After weeks of conversation and compromise, the Detroit City Council narrowly approved, in a 5-4 vote July 26, a $60 million tax abatement for Bedrock Detroit’s development at the former Hudson’s Department Store site downtown. The vote came at the end of a nearly seven-hour-long meeting, and was met with dozens of residents who spoke out and opposed the abatement during public comment.
Others were left wondering why the council approved a 10-year tax break, lasting until 2032, for one of Michigan’s richest business owners, Dan Gilbert, who owns Bedrock Detroit and Rocket Mortgage. Some Detroit residents told the council members they’d like to see the same tax incentives given to Detroit’s residential property owners, BridgeDetroit’s Malachi Barrett, who’s been following the story, said.
RELATED: BridgeDetroit | Detroit Council Approves $60M Hudson’s Tax Break
One Detroit’s Bill Kubota sits down with Barrett to discuss the City Council’s decision to finally vote on the proposed tax break after weeks of postponing the vote, and the Council’s approval of the abatement for the former Hudson’s Department Store site. Plus, hear why City Council members voted in favor or against the resolution, and the new community benefits agreement involved with the plan, which Bedrock representatives said will include investments in affordable housing downtown.
Malachi Barrett, Reporter, BridgeDetroit: The saga of the summer in Detroit has kind of been this discussion over whether the city would grant a $60 million dollar, 10-year tax abatement to a big development project downtown that Bedrock is doing.
Bill Kubota: Bedrock. The rocket company’s billionaire, Dan Gilbert. The huge high rise going up at the old Hudson site. The big request suddenly approved by city council last week, after weeks of putting off the vote.
Speaker 3: Young resolution.
Speaker 4: Councilmember Young.
Speaker 5: Thank you, Ma’am, President. I move to approve while…
Bill Kubota: Malachi Barrett’s been covering the story for BridgeDetroit.
Malachi Barrett: This was the last scheduled meeting before the council was going to go on recess for about a month. So they’re off until September now. And in that last meeting, there was a surprise vote on that tax abatement.
Bill Kubota: Seven hours into the session at the very end, they did it.
Malachi Barrett: If you had the tenacity to stick around until the end, you found out that this was voted on.
James Tate, Council President Pro Tem: And I will not be able to support the vote today for this item. And the reason I cannot is because it was not noticed for the public that this was going to be a vote today.
Mary Waters, Council Member: If for some of you all who make statements like you’re selling your soul. That is not true. And, you know, I really don’t even want to hear that phrase again.
Angela Whitfield Calloway, Council Member: So I absolutely oppose this. It should come before the public. It should not be walked on. We shouldn’t. I think we’re doing a disservice to our taxpayers.
Fred Durhal III, Council Member: What I know when I ride down Woodward, I look at a half-completed building and I know we got over 2,000 thousand jobs wrapped into that and that’s 2000 lives and families that are affected by that. And I take that very seriously.
Coleman Young II, Council Member: For us to not pass this, to not have this project and to have those folks out of a job, I don’t think the answer to solving employment is to throw working families out of work.
Latisha Johnson, Council Member: I quite honestly want it to have an outside entity. A professor from the university, to come in and have the conversation around tax abatements and the Downtown Development Authority. Because a lot of times that part gets missed and it’s extremely important in this conversation.
Mary Sheffield, Council Member: I have decided to support the abatement that is before us for this project. Like all decisions I make on behalf of those that I represent, I’ve arrived at this point after careful research.
Bill Kubota: So then, Bedrock had the votes 5 to 4 sliding through, seemingly without much of a hitch.
Malachi Barrett: You know, I think that’s why we probably saw the vote. I think those who were in favor of it felt that, okay, we have enough. We have a majority. Let’s get this done.
Bill Kubota: I suspect some people were really surprised to have this thing just kind of pop up and what about that? Is that how things usually work in the city council?
Malachi Barrett: Yeah, kind of. Yeah. I mean, I think for people that have been advocating about this and trying to have conversations about it for weeks now, I mean, essentially the whole summer. For this to be a surprise vote, I think is really frustrating for them.
Mary Sheffield: The clerk would note that line item does pass.Yes.
Mary Sheffield: And Mr. Clerk, if you can move the two agreements, please.
Bill Kubota: Through the community benefits agreement, the city looks to be getting more out of this deal, enough to sway some on city council. Meanwhile, project execs were on hand to explain.
Jared Fleisher, Vice President, Rocket Companies: The initial agreement said that 20% of our entire portfolio had to be affordable at 80% of the AMI. We are many it to make the most far-reaching commitment to affordable housing ever made by a developer in the city with leadership from the Council President.
Jared Fleisher: Which is to say that going forward, 30% of everything that we do, all development will be affordable at 60 percent of the AMI.
Bill Kubota: That’s area median income. So more affordable housing thanks to the Hudson’s abatement. The tax break some Detroit is recent having to cover out of their own pockets.
Public Comment, Committee Meeting: The Gilbert site over at the old Hudson’s site is not contingent upon him getting his $60 million dollar tax giveaway. He’s not going to pick up and leave. And so it’s a red herring for people to be coming in here talking about, oh, we’re working on a site. We need to be working on the site and so forth and so on. He’s not going anywhere. And if he does go somewhere, let him go.
Malachi Barrett: The major criticism is why are we giving a taxpayer-funded handout to the richest man in Michigan? I mean, we heard that multiple times from council members and Detroiters who weighed down on the proposal. Dan Gilbert owns Bedrock. He’s been at the forefront of a lot of, you know, major developments and changes in the city’s downtown. And I think there’s a feeling that there has to be some kind of limit on how much public support we give for somebody who’s, you know, independently very wealthy.
Bill Kubota: Expect construction to continue to at least 2024, but the taxes won’t kick in until 2032.
Malachi Barrett: This is kind of the underlying tension that I think is key to a lot of this. When people see that the city is giving up taxpayer dollars to these wealthy businesses and regular Detroiters who are struggling to make ends meet do not have access to that same kind of tax break. You know, we all would love to get a break on our property taxes for 10 years.
Malachi Barrett: That’s where the frustration comes in. And developers will say this is necessary to make projects happen. But homeowners will say, why don’t we have access to these same kinds of tools? Let’s reform taxes in Detroit so that these are not necessary.
Malachi Barrett: Council President Sheffield said In a perfect world we would not have to use these tax abatements to make developments happen. But you know, we’re not living in a perfect world.
Bill Kubota: And it doesn’t sound like we’ll be in a perfect world any time soon with this stuff.
Malachi Barrett: No, definitely not.
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