversee the rehab work with current students and graduates, said Hazel Balaban, project director for Herman Kiefer Development. 

Balaban said they had hoped to start work on the homes in the spring, but they can't pull construction permits until the Neighborhood Enterprise Zone is established. Such zones reduce the taxes on property for up to 15 years in designated areas in order to promote revitalization. 

The city council is expected to vote on Tuesday on establishing a Neighborhood Enterprise Zone for the area bounded by Rosa Parks Boulevard to the alley north of Clairmount, west of Woodward Avenue and south of Virginia Park. 

The proposed zone would encompass 1,830 properties and seven previously acquired by Castellano as well as the hospital complex over 224 acres. The zone will include 131 of the 500 available homes from the Detroit Land Bank Authority. The developer will rehab those homes based on terms outlined in an eight-year agreement. 

The value of the land is estimated to be about $28 million but is expected to increase with the rehabilitation effort.

Virginia Park district resident George Adams Jr., addresses questions involving the planning process for neighborhood.

The tax savings for the development through the Neighborhood Enterprise Zone is expected to be $1.9 million, according to the city.

"That's why we need the incentives," Castellano said. "We're putting work into houses that need a lot of attention."

As for the commercial portion of the development, Castellano said he's marketing the property. This week, he'll invite for the first time local and national brokers to the complex to generate interest from potential tenants. 

"Right now, we’re basically marketing the site to tenants," he said. "We’re ready to do whatever it takes."

A previously announced 13-room hotel on the hospital site could open as early as late spring 2020, Balaban said. It'll be housed in an 11,000-square-foot building, one of seven existing “pavilions” on the site. Permits have been pulled for the project, Balaban said. 

Castellano said he's looking for an operator for a grocery store he has planned at Clairmount and the Lodge Service Drive. It could include a pick-up window for food, he said. 

Not all of the developer's plans have worked out. Castellano in 2017 told The News he'd partnered with Detroit-based skateboarding group Community Push on plans for a1 0,000-square-foot skate park inside the old Hutchins school. That group has since lost interest in the partnership, he said Friday.

Debate over boundaries

The development, according to the city, is on track with mowing the grass and snow removal, depending on the season. Castellano also maintains the properties by hiring residents for landscaping and handiwork. 

But Adams of the Neighborhood Advisory Committee contends maintenance is falling short and some of the 40 acres of grass on the properties under Castellano's control is two and three feet high. 

Virginia Park resident Joyce Moore said she’d like to know more about what’s planned for the old Herman Kiefer complex.

"It weighs on your psyche for residents; it's depressing," Adams said. 

Adams also is critical of who Castellano is employing and where the early jobs for the project were advertised.

"If you are posting jobs, why not send an email to all the NAC members so we can disseminate it to our various constituents," said Adams, founder of the nonprofit group 360 Detroit, which strives to improve city neighborhoods. "When I see the people (working), I'm not familiar with them."

Resident Joyce Moore said she’d like to know more about what’s planned for the old hospital complex and be included in the talks.

"There was no reach out to the community as to what we would like to see over there,” she said. "That project itself, when are we going to come up with something definitely defined as to what you're going to do with each building. We don't have that yet."

At the same time, a debate is ongoing over the boundaries of the Neighborhood Enterprise Zone identified for the project.

Moore and Adams are among the neighbors objecting to the boundaries laid out.

Neighbors, they said, don't see why the project zone has to extend to Woodward, saying it should go the opposite way to Linwood.

"This new development we thought would be a way for us to deal with the housing stock, save our houses and develop our community where more people would want to move to Detroit," said Moore, who lives just outside of the boundary area. 

After residents raised concerns last week, City Council President Pro Tem Mary Sheffield proposed plans for an additional zone for from 13th to Linwood for individuals who might not have fallen into the original. That would be voted on within a couple of weeks, she said.

“I'm personally going to be monitoring it and make sure that I advocate that we usher it through the process so it gets done,” she said.

Adams and Moore want the entire Neighborhood Enterprise Zone process to start all over again.

"It should be from the targeted area to Linwood," Moore said. "If they do that then that would bring our community in for tax relief, to get their homes fixed up."

Vacant home ownership

Another point of contention with the community is the residents' inability to gain ownership of vacant homes or side lots, some of which they have maintained for decades.

For Adams, there's been a long-running attempt by his nonprofit group to get use of about 20,000 square feet of parkland at Virginia Park and Byron. Before the development agreement, the land was to be donated to by Henry Ford Hospital, Adams said.

Castellano has agreed to a 10-year lease with 360 Detroit, but the two sides are waiting on the Land Bank to close on the deal. A closing is set for Oct. 1, according to the Land Bank. 

Several years ago, the city instructed the land bank to stop demolition and sales in the Herman Kiefer area when the developer indicated plans for the entire neighborhood, according to the land bank.

"After that, the DLBA conducted one final side lot blitz in the area, including postcards and knocking on doors, in an effort to give all homeowners living there at the time one last chance to buy vacant lots adjacent to their property as side lots," said Alyssa Strickland, spokeswoman for the Land Bank. 

The final blitz was conducted in May 2018 and early June 2018, Strickland said. The deadline to purchase was June 12, 2018. She did not immediately have figures on how many residents purchased lots during that period.

Lamont Causey, 59, said his family put down roots in the community back in the 1940s, and it’s never recovered from the devastation of the 1967 uprising.

Causey said community meetings have been scarce, and he intends to push the city and developer to hold them monthly.

“Everybody has got to come on board, sit down and find out the direction we’ve got to go in,” he said.

The city requires that developers hold an annual meeting with a Neighborhood Advisory Council through its Community Benefits Ordinance, said Charity Dean, director of the city’s Civil Rights, Inclusion & Opportunity Department, which provides enforcement. 

"Herman Kiefer has done more," she said. "They've had quarterly meetings."

Some residents might be resistant to Castellano, an outsider, who under the deal has control of large swaths of land, housing and the hospital site.

The developer, Causey said, has been cutting grass, shoveling snow and working in the hospital buildings. He thinks the neighborhood should give him a chance.

“He stepped up. He came, he bought the buildings and he actually is doing some work,” he said. “We need to let him go ahead and do what he needs to do because we've been waiting for this for so long. We got a developer. Let's see what he's going to do.”