November 9, 2017 (DETROIT) ─ Bedrock today is going before the Detroit City Council to take the next step towards starting construction on $2.1 billion in transformational projects that include the redevelopment of the historic Hudson’s Site, Monroe Blocks, Book Tower, and One Campus Martius Expansion Project. Together, these four projects will create 24,000 jobs in the City.
In September, Bedrock announced that it would be seeking gap financing to make these transformational investments possible through the new state MIthrive program enacted into law earlier this year. Today, the Detroit City Council is beginning consideration of MIthrive financing package for Bedrock’s transformational projects.
“Today’s City Council hearing is an important step toward going vertical in Detroit,” said Dan Gilbert, Bedrock Founder and Chairman. “Every day, our family of companies is driven by the goal of creating jobs and expanding opportunity for all Detroiters. These transformational projects are necessary to achieve that goal while accommodating the growth of current downtown businesses and attracting top talent from all over the world. The Amazon bid process proved just how vital development on this scale is to the competitiveness and economic future of our city.”
MIthrive builds on the existing local Brownfield Tax Increment Financing (TIF) program by providing additional state support needed to make transformational development projects financially possible. MIthrive works by allowing transformational developments to keep a portion of the newly created state tax revenue the projects generate to help bridge the gap between high redevelopment costs and market rents needed to support these monumental projects. This mechanism is known as tax increment financing or “TIF.” The approval process includes local and state approvals and analysis and requires developers to submit a “Transformational Brownfield Plan” that lays out in detail all of the components and economics for the projects.
The Detroit Brownfield Redevelopment Authority unanimously approved Bedrock’s Transformational Brownfield Plan in October, and the Plan is now before the Detroit City Council. The TIF will not capture any City of Detroit taxes, and it will have no impact on the Detroit Public Schools Community District.
In addition to the TIF Plan, the package includes traditional local tax abatement tools necessary for development projects in Detroit to be economically viable.
According to an analysis by the Detroit Economic Growth Corporation (DEGC), because the TIF Plan does not capture any City taxes, the package will result in a net benefit of $673 million in new tax revenue to the City over the life of the TIF. The primary sources of financing in the MIthrive package are summarized below.
Bedrock is committed to maximizing opportunities for Detroit residents and businesses and will be complying with the City of Detroit’s executive orders with respect to utilizing Detroit residents and Detroit-based businesses in the construction of these transformational projects.
Bedrock has also entered into an Affordable Housing Agreement with the City, committing that twenty percent of its overall residential rental portfolio will be developed or preserved as affordable housing.
In August, Bedrock announced a major commitment under its Affordable Housing Agreement and is now moving forward with a partnership to rehabilitate the Cathedral Towers affordable housing development in Midtown and maintain it as an affordable development for another 30 years.
Detroit-based Bedrock is a full-service real estate firm specializing in acquiring, developing, leasing, financing, and managing commercial and residential buildings. Since its founding in 2011, Bedrock and its affiliates have invested and committed more than $5.6 billion in acquiring and developing more than 100 properties, including new construction of ground up developments in downtown Detroit and Cleveland totaling more than 16 million square feet. Bedrock’s real estate portfolio consists of more than 330 office and retail tenants in Detroit’s technology-centric downtown. For more information, visit bedrockdetroit.com or engage with us on Twitter @BedrockDetroit and Facebook.