Detroit Council approves $3 billion Henry Ford Health hospital expansion in New Center, community benefits

Detroit — After weeks of contentious debate, the Detroit City Council approved Tuesday community benefits and rezoning parts of New Center to accommodate the Henry Ford Health $3 billion hospital expansion.

The nine-member council voted 6-3 after a four-hour debate. Council members Mary Waters, Angela Whitfield-Calloway and Gabriela Santiago-Romero voted against the community benefits and the rezoning of the projects, saying the benefits proposed weren't sufficient.

The expansion, announced in February last year and expanded in September, includes five components: a new research center with Michigan State University, a 400-private room patient tower, a commercial corridor with two new residential buildings and a 1,500-space parking garage.

The developers are Henry Ford Health, Michigan State University, Detroit Pistons owner Tom Gores is producing the commercial corridor and the Gilbert Family Foundation have separately partnered to bring a stroke and neurofibromatosis research center.

Developers will receive an estimated $231.7 million in tax revenue reimbursement over the next 35 years, with $117 million of that from property tax, according to the plan.

The developer investment will be $773 million for the joint Henry Ford/Michigan State University Research Center, three residential/commercial projects and a six-story parking garage. Henry Ford has not sought any tax breaks for its portion of the $2.2 billion expansion.

The brownfield plan builds on the health system's development of the Henry Ford Pistons Performance Center on Second Avenue, completed in 2019. The existing 877-bed hospital on West Grand Boulevard will remain.

Three dozen development team members attended City Council meetings hoping to see the projects approval.

The developers issued a joint statement directly after the project's approval saying they are long-standing Michigan community stewards that are working toward a "historic partnership."

"Today’s approvals lay the groundwork to execute the reimagination of our shared campus, creating meaningful economic opportunity and redefining what health and well-being means for the City of Detroit," according to the statement.

"We appreciate our engagement with members of City Council, Mayor Mike Duggan and his team, and the committed impact area residents of the Neighborhood Advisory Committee for understanding the importance of this vision and working together to deliver a community benefits package that will enhance our shared neighborhood and the broader city we serve.  The Future of Health in Detroit is ours to shape, and we’ll do it together.”

Arn Tellem, vice chairman of the Detroit Pistons, said in 2017 the Pistons were the second developer to go through the CBO process. He advocated for the project's passage Tuesday saying they are returning customers in this development "to be in a position to further transform our neighborhood in a positive way."

"And it will leave Detroit in a better place providing the finest medical care and access for Detroiters," Tellem told the council. "It will expand the zone of development and investment from the urban core to the neighborhoods that will have a ripple effect."

Developers spent the last six months working with a special board that requires resident input in areas impacted by major private developments under Detroit's unique Community Benefits Ordinance.

The special nine-member Neighborhood Advisory Council, known as NAC, was made entirely of residents who live in an "impact zone" surrounding the planned expansion. They submitted 155 recommendations as part of the Community Benefits Agreement, whereas developers initially proposed 80 benefits.

The Community Benefit Agreement

The developers said they have made commitments to affordable housing, home repair, and rental assistance as a part of the Community Benefits Agreement that was approved by the Neighborhood Advisory Council by a 6-2 vote.

Developers, according to the Transformational Brownfield Plan, estimate their benefits agreement totals $604 million. This total includes the $90 million cost of the research center; $10 million for the construction of a 1,500-space parking garage; $55 million on infrastructure improvements like roads, crosswalks, and streetscape improvements; and $30 million on rehabbing five acres of greenspace around the hospital.

The majority of the benefits package cost is $310 million for uncompensated care for under-insured residents within a 3-mile radius they're calling a Community Health Fund.

As part of new development being built by Pistons' Gores, the benefit package sets aside 133 of the 662 residential units (20%) for "affordable housing" at varying levels of income.

"We're delivering housing here to prevent displacement," said Richard Haddad, on behalf of the Pistons. "We've heard the commenters talk about how this is just a project for us to get rich... the projected rate of return on this project is 4.5% that's not what this is about for the Pistons. This is about us coming together, with our partners in the neighborhood, to invest in this city."

Developers slotted $2 million to a home repair fund, to be administered by an experienced nonprofit in the neighborhoods surrounding the developments including New Center, New Center Commons, Virginia Park, Virginia Park Community, Tech Town, Elijah McCoy, Piety Hill, LaSalle Gardens and NW Goldberg. Developers promise $500,000 to a rental assistance fund for qualifying renters in the impact area.

The developers will conduct a feasibility study identifying the potential redevelopment plans for the Fairbanks School and "hold a public community meeting to directly inform the redevelopment plans." They promise $1.3 million to curate a site plan for Fairbanks within a year of the group's approval that focuses on housing, healthcare, careers, education or community building.

