Rendering of the high-rise project at the Hudson's site in downtown Detroit.
The Detroit City Council on Tuesday postponed a controversial vote on a $60 million tax break for billionaire Dan Gilbert’s real estate firm to develop the delayed Hudson’s site project in downtown.
Gilbert’s Bedrock firm is asking for a 10-year local tax break on top of the more than $200 million the company has already received in state and local subsidies and development incentives.
Gilbert received the site in the heart of downtown for $1.
The project has been underway since December 2017 and is two years behind schedule. Crews are building a 685-foot tower with a hotel, offices, condos, and underground parking.
Blaming cost overruns, Bedrock is asking the city to grant a tax break that would take $31 million from city taxes and $12 million in taxes for Detroit public schools.
Despite very vocal opposition, five of the nine council members said they support the tax breaks. Those same council members — James Tate, Latisha Johnson, Fred Durhal III, Scott Benson, and Coleman Young Jr. — received donations from Gilbert’s political action committee, The Detroit Free Press reported
Council members who oppose the abatement said it’s nonsensical to provide a tax break in the middle of an ongoing project.
“This tax abatement is not needed for this project to be completed,” Councilwoman Angela Whitfield Calloway said at the council meeting. “If we do not grant this tax abatement, I can assure you the project will go on. Mr. Gilbert has more than enough money to complete his project. This is not going to benefit the average taxpayer.”
Benson disagreed, suggesting that the project could suffer without the tax break.
“If you do not provide this incentive, the development will continue,” Benson said. “That may be true, but there is a difference between a development that is completed and a development that is successful.”
Supporters of the tax break suggested opponents don’t understand how tax incentives work.
“Miseducation is a dangerous thing,” Durhal said. “We have started to focus on educating the public about these tax abatements, so we can get rid of that myth that for some reason, folks think there is a vault of money that you give to Dan Gilbert. … It doesn’t work that way. Government does not work that way.”
Whatever the case, council members said they need time to explain the tax incentives to their constituents.
“Residents have real concerns,” Councilwoman Gabriela Santiago-Romero said. “They have real fears, and I think not engaging them in this process will really damage trust, and I think trust is really important when it comes to our leadership.”
The council voted 8 to 1 to delay the abatement vote by a week. Tate cast the lone no vote, saying he wanted to support the tax break on Tuesday.
Supporters of the tax abatement say the project will result in more tax revenue in the long run. The site currently generates about $620,000 a year in local taxes. When the project is complete, the site will create $2.6 million a year in local taxes. And once the 10-year tax abatement is complete, the site will generate about $10 million a year in new taxes, according to city estimates.
“The dollars that are being received today in terms of tax revenue pale in comparison to what will be received following this incentive and this development being completed,” Tate said.
Still, the revenue would be even higher without the tax break.
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