3-way deal big step toward jail land swap in Detroit

Louis Aguilar, and Nicquel Terry
The Detroit News

Detroit — The years-long saga to build a new jail in Detroit appears to be nearing an end, and the potential solution is a multi-pronged deal that goes well beyond a modern lock-up.

Wayne County Executive Warren C. Evans announced a tentative agreement with Rock Ventures to build a new $533 million criminal justice center on Wednesday, March 7, 2018.

The tentative deal is a major land swap involving Wayne County, billionaire Dan Gilbert and the city of Detroit. If it works, Wayne County gets a new jail, courthouses and juvenile detention center; Gilbert gains yet another major piece of downtown; and the city could find new life for the blighted ex-headquarters of an automaker that gave us the Pacer.

The deal took a major step forward Wednesday with Wayne County Executive Warren Evans announcing he reached an agreement with Gilbert’s Rock Ventures to build a proposed $533 million criminal justice center in an area east of Midtown, near Interstate 75 and Warren Avenue.

In exchange, Rock Ventures gets 15.5 acres of property where a half-built jail now stands on the edge of Greektown, a popular area of downtown. Gilbert has vowed to build a $1 billion development there, though a formal plan has not been announced.

The city of Detroit is involved because the new location of the criminal justice center is city property, specifically owned by the Department of Transportation. The city has agreed to give up the property in exchange for county-owned land: the shuttered American Motors Corp. headquarters on the city’s west side.

Wayne County Executive Warren Evans, right, is joined by deputy county executive Rick Kaufman, center, and county corporate council Zenna Faraj Elhasan, left, after he announces the tentative agreement with Rock Ventures to build a new $533 million criminal justice center.

Finding a way to build a new county jail has “been an albatross for the county for far too long,” Evans said at the Wednesday press conference.

The criminal justice complex, on an 11-acre site, will include a 2,280-bed jail, sheriff and prosecutor staff and administrative offices, 25 courtrooms, five hearing rooms, and a 160-bed juvenile detention facility. It could be completed by summer 2022 with a groundbreaking this October, Evans said.

The tentative agreement announced Wednesday revealed an evolution of ongoing negotiations to build a new jail in Wayne County that protected the county from the cost overruns that got it in trouble when it originally tried to build one on Gratiot in Greektown.

Gilbert’s latest offer to the county increased the criminal justice complex’s price tag by more than $110 million from the $420 million pitched a year ago when Rock Ventures asked the county to foot $300 million of the bill. But the tentative agreement caps how much the county will spend at $380 million. In return, the county gets a larger jail than the 1,600-bed facility previously offered.

Rock Ventures will spend $153 million, plus any overruns. The county will use $50 million in existing IRS bonds, new bonds and general fund dollars to cover its $380 million contribution, officials said. The IRS approved use of the bonds remaining from the failed jail project in Greektown. If the cost of the project is lower, Rock and the county will share in the savings.

The newly constructed criminal justice center will house the County’s 2,280-bed jail, sheriff and prosecutor staff and administrative offices, criminal courthouse and juvenile detention facility.

In exchange for the criminal justice complex, the county will give Rock Ventures its existing Division I and Division I jails, juvenile detention facility and the Frank Murphy Hall of Justice in Greektown. The county will lease those buildings for $1 a year until the criminal justice complex is complete and it can move its operations.

The county will sell the unfinished jail site to Rock Ventures for $21.3 million. Rock Ventures is expected to begin demolition of the jail site later this year, though, Rock Ventures has up to one year to get rid of it.

The agreement with the county also allows Rock Ventures to collect $30 million in parking revenues from parking sites around the new criminal justice center — further profits would then go to the county.

John Mogk, a Wayne State University law professor who works on city development plans, said “on the surface, the deal looks like a win for everybody.”

The Greektown site is much “better served with an inviting development instead of a jail” because the location serves as a gateway to the eastern edge of downtown, he said.

“I don’t think we know all the specifics yet, but the taxpayers’ costs seems to have been addressed, the needs of the county apparently are being met and there’s the potential to redevelop the unused (former American Motors site),” Mogk said.

In exchange for the city property where the criminal justice center may get built, the city gets ownership of the 1.4 million-square-foot American Motors Corp. building at 14250 Plymouth. The county foreclosed on the property in 2015. The county land bank owns the property and still needs to approve the swap. The Wayne County Commission also must approve the land swap with Detroit.

The massive complex was a hub of Detroit innovation for more than eight decades but became a dumping ground. As recently as 2009, more than 1,000 Chrysler employees worked at the site designing Jeep Grand Cherokees and Dodge Durangos. The complex, which opened in 1927, also was home of Kelvinator, a refrigerator manufacturer.

As part of the deal,  Wayne County would invest $380 million with Rock Ventures  covering the remaining costs and any overruns.

The incomplete jail is the “most notorious symbol of government failure” in Wayne County, Evans said Wednesday.

In 2011, Wayne County started building the estimated $220 million jail on Gratiot Avenue near the I-75 service drive.

In 2013, an estimated $151 million of the jail was built when construction was stopped because the price to finish the project jumped by $171 million more than originally planned. The cost overruns ultimately led to corruption charges against two county officials and a contractor working on the site.

For nearly five years, the “failed jail,” as Evans called it Wednesday, has sat unfinished, costing taxpayers $1.3 million a month to repay its bond debt as well as cover security and maintenance.

In April 2016, Gilbert and Detroit Pistons owner Tom Gores declared they wanted the jail site and had a $1 billion plan. Initially, they aimed to build a 25,000-seat soccer stadium in an effort to nab a new Major League Soccer team. Beyond the stadium, Rock Ventures said it intended to develop retail and residential units, a hotel, covered parking and plazas. The soccer stadium was later scrapped in favor of using Ford Field. Whether Detroit gets an MLS expansion team is still unclear as the league hasn’t made a decision on Detroit’s bid.

Gilbert’s offer was unsolicited, and it’s taken this long for the county to weigh the pros and cons of the proposal and negotiate the terms of the deal.

“This agreement is an outstanding example of Detroit 2.0, where the public and private sectors partner together in a smart, cooperative and optimistic manner to find and implement the best outcome possible,” said Gilbert, chairman of Rock Ventures, in a written statement. “The solution here not only fixes significant mistakes of the past, but at the same time delivers to the county a completely new, ground-up criminal justice center, in addition to resulting in a large, mixed-use development on the former proposed jail site.”

Gilbert didn’t reveal any new details of the potential mixed-used development, other than to repeat the $1 billion estimate. Evans said specifics of the mixed-use development will have county input.

Wayne County Commission Chairman Gary Woronchak sounded upbeat about the tentative deal on Wednesday.

“I am encouraged that an agreement finally has been reached between Rock Ventures and the county administration, and I appreciate the intense and detailed work it took to get us to this point,” Woronchak said in a written statement.

Wayne County Commissioner Jewel Ware added she would do her “due diligence with regard to this agreement and make the best decision I can for the residents who would be most affected.”