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Bedrock’s $2.15 Billion Transformational Development Projects Clear Final Hurdle with Michigan Strategic Fund Approval of MIthrive Financing

May 22, 2018

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Bedrock’s $2.15 Billion Transformational Development Projects Clear Final Hurdle with Michigan Strategic Fund Approval of MIthrive Financing

  • Today’s vote represents the first use of Michigan’s MIthrive program created to support transformational redevelopment projects across the state 
  • Bedrock’s four transformational projects in Downtown Detroit are projected to create a total of 22,000 jobs; 15,000 construction-related jobs and 7,000 permanent high-wage jobs occupying the new and redeveloped buildings
  • State of Michigan to see an estimated $2.5 Billion increase in tax revenue, a 3-to-1 return on their investment 
  • MIThrive will not capture any City of Detroit taxes, and it will have no impact on the Detroit Public Schools Community District

May 22, 2018 (DETROIT) ─ Today the Michigan Strategic Fund (MSF) provided the final approval for Bedrock’s use of the MIthrive financing tool, clearing the final hurdle that locks in $2.15 billion in new investment in Downtown Detroit for four transformational projects:

  • The redevelopment of the iconic Hudson’s Site
  • The transformation of the nearly four-acre Monroe Blocks site in the heart of Downtown Detroit
  • Restoration of the historic Book Building and Book Tower
  • The expansion of the One Campus Martius building, which will create new office space for an estimated 1,500 of the 7,000 permanent, high-wage jobs occupying the new developments

As a result of its support for these four transformational projects through the MIthrive program, which is projected to total $618 million in foregone tax revenue over approximately 30 years, the State of Michigan is expected to realize $2.5 billion in new tax revenue over the same period. On a present value basis, for every $1 of support to make the projects possible, the state is expected to receive $3.2 in new tax revenue in return. This does not include the significant non-tax direct economic benefits and substantial job creation that is consistent with multi-billion dollar investments such as these.

“These landmark developments are a milestone representing Detroit’s credible new era of hope, optimism and growth,” said Dan Gilbert, Bedrock Founder and Chairman. “This process has been an outstanding example of collaboration between multiple levels of government and private industry that will unleash billions of dollars of investment, resulting in transformational impact to Detroit, the region, and the entire state of Michigan. Governor Snyder and the Michigan Strategic Fund were instrumental in getting these monumental projects to the finish line. I want to thank the Governor, MSF, and all of our local and state partners for their strong support and commitment to Detroit and the state’s transformation.”

Together, Bedrock’s four projects will support an estimated 22,000 new jobs – 15,000 jobs related to the construction of the projects, and over 7,000 new permanent, high-wage jobs occupying the office, retail, hotel, event and exhibition spaces. Construction has already started on the Hudson’s site and Book Tower, and the Monroe project and the One Campus Martius will be underway later this year.

The Hudson’s Site and Monroe project will be the first 20-story or higher commercial towers built in downtown Detroit in more than a quarter-century and are defined by our commitment to public, exhibition and meeting spaces, as well as iconic design that honors and evolves Detroit’s architectural legacy.


Bedrock’s Transformational Brownfield Plan

MIthrive builds on the existing Brownfield Tax Increment Financing (TIF) program by providing state support needed to make transformational development projects financially feasible.  MIthrive works by deploying the strategy of utilizing a portion of new state tax revenue to help bridge the gap between today’s development and construction costs and market rents. This mechanism is known as tax increment financing or “TIF,” and individual projects are approved through what is known as a “Transformational Brownfield Plan.”


  • The TIF plan will enable Bedrock to secure approximately $250 million in debt financing of the $2.15 billion total project costs by authorizing the capture, over 30 years, of an average annual $18.56 million in newly generated taxes across the sites. All tax capture is limited to new tax revenues from the development sites themselves, and all debt will be issued by the developer – not the state or city.
  • The TIF plan exempts the state sales tax on construction materials used to build the projects, averaging a forecasted savings of $12.2 million per year over the expected five-year construction period.
  • Together, the TIF financing and sales tax exemption will cover approximately 15 percent of the project costs, with Bedrock responsible for 85 percent of the total $2.15 billion investment.


Importantly, the TIF will not capture any City of Detroit taxes, and it will have no impact on the Detroit Public Schools Community District.

“The Michigan Strategic Fund’s approval of the MIThrive financing represents a major step forward for Detroit and other Michigan cities that are rebuilding,” said Mayor Mike Duggan. “Thanks to this new tool, we will be able to make sure these projects realize their full potential to create thousands of new jobs in our cities.”

“MiThrive poses an incredible opportunity for carpenters and skilled tradesmen across the state,” said Mike Jackson, Executive Secretary-Treasurer, Michigan Regional Council of Carpenters. “Bedrock’s four projects represent thousands of jobs for our union members, as well as tremendous opportunities for young people looking for a rewarding career in the trades.”

In September 2017, Bedrock announced that it would be seeking gap financing to make these transformational investments possible through the new state MIthrive program.  In November 2017, the Detroit City Council approved the MIthrive financing package for Bedrock’s transformational projects, setting up the final state review and approval.


The State Review Process

As part of the months long approval process, the Michigan Strategic Fund worked with outside third-party consultants to analyze whether approving the TIF would be cost beneficial for the State of Michigan and whether the TIF financing is needed for the projects to be financially possible.

Based on a report from University of Michigan economists, the MSF concluded that this Transformational Brownfield Plan will deliver a net tax revenue increase of $1.882 billion ($596 million present value), or more than 3 to 1 return of the tax incremental investment being made by the State.

In addition, the review confirmed that the TIF financing is needed to make the projects financially viable, helping bridge the gap between today’s development and construction costs and market rents. The MIthrive law also mandates a reduction of the incentives under certain conditions, if upon the projects’ completion it is determined that the construction and development costs are lower than projected.


Bedrock’s Commitment to Community

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 the four projects.

In addition, Bedrock is proud to have invested in the Randolph School and the Breithaupt Career and Technical Center, both part of the Detroit Public Schools Community District, to help train and prepare Detroit students and adults for jobs that will be created through these transformational projects.

Bedrock has also entered into an Affordable Housing Agreement with the City, committing that 20 percent of its overall residential rental portfolio will be developed or preserved as affordable housing.


About Bedrock

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 to acquiring and developing more than 100 properties, including new construction of ground up developments in downtown Detroit and Cleveland totaling more than 18 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