Michigan Strategic Fund approves incentive for $3B New Center development

JC Reindl, Detroit Free Press
Updated 3 min read
3

State development officials gave a final approval Tuesday to the biggest development incentive for the $3 billion Future of Health development in Detroit's New Center area, clearing the way for at least two groundbreakings to happen this year.

Members of the quasi-public Michigan Strategic Fund in Lansing voted unanimously in favor of the Transformation Brownfield incentive, which would allow the trio of developers — Henry Ford Health, the Detroit Pistons organization and Michigan State University — to capture up to $232 million in future local and state-level tax revenues over 35 years that are expected to be generated by a $773 million portion of the development.

An aerial view rendering of the proposed development and its multiple components.
An aerial view rendering of the proposed development and its multiple components.

The development also expects help from about $55 million in various tax abatements, bringing the total value of its local and state incentives to about $287 million. Earlier estimates put that total figure at $296 million.

Detroit City Council voted 6-3 in late February to approve the brownfield and the tax abatements, amid vocal opposition during public hearings. Council's vote sent the plan to the Michigan Strategic Fund.

The Future of Health development encompasses six projects: a large expansion to Henry Ford Hospital, including a new 21-story hospital tower, 662 new mixed-income apartments, a new collaborative medical research center for MSU and Henry Ford, and a parking deck.

Orange is proposed new housing. Green is the joint Henry Ford-MSU research center. Light blue is the Henry Ford Hospital expansion. Purple is parking.
Orange is proposed new housing. Green is the joint Henry Ford-MSU research center. Light blue is the Henry Ford Hospital expansion. Purple is parking.

The largest of the six projects — a $2.2 billion Henry Ford Hospital expansion along West Grand Boulevard — is the one project not seeking incentives or tax breaks. As a nonprofit health system, Henry Ford Health already doesn't pay property tax.

The majority of the development incentives would go toward construction by the Pistons organization of two new apartment buildings and conversion of Henry Ford Health's current corporate headquarters — One Ford Place —  into housing.

The first of those housing developments is to get underway sometime in 2025; a Pistons representative said Tuesday that there is no specific start date yet.

More: Detroit City Council to vote on incentives for $3B New Center development

The Pistons organization's rate of return for the housing developments is projected to be between 5% and 6%, according to documents with the Michigan Economic Development Corp.

The specific Pistons-related corporate entity that would develop the housing is called DP Amsterdam LLC, which is owned by a Delaware corporation that, in turn, is owned by Detroit Pistons' owner Tom Gores and "his estate planning vehicles," according to MEDC documents.

Henry Ford Health has said it will begin construction of its hospital expansion this year, starting with demolition of a now-empty office building, 2850 W. Grand Blvd., that once housed offices for Health Alliance Plan, to make way for the new building.

The health system's specific timeline for that demolition, as well as construction of the hospital expansion, was not immediately available Tuesday. However, a spokesperson said they expect construction to start later this year so that the expansion can be finished and open in 2029.

"The low-impact demolition will be the first physical step in our vision to transform our academic medical campus in Detroit and will start in the coming weeks," the Henry Ford Health spokesperson said. "We will communicate the exact date when the deconstruction will begin soon."

Separately, a groundbreaking is expected next month for the planned Henry Ford Health + Michigan State University Health Sciences Research Center, which would be built at the intersection of Amsterdam Street and Third Avenue. The center could then open in 2027.

Contact JC Reindl: 313-222-6631 or jcreindl@freepress.com. Follow him on X @jcreindl.

This article originally appeared on Detroit Free Press: Michigan Strategic Fund OKs incentive for $3B New Center development

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