$273M in tax subsidies sought for Henry Ford, MSU, Pistons project

Detroit Pistons Owner Tom Gores will seek $220 million in state and local tax incentives to help fund a $322 million housing development in New Center.

The construction of three residential buildings near the Pistons Performance Center is part of a larger $3 billion development with Henry Ford Health and Michigan State University. Most of the investment will go toward a $2.2 billion expansion of Henry Ford Health facilities on the south side of West Grand Boulevard. Residents living near the proposed developments learned new details about the project at a Tuesday community benefits meeting. 

A combination of $273 million in tax incentives will be sought to finance a $733 million “east campus” project including 662 apartment units, a medical research facility and parking garage separated from the hospital campus by the Lodge Freeway. This includes a $220 million state Transformational Brownfield Plan tax capture, which reimburses development costs using a portion of property taxes diverted back to the developers over 35 years. The partners will also request three tax abatements from the city worth $53.5 million. Henry Ford Health is a nonprofit organization and does not pay property taxes, so no tax breaks are being sought to build its facilities.

Some residents questioned the necessity of tax incentives during the Tuesday meeting. Theo Pride, an organizer with the Detroit People’s Platform, argued billionaires like Gores should find a way to finance his share of the projects without public subsidies.

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“Don’t tell us that tax incentives are necessary for development,” Pride said. “Tax incentives are there for the taking and if you make it available to somebody, they’re going to take it.” 

State law allows multiple projects to seek tax incentives through a Transformational Brownfield Plan. The tool has been used to support several large Detroit projects, including the $1.5 billion District Detroit development.

City officials with the Detroit Economic Growth Corporation said the projects aren’t possible without tax incentives. David Howell, senior director of real estate for DEGC, said the tax deals align with the city’s goals to create more “deep affordability” in the housing market. 

One-fifth of the units will be set aside for people earning $33,150 – half of the area median income for Southeast Michigan. Detroit’s median income is $36,453, according to the U.S. Census Bureau. The rest of the units will be set at market rates, which were not disclosed Tuesday.

The Pistons will create around 132 “affordable” units, including 63 studios set at $828 per month, 57 one-bedroom units at $888 per month and 13 two-bedroom units at $1,066 per month. A spokesperson for the Pistons said details about who will manage the apartments are still being worked out.

Plans call for 311 total studio units averaging 540 square feet, along with 288 one-bedroom units averaging 749 square feet and 63 two-bedroom units averaging 1,076 square feet. 

Apartments will be located inside a rehabilitated Henry Ford administrative building and two new buildings constructed on parking lots owned by the hospital system. Currently, the three sites are generating no property tax revenue but will bring $36.1 million in annual tax revenue to the city once finished, according to the DEGC. 

The $3 billion project is expected to create $119 million in net tax benefits over the next 35 years. Construction is expected to create 8,241 jobs and 702 permanent jobs are expected to become available once the projects are finished. 

DEGC Chief Operating Officer Kenyetta Bridges said the tax incentives are “performance based,” meaning the funds are only made available if developers complete the projects. Bridges said incentives are only granted if the project creates a net benefit for the city and would not be possible without them.

DEGC Brownfield Redevelopment Manager Cora Capler said brownfield incentives will help cover the cost of environmental cleanup on the sites. Contamination from former automotive uses still taints the properties, she said. 

Howell said DEGC is supporting the tax breaks because it helps offset rising construction costs and interest rates, puts vacant land on the tax rolls and creates affordable housing. Howell said increased tax revenue helps fund city services. 

Howell said the project “certainly could not happen without the incentives” because it doesn’t generate enough income to service its debt. 

A $1.74 billion hospital expansion would create a larger emergency department including 877 single-patient rooms, 50 surgical procedure suites. The emergency department would be connected to Henry Ford Health facilities on the north side of the boulevard with pedestrian bridges. 

Henry Ford is also building a $203 million shared services building, a $235 million green energy facility and a $70 million parking deck. The hospital system is collaborating with MSU on a $393 million biomedical research facility. 

Norman Hubbard, senior associate vice president of the MSU Office of Health Sciences, said researchers will study treatments for heart disease, strokes and Alzheimers, which disproportionately impact Black residents. 

Jerry Darby, vice president of planning, development and design at Henry Ford, said projects will include stormwater management features to mitigate flooding and divert traffic away from neighborhoods on the north side of West Grand Boulevard. 

Attendees of Tuesday’s meeting were also introduced to the nine-member neighborhood advisory council selected to negotiate a community benefits agreement with developers meant to protect residents in the neighborhood from negative impacts of the projects, which are expected to finish construction between 2027 and 2029.

Steven Rimmer, a tenants rights organizer, was appointed chair of the advisory council by his colleagues, with Joanne Adams and Venita Thomkins serving as co-vice chairs. 

Adams asked developers to put the project through a racial equity analysis. She said the analysis would help guide the council in advocating for tangible community benefits that reduce racial inequities in surrounding neighborhoods. Developers agreed to explore the idea. 

Adams noted that a majority of residents are Black renters and 30 percent are at or below the poverty line. The homeownership rate ranges between 18 percent and 40 percent for residents living in three census tracts making up the impact area. 

Other members of the neighborhood advisory council asked questions about development details but have yet to hold conversations on community benefits. The group briefly met for the first time Monday. 

The next public meeting is scheduled for Wednesday, Nov. 1, while subsequent meetings are scheduled for Tuesdays at 6 p.m. at University Prep High School, 610 Antoinette St.