Developers have also promised $100 million on "business spend" to procure small businesses. There's also $300,000 in microgrants spread over 15 years to support organizations within the Impact Area. A panel of community members will nominate organizations for consideration and the funds shall be granted by developers.

The hospital will provide a "dedicated community health worker to provide engagement with impact area senior citizens to educate, coordinate community resources and assist seniors in navigating the healthcare system."

They've also slotted $3.75 million for 50 tuition-free scholarships to Michigan State University to qualifying seniors at University Prep and Northwestern High School - one from each school over a period of 10 years.

Medical resources have also been promised to Northwestern High School. Developers will also dedicate research and direct care resources to address infant/mother mortality issues, which will report to the city's Civil Rights and Inclusion Office twice a year.

JoAnne Adams, who served as a leader on the NAC, said she feels this CBA lacks three critical components: protection from displacement, a community investment fund and a rehab plan for the abandoned Fairbanks School. And "we need stronger language," she said.

"It doesn't give me confidence this CBA will materialize," she told the council. "Please do more to make this more equitable."

On Tuesday, the developers added a $1 million community land trust that is comprised of $250,000 in 10 parcels of donated land Henry Ford owns and $750,000 for supportive services. Developers also added a memorandum of understanding with the Detroit Area on Aging to support seniors in the impacted area.

Council weighs in

City Council President Mary Sheffield pushed for a non-emergency shuttle service for senior citizens in the impact area to get to appointments or grocery stores. She supported the project and said she's certain "the Detroit Pistons are here to better our city."

"I may be a bit biased coming from a family of health care service and this project being in District 5," Sheffield said. "I am supportive of the project today although no deal is perfect. Mainly because of the No. 1 rehabilitation center in the country that will be housed here and what this is going to do for the working class in Detroit."

District 7 Fred Durhal III said he grew up in the impact area and didn't expect to see this type of improvement project.

"This is a beacon of hope for that neighborhood and something that shows our city is ready to move forward," Durhal said. "This will bring 2,000 construction jobs and 700 permanent jobs... The CBO was not perfect, but not all nine members sitting here have always agreed. I'm glad to support this project because we need more developers who are willing to work with our city. However, we will be working to ensure these promises are followed through."

District 6 Councilmember Gabriela Santiago-Romero said she could not support the project due to the lack of benefits. She requested the Housing Trust Fund to be at least $3 million and an additional $8 million to be allocated for the Housing Repair Fund, which was not added.

District 2 Councilmember Angela Whitfield-Calloway also voted against it, saying previous developers underwent the same benefits agreement but failed to deliver on promises.

"During public comment, too many residents spoke in concern that this body would not be able to hold developers and businesses accountable," she said. "Unfortunately, enforcement is lacking under the current (community benefits agreements). Previous project agreements are delivered late or completely ignored."

District 3 Councilman Scott Benson supports the project because it's expanding hospital beds "at a time when others are closing down."

"We are a city that has a high level of poverty and low-income families, making it harder to provide services to residents in need," said Benson, who touted the greening and education initiatives as part of the project.

Pro Tem James Tate said the benefits before them were the best based on the financial needs and his priority was focused on housing.

"This is a 35-year incentive relationship and the benefits should extend during that time," he said.

Residents weigh in

Nearly 200 public commenters spoke over the last three weeks divided on the issue at the formal sessions held on the 13th floor of the Coleman A. Young Municipal Center Auditorium.

Several construction workers stated they'd like to part-take in building this project and "It will be a project that positively impacts this city long after we're gone."

Some commentators, including a high-rise window washer, turned directly to the tradesmen and said, "You and your unions are being manipulated by the billionaires. This project will still happen without the tax breaks."

Southwest Detroit resident Elena Herrada was escorted out of Tuesday's meeting for yelling, "This is one-sided. If only you were on our side."

"We know the hospital is needed, of course it's needed, but Gores does not need our money. I'm saddened. You can't be a billionaire without taking other people's money. If you think you're on the right side of history, you're not," Herrada said earlier in the meeting during public comment.

Attorney Tonya Meyers Phillips, who attended nearly every NAC meeting, questioned "who actually benefits?"

"What about the so-called benefits? We can't package something as a community benefit when we already pay for and subsidize.... It's not right to take and divert our tax dollars from the least of these and give it to a billionaire like Tom Gores," she said. "This hospital is going to happen either way. They just want their billionaire friends to come along for the ride."

Jaye Clement, a worker of Henry Ford Health for 12 years and VP of community programs and strategy including social drivers, spoke in support of the benefits agreement.

"It will help build capacity and strengthen infrastructure for Detroit families," he said.

srahal@detroitnews.com

X: @SarahRahal_