A weeks-long stalemate over a $60.3 million tax break for Dan Gilbert's $1.4 billion J.L. Hudson's site development downtown has ended with his Bedrock LLC real estate company conceding to more community benefits for Detroit in exchange.

The Detroit City Council on Tuesday approved the 10-year abatement for the development at Woodward and East Grand River avenues on a 5-4 vote, with President Mary Sheffield and members Scott Benson, Fred Durhal III, Mary Waters and Coleman A. Young II voting for and President Pro Tem James Tate and members Latisha Johnson, Angela Whitfield-Calloway and Gabriela Santiago-Romero voting against.

Since early June, the issue had been a topic of debate both at the council dais as well as in the general public, where some argued that foregoing tens of millions in city property tax revenue so a billionaire could continue building a massive skyscraper downtown was not the best use of public resources in a city that struggles to provide things like affordable housing and reliable public transportation services.

Bedrock and others, however, pointed to the Hudson's site development's net positive impact on the city's bottom line, as well as its necessity to make the project financially viable, even with a slim profit margin of just 1.6 percent.

Tate and Whitfield-Calloway expressed concerns over the process, among other things. The tax abatement, as well as amendments to the community benefits ordinance agreement and Bedrock's affordable housing agreement with the city, were on the Detroit City Council agenda to be referred to the Planning and Economic Development standing committee. However, Young made a motion Tuesday — over the objection of Tate, Whitfield-Calloway and Santiago-Romero — to move those items to the council agenda for a vote. Amendments to the CBO and affordable housing agreement were also approved.

"These are the people's tax dollars and I think we are disrespecting, in my opinion, our taxpayers, the residents of the city of Detroit," Whitfield-Calloway said. "We say we support them but our actions speak differently. It should come before the public. It should not be walked on (to the agenda for a vote)."

Young said his decision on the tax abatement was driven by keeping workers at the site on the job. "I think in a time of inflationary times, where gas and groceries are too expensive, and guns and ammo are too cheap, in a time of an oncoming recession, I think it would be irresponsible to not do everything we can to keep those young men and women working," he said. Sheffield had been one of the holdout votes but changed her mind.

"In a perfect world, we would not need tax abatements," she said. "But unfortunately, Detroit has one of the highest tax rates in the nation, putting us at a competitive disadvantage."

Among the enhanced community benefits agreed to as a condition for receiving the 10-year Commercial Rehabilitation Exemption Certificate are committing to reserving 20 percent of the first-floor retail space at the development for Detroit-based small businesses "and other community programming;"and a $1 million commitment to those small businesses over the course of the tax break in the the form of small business development grants, technical assistance funding, free or deeply discounted rent, or purchasing goods from those businesses.

In addition, Bedrock agreed to a $5 million commitment, also over the term of the tax break, to projects that meet the criteria for the Neighborhood Improvement Fund, which started with $2.25 million funded with tax revenue from NBA player salaries during home games at Little Caesars Arena, as well as Palace Sports & Entertainment employees.

The Neighborhood Improvement Fund is for things like blight removal, home repairs, recreational opportunities, affordable housing and other things. Any affordable housing investments done as part of this requirement would not be credited towards Bedrock's long-standing affordable housing agreement with the city.

In 2017, Bedrock and the city reached an agreement where it committed to make 20 percent of its rental housing portfolio affordable at 80 percent of the federally-designated Area Median Income or lower. However, under terms of that agreement, Bedrock is not required to actually build those units — originally 700 of a planned 3,500 — itself. It is allowed to finance affordable units built or owned by others, like what it agreed to with a $12 million commitment to the renovation of Cathedral Tower in Midtown, announced in 2017.

However, Bedrock has agreed to increase its affordable housing portfolio from 20 percent to 30 percent of all of its units, and to reduce the 80 percent AMI to 60 percent AMI, meaning that affordable units it creates or preserves going forward will be more affordable to Detroiters who most need it.

Crain's reported in May that the AMI for the region increased 12 percent this year. In Wayne County, figures released in April show the AMI for a single person was $62,700; for a family of four it was $89,500.

