State panel approves $231.7M in tax incentives for Henry Ford Health project
Candice WilliamsThe Michigan Strategic Fund board on Tuesday approved $231.7 million in tax incentives for a portion of Henry Ford Health’s development project and agreed to create a renaissance zone for a 600-room hotel room to be built next to Huntington Place in Detroit on the former Joe Louis Arena site.
The developer, Palace Sports & Entertainment, LLC, DP Amsterdam, LLC, Henry Ford Health System and Michigan State University requested incentives for the Future of Health Transformational Brownfield Plan, a $773 million investment in the city’s New Center neighborhood and part of a broader $3 billion plan that includes a hospital expansion.
The brownfield plan includes a new research center with Michigan State University, three mixed-use buildings containing commercial and residential space, and an 800-space parking garage. Henry Ford has not sought any tax breaks for its planned $2.2 billion hospital expansion.
The effort is expected to create 735 jobs, according to a Michigan Economic Development Corp. briefing memo.
“The end result will be a large-scale, mixed-use development that creates a sense of place in the New Center neighborhood, provides the finest medical care and access, creates jobs and opportunities, attracts talent and provides mixed-income housing for the people that will fill those jobs,” Richard Haddad, chief operating officer and chief legal officer at Pistons Sports & Entertainment, said during the meeting. "It will expand the zone of development and investment out from the urban core here in Detroit toward the neighborhoods and it'll create a center of gravity that will attract additional investment and activity.”
The $231.7 million in tax incentives include local and school property tax capture projected to be about $117.4 million, with state tax capture limited to around $44 million; a maximum of about $5.6 million in construction period tax capture revenues, a maximum of about $8.2 million in construction period sales and use tax exemptions, and a maximum of around $100.6 million in income tax capture revenues and withholding tax capture revenues post-construction.
Haddad said the tax incentives are needed to make the project economically viable.
The $400 million hotel project in Detroit, called Hotel at Water Square, would not be financially feasible without an MSF Renaissance Zone designation, said Danny Samson, chief development officer with The Sterling Group. The applicant, Atwater & Second Associates LLC, is an affiliate of the Detroit-based company.
According to the MEDC, the 30-year zone "will help the expansive development costs by reducing the company’s overhead throughout the term of the designation."
The firm expects to break ground on the 600-room, 25-story hotel by the end of the month, with an expected completion date of early 2027, he said.
“Just in time for the men's basketball Final Four in Detroit,” Samson said.
The proposed hotel will be connected to the Huntington Place convention center by a skywalk and feature 50,000 square feet of meeting space, dining options, a spa, a pool and a market.
Samson said the project is all-union.
“A hotel connected to the Huntington Place convention center will serve as an economic catalyst for the area and help to level the playing field amongst our competition that already have connected hotels such as Chicago, Minneapolis, Columbus, Indianapolis and Cleveland,” he said. “Without a connected hotel the City of Detroit is missing out on dozens of conventions every year and hundreds of millions of dollars in spending that would have come from those conventions annually.”
The Michigan Strategic Fund also approved a $9.2 million Strategic Site Readiness Program grant for an advance manufacturing district in Genesee County.
The awardee, Flint and Genesee Group Foundation, is assembling land for a large-scale site in Mundy Township to attract more than $2 billion in investment and create 2,000 jobs, according to the MEDC.
"As of 2022, the Applicant embarked on a significant initiative aimed at establishing a mega site for utilization by the State." MEDC staff wrote in a briefing memo. "This includes gaining control of 20 parcels to date, spanning over 1,000 acres of land by way of option agreements."