Detroit residents living near a $3 billion development project gave the first approval of a community benefits deal struck with Henry Ford Health, the Detroit Pistons and Michigan State University.

The trio’s “Future of Health” plan includes six projects that promise to add affordable housing, new jobs, improve health care access and boost economic growth around New Center. Residents serving on a voluntary neighborhood advisory council spent the last three months considering how the massive project will affect life in surrounding neighborhoods. A 6-2 vote on Tuesday night sets the stage for City Council to finalize developer commitments to invest in community priorities. 

Developers agreed to a $2 million investment in a home repair fund, a $500,000 donation in a rental assistance fund, $300,000 in grants for community organizations and 50 full-ride scholarships to MSU for students at Northwestern High School and University Prep. 

The Pistons agreed to accept Section 8 housing vouchers for a portion of apartments offered at “affordable” rates. However, the benefits deal doesn’t include a breakdown of how the investments are divided between Henry Ford, the Pistons organization and MSU.

Roughly $283 million in state and local tax breaks are being sought to help finance a $774 million investment in three apartment buildings, a joint medical research center and a parking garage. Henry Ford Health won’t request any tax breaks to fund its $2.2 billion hospital expansion, which includes a new energy facility and another parking deck. Most of the tax incentives will go toward the Pistons’ housing projects. 

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Richard Haddad, chief operating officer for the Pistons, said the agreement won’t satisfy everyone but the developers are proud of what’s included in the package. Home repair and rental assistance funding was added to the agreement after residents pushed for its inclusion.

“It all comes back to the mission of this development, which is to make a positive impact on this neighborhood and the city,” Haddad said.

Two leaders of the neighborhood council didn’t approve the benefits package. Co-Vice Chairs Joanne Adams and Venita Thompkins said the deal doesn’t go far enough to address potential displacement of renters. 

The neighborhood group presented a list of 155 demands. The developers’ response cut the number in half.

Adams said the benefits are “meager” compared to tax incentives being sought. She was also frustrated by failed proposals to incorporate a racial equity framework and seek an investment in the city’s affordable housing trust fund. 

“This isn’t a negotiation, this is the administration and developers exercising their considerable power for their own gain, against the best interests of our community,” Adams wrote in a statement. 

Chair Lynda Jeffries said she was excited to see the scholarships and investments in home repairs, grants for community organizations and a steeper discount on rent for a portion of the “affordable” housing units. Other members of the neighborhood group applauded commitments for environmental sustainability and job opportunities. 

Denise Brooks-Williams, executive vice president and CEO for Care Delivery System Operations at Henry Ford Health, said she was disappointed to hear residents say the agreement isn’t good enough. She said having a world-class hospital is a major asset to the community, and Henry Ford’s involvement in Detroit will continue well into the future. 

“I think there are a lot of opportunities for partnership beyond this process and those that want to work with us, we want to work with them,” she said.

Many of the benefits must focus on an impact area defined by the Detroit Planning Department bounded by I-94, Rosa Parks Boulevard, West Euclid Street and Woodward Avenue. The 61-item list includes nine items provided by the City of Detroit, including renovation of Williams Recreation Center, the addition of two bus shelters along Grand Boulevard and sidewalk repairs. 

Susan Mosey, longtime executive director of Midtown Detroit Inc., said the projects will activate underused real estate and bring thousands of people to support area businesses that have lacked foot traffic. 

Rachel Lutz is owner of The Peacock Room, a boutique inside the Fisher Building. She said there’s been minimal interaction between New Center businesses, Henry Ford and the Pistons. Lutz is skeptical that adding more employees will result in a boom for retailers like herself. She worries the Fisher Building is becoming “insulated” like the downtown Renaissance Center.

The benefits agreement is a product of Detroit’s Community Benefits Ordinance, which established a process for community involvement when large development projects worth $75 million seek tax breaks over $1 million. Community organizers said the process is designed to allow developers to maximize subsidies while delivering the minimum amount of benefits sought by residents. 

“Nobody is asking for (developers) to give them something for nothing,” said Cassandra Floyd, executive director of the West Grand Boulevard Collaborative. “We’re asking you to do a lateral exchange. You’re going to use our tax dollars, then you provide some benefits that we want to see in our community, not the ones that you decided you want to give.” 

Sam Butler, executive director at Doing Development Differently in Metro Detroit, said he’s glad to see a commitment to give residents in the impact area priority when applying for jobs created by the project. 

