Bedrock asks and gets delay on Detroit City Council vote on Hudson's site tax break — again

·3 min read

Detroit City Council on Tuesday delayed a vote on a proposed $60 million tax break for businessman Dan Gilbert's enormous downtown Detroit development that is under construction, and one councilman said the controversial proposal lacks support.

Gilbert's real estate firm, Bedrock, requested that city council remove the vote for the Hudson's site project from Tuesday's agenda to allow for more time "to work through the process."

Council members previously postponed a vote on the abatement at their June 14 and June 21 meetings. Tuesday marked the third postponement.

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Bedrock, in a statement Tuesday, said that city council in 2017 voted unanimously "to give the critical initial approval to the matter in question. Since then, in addition to proceeding in good faith with the development of the Hudson’s site, Bedrock and the Rock Family of Companies have created thousands more jobs in the city, brought abandoned building after building back to life, and committed an unprecedented $500 million to Detroit’s neighborhoods."

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Councilman Coleman Young II said he will continue to support Bedrock's project, and is concerned about losing jobs in Detroit if council were to act too quickly.

"They don't have the votes," Young said. "My concern is that you have 7,500 union workers, 3,500 of them are Detroiters who moved heaven and earth to get those positions ... and now they're going to be laid off because of something we did as a council?"

Bedrock insists that the abatement, which would freeze property taxes for 10 years, is necessary because of the project's high costs and low anticipated return-on-investment. The developer hasn't said what a rejection of the abatement would mean for the project and its construction schedule, which is already running two years behind.

Bedrock says the project's costs have jumped to $1.4 billion, up from $909 million at the December 2017 groundbreaking. Gilbert is said to be contributing about $1 billion in equity or cash, and Bedrock intends to borrow the other $400 million.

Gilbert's top lobbyist told some council members at a June 20 informational session that a bank is unwilling to loan Bedrock the $400 million unless the city approves the $60 million tax abatement.

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In November 2017, shortly before the project's groundbreaking, council voted unanimously to establish a special tax abatement district that encompasses the Hudson's site. That district was a required first step for later obtaining the abatement.

However, Bedrock didn't seek approval for the abatement until now because the project underwent several design changes during construction, including a height reduction.

Under other circumstances, the $60 million abatement would ordinarily be for taxes going toward the city, Detroit schools, Detroit libraries and Wayne County educational entities.

But because of the Hudson's site's downtown location, much of its property taxes are instead captured by the Downtown Development Authority, or DDA, for various economic development purposes in and around downtown.

That means the requested abatement would give Bedrock a 10-year break from taxes that would otherwise go to the DDA.

"We have always worked in a spirit of partnership with the City of Detroit, and we remain confident that the approval provided in 2017 will be honored. We look forward to the continuation of this process and to seeing council affirm its support for this transformational investment," Bedrock's statement said.

The Hudson's site project remains an active construction site and is scheduled to be completed in late 2024. It will have two components: a 12-story midrise building with more than 500,000 square feet of office and events space and a skinnier 49-story skyscraper with a 225-room hotel and about 100 luxury condos or apartments.

The skyscraper would be Detroit's second-tallest tower after the Renaissance Center.

Dana Afana is the Detroit city hall reporter for the Free Press. Contact Dana: dafana@freepress.com or 313-635-3491. Follow her on Twitter: @DanaAfana.

This article originally appeared on Detroit Free Press: Gilbert's Bedrock gets a delay on Hudson's site tax break vote again