Crain's reported this spring that units that are built for residents who make 60 percent of the area median income — $37,620 for an individual or $53,700 for a family of four — would pay $1,209 for a two-bedroom apartment under the new figures, up from $1,080 last year.

There are also measures related to digital inclusion and creating a Detroit Public Schools Community District

"We need partnerships," said Waters, who advocated on behalf of more digital and technological provisions in the amended CBO. "Let's not talk about people selling their souls anymore. If I sell my soul, it will be sold on behalf of the people I represent."

The framework for the Commercial Rehabilitation Exemption was also laid in 2017.

"Bedrock sincerely appreciates the council's continued partnership, evidenced by their vote today," Kofi Bonner, CEO of Bedrock, said in a Tuesday statement. "We are pleased to have this approval finalized and look forward to completing a landmark project that will not only define the city’s skyline but will bring a significant boost in jobs and taxes to the city."

Tuesday's City Council vote marks the culmination of weeks of debate and wrangling.

On June 14, the council opted to take another week to consider whether to grant the tax break for the Hudson's project, which sits on a 2.3-acre site.

Then on June 21, the council delayed the vote again, with Sheffield saying that she and other council members recently held meetings on the subject and additional information was still being gathered, prompting another postponement of the vote.

The Detroit News reported last month that the project has a 1.6 percent annual return on investment. Once the 10-year abatement expires, the taxes will be over $10 million per year, the city says.

In addition to the commercial rehab certificate, the project is part of a grouping of developments in varying degrees of completion that received $618.1 million four years ago in so-called "transformational brownfield" funding on $2.14 billion in development.

According to a Detroit City Council document, the development is being financed with $1.03 billion in equity and $378.1 million in debt. The city says net benefits through things like city income taxes, property taxes and utility revenues are $71.6 million after the tax abatement, while total benefits to all taxing jurisdictions is nearly $89.1 million.

A report last month in Deadline Detroit casts doubt on whether those benefit projections are accurate as three-quarters of the city benefits are from city income taxes. Economists and experts the online publication interviewed said, among other things, many of the jobs within the development when its complete may already be located within the city.

Gilbert paid $16.4 million combined for the property, which includes the air rights above the site and $15 million for an underground garage that was demolished, Jared Fleisher, Gilbert's top lobbyist, told Crain's in recent weeks.

The development started construction in December 2017 with a groundbreaking ceremony, but completion has been delayed by two years, now expected by the end of 2024.

New renderings of the development were released in recent weeks.

There are two primary components: The block building at the northern edge of the property is set to contain hundreds of thousands of square feet of office, meeting, retail and restaurant space; and a skyscraper with hotel and residential space expected to rise 685 feet.

The tower has fluctuated in height, initially proposed to be 734 feet, making it the tallest building in the state, then rising to 800 feet, then to as high as 912 feet before softening those numbers and settling on approximately 680 feet. The most recent expected height is 685 feet, 4 inches. Bedrock said last month that it is expected to reach that height next year, with the overall development being completed in 2024.

A so-called "topping out tree" was put on the tower component in April to mark structural steel for the block component commemorating the last/highest piece of structural steel being hoisted in that component.

Southfield-based Barton Malow Co. is the general contractor, while New York City-based Shop Architects is the design architect, along with Houston-based Kendall/Heaton Associates, and Detroit-based Hamilton Anderson Associates is landscape design architect and interior design architect on the Edition Hotel component. Detroit-based Pophouse is designing common areas in the office space. The owner's representative for Bedrock is New York City-based Turner Corp., which was brought in after Jacobs Engineering Group was removed from the project.

In addition to the Hudson's project, the others grouped as part of the transformational brownfield package are the long-delayed $830 million Monroe Blocks project immediately east of the One Campus Martius Building, the $311 million redevelopment of the Book Tower and Book Building on Washington Boulevard set to finish this year, and the $95 million addition to the One Campus Martius building where Gilbert has his Rocket Companies Inc. (NYSE: RKT) headquartered.

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