However, he’s also concerned that donations to home repair and rental assistance can be credited toward fines the developer would pay if it doesn’t hire enough Detroiters during the construction. Developers volunteered to comply with an executive order requiring residents to make up half of the workforce on large city construction projects. 

“They voluntarily complied with the executive order, but they should be paying fines and making a donation,” Butler said. “What they’re asking the community to do is make a choice between workforce development dollars, which is what the fines are supposed to go to, and affordable housing.” 

Developers also agreed to invest $100 million of its development costs in Detroit-based, historically disadvantaged and women-owned businesses. 

Jeremy Stephenson and Apollos Robbins are  union construction workers who highlighted the importance of creating good-paying construction jobs. Robbins said these kinds of multi-year projects creates job security and allows him to build a financial foundation to pass on to his children. 

New affordable housing 

Developers are seeking $232 million in tax incentives through a Transformational Brownfield Plan and $55 million in other tax abatements, which require City Council and state approval in 2024. Construction for the various projects will happen in stages between 2024 and 2029. 

Most of the tax incentives, roughly 80 percent, will go toward the three Pistons housing projects located near its training facility on Third Street. Three buildings with 662 units are expected to house 916 people, according to brownfield documents, including an estimated 275 newcomers to Detroit.

Twenty percent of the units (133 total) will have rent based on federal affordability guidelines. Haddad said they’re offering the “deepest level of affordability” of any project to go through the community benefits process. 

Rent will be discounted for 107 of the 662 units in order to be affordable for people earning half of the median income in Southeast Michigan, which is $33,150 for a single person. Steeper discounts are planned for 13 units so residents earning $19,890 can afford them. Another 13 units will have rent set to be affordable for people earning $46,410. 

Rental rates for the other 529 units could average $1,844 per month. Brownfield documents show market-rate rent for a one-bedroom apartment could be $1,994 per month.

Some residents criticized the project for not adding more affordable units and ignoring other components of an earlier benefits deal sought by the neighborhood council. 

“It’s a very hard pill to swallow when you see developers not being sympathetic toward affordable housing,” Floyd said. “You can set a better example where people could go lower.”

Tax abatements, jobs and benefits 

Detroit’s Brownfield Redevelopment Authority will discuss a major request for tax incentives for the first time Wednesday, then set a public hearing. The tax incentives must clear the City Council and a state economic development board. 

If approved, the Transformational Brownfield Plan would redirect a portion of tax revenue back to developers over 35 years to help finance three apartment buildings, a parking garage and the joint research center. This includes $127 million in property taxes that would have otherwise gone to the city, schools, Wayne County, Detroit Public Library and other public entities. 

Developers said the tax breaks will create an overall boost in tax revenue. New jobs associated with construction, the hospital campus and research facility, apartment management and retail space are also expected. 

Detroit is expected to receive $118 million in net revenue, primarily through income taxes, during the 35-year brownfield plan. The State of Michigan could also receive $273 million in net revenue during the same period. 

Brownfield documents show the projects are expected to create 2,145 construction jobs with an average wage of $61,921. Approximately 735 full-time non-construction jobs would be created, according to the brownfield plan, with an average annual income of $111,684. 

Henry Ford Health and MSU formed a non-profit corporation to share the new research center. One floor will be leased to the Nick Gilbert Neurofibromatosis Research Institute, which is supported by a $100 million donation from the Gilbert Family Foundation. 

Research positions are expected to pay $137,800 on average. Henry Ford Health also plans to enter a 75-year lease with MSU for the research center, which will be exempt from property taxes.

A new 1,500-space parking garage is planned to serve the hospital while another 804-space parking garage would be built for housing tenants and visitors. 

The benefits deal struck Tuesday night includes dozens of other commitments to provide the following:

• Dedicate $55 million in construction costs for infrastructure, roadway and streetscape improvements, crosswalks, and landscaping 
• A $200,000 donation to nonprofit Brilliant Detroit to turn a home in the impact area into a community space with children’s programing
• A $75,000 donation to the Pistons Wheelchair Team
• A $15,000 sponsorship of NW Goldberg Hoopfest 
• A dedicated community health worker to help seniors in the impact area receive health resources 
• Create a plan within 12 months to redevelop the former Fairbanks Elementary School 
• Create a plan to promote local businesses 
• Meet environmentally-friendly design standards and incorporate environmentally conscious stormwater mitigation designs
• Commission a traffic study to determine the impacts on residents during and after construction 
• Walk-up primary care services at an existing location or near the new hospital campus
• Emergency medical kits provided to Northwestern High School and University Prep
• Several community resource events, student events and job fairs