DDA signs off on public funding for District Detroit projects

**Airforceguy** · January-07-23, 04:44 PM

If half of the proposed projects get built, I'll be pleasantly surprised.

DDA panel backs public aid for Ilitch-Ross District Detroit development

The board’s finance committee approved on Friday a trio of 34-year, 1% loans totaling $23.76 million to help cover hard construction costs for the development's three residential projects with affordable housing as well as a $25 million reimbursement to cover infrastructure costs across its 10 planned developments. The matter goes before the full DDA board on Wednesday.

The loan program under the DDA’s Housing, Office, Retail Development and Absorption Fund is a new financing tool the agency says will help residential developers offer more discounted rents for low-income Detroiters within the DDA boundaries.

https://www.detroitnews.com/story/bu...s/69786459007/

**K-slice** · January-08-23, 09:23 AM

Agreed, BUT, this is different than in years past where there was always a stadium involved. There is no way Illich can get any of the tax incentive without building the actual residential/commercial buildings.

In 2000 they promised "Foxtown" and we got Comerica Park and paved parking lots.

In 2016 they promised "The District" and we got LCA and more paved parking lots.

In 2023 there is no stadium to build, so they either build nothing and get nothing from taxpayers, or build what we wanted all along and get the incentives.

I'm still under the assumption that this is "Illich in name only". Ross is spearheading the entire thing and just taking advantage of the massive Olympia land holdings to get it done. Left to the Illich's alone, none of this would be happening.

**DetroiterOnTheWestCoast** · January-08-23, 12:31 PM

Sadly nothing can ever be accomplished without trickle up economics. We must always shovel tax money to billionaires.

**401don** · January-08-23, 02:13 PM

Guaranteeing 1% loans shortly after rates have skyrocketed is quite the generous deal. Who knows how long before rates return to historically low levels. Maybe they should have provided them at prime.

**Zacha341** · January-08-23, 08:36 PM

Yep. And the faces of those millionaires keep changing. No longer the usual folks as where told to watch out for!

Originally Posted by DetroiterOnTheWestCoast

Sadly nothing can ever be accomplished without trickle up economics. We must always shovel tax money to billionaires.

**DetroiterOnTheWestCoast** · January-08-23, 11:34 PM

Originally Posted by 401don

Guaranteeing 1% loans shortly after rates have skyrocketed is quite the generous deal. Who knows how long before rates return to historically low levels. Maybe they should have provided them at prime.

I guess the interest rates can be absurdly low on loans that they’ll likely forgive anyway. From the article:

“For every year that at least 50% of the affordable units are occupied by existing Detroiters — defined as someone who has been a city resident for at least three years prior to living in the apartment — 1/30th of the original principal loan amount after the 49th month would be forgiven.”

**Richard** · January-09-23, 01:00 PM

It dies not appear as though they are also including the direct HUD affordable housing grants,which would be a few million more.

It also looks as though they are adding the loan forgiveness aspect in order to extend the HUD requirements by two more years,under HUD you can pull 5-6 million in flat out grants if you keep 20% at below market rate for 2 years.

That’s why you see apartment complex builders flip them after the two years,you can add 20% market value on the sale after the time frame ends and you can dump the below market rate units.

To me it does not really resolve the issue,because the ones renting below market have to move every 2 years,if they have kids in school it’s disruptive.

**Burnsie** · January-11-23, 07:45 AM

It adds up to $800 million in tax breaks for District Detroit. Keep shoveling it at them, maybe two of the buildings will get built.

**southen** · January-11-23, 10:25 AM

Originally Posted by Burnsie

It adds up to $800 million in tax breaks for District Detroit. Keep shoveling it at them, maybe two of the buildings will get built.

Bingo. I asked last night if the subsidies were dependent on all of the proposed projects happening and they said that each project got these individually. It’s simply another case of present x amount of projects to get the most favorable tax benefits with intent on only building one or two. I would put good money on seeing the same renderings in 5 years in an attempt to get even more breaks.

One of the most interesting statistics I saw last night was that the entire district generates less than 250k in taxes for the city general fund. That struck me as insanely low but I really have no point of reference.

**Henry Whalley** · January-11-23, 11:02 AM

insanely low

**mikeg19** · January-11-23, 11:27 AM

It said $616M was from the Transformational Brownfield bucket. Is that the same fund Gilbert used for his projects in downtown as well? Is that bucket just an open checkbook or is there a cap?

I'm also surprised to hear that this is individually imposed. I could have sworn I read that the breaks were dependent upon the entire 10 building portfolio presented being completed in its entirety. I could get behind that if they were held to the entire vision taking place. Not so much if were talking individual projects. Ross being involved has me cautiously optimistic this is more then Olympia BS.

**Lowell** · January-11-23, 11:45 AM

Agree, although I would use 'geyser up' vs. trickle up.

Originally Posted by DetroiterOnTheWestCoast

Sadly nothing can ever be accomplished without trickle up economics. We must always shovel tax money to billionaires.

**Richard** · January-11-23, 10:33 PM

Originally Posted by southen

Bingo. I asked last night if the subsidies were dependent on all of the proposed projects happening and they said that each project got these individually. It’s simply another case of present x amount of projects to get the most favorable tax benefits with intent on only building one or two. I would put good money on seeing the same renderings in 5 years in an attempt to get even more breaks.

One of the most interesting statistics I saw last night was that the entire district generates less than 250k in taxes for the city general fund. That struck me as insanely low but I really have no point of reference.

They did not mention the different breakdowns of what programs contributed what in order to come up with the total figure of incentives,but if tax capture was a part of the deal that $250k will be out of the coffers for the next 20-30 years and the rest of the taxpayers will have to make it up.

**Gistok** · January-15-23, 01:14 AM

Other details on the tax abatements in District Detroit....

Billionaire familes seek nearly $800M from taxpayers for Detroit developments [[msn.com)

District Detroit | City of Detroit [[detroitmi.gov)

**Richard** · January-15-23, 10:24 AM

Originally Posted by Gistok

Other details on the tax abatements in District Detroit....

Billionaire familes seek nearly $800M from taxpayers for Detroit developments [[msn.com)

District Detroit | City of Detroit [[detroitmi.gov)

“Incentives are only recommended for approval after a thorough financial review and a determination that project would not be able to proceed without that form of public support,"

So even after they are built how will they be self supporting without further public support? If they were they would have never required public support in the first place.

After hurricane Katrina hit New Orleans and destroyed the projects,as we knew them,HUD decided to get out of the projects business and allocated funds directly to the states so they could intergrate those that lived in the projects into mainstream units.

There was a problem with that where people then became upset when they found out they were paying market rates while the person next door was not.

So HUD changed the restrictions on below market rate units and gave them the ability to become time restricted in order to cover the losses to the builder and allows them to convert the below market rates into full market rates after 2 years.

This appears to be a test of sorts where the city is approving the funds based on retaining long term below market rate units,if the project was not viable without public support,what makes it viable long term without continued public support if the builder can never see the full market value by eliminating the below market rate units?

I am not sure where in the article the city is expecting the future tax base returns they list.

Because in essence the taxpayers are paying to build X amount of units within the development in upfront costs and X amount per month to offset the losses to the private builder.

So what happens in the future when the private owners say,look keeping these units at below market rates is keeping us underwater and unless we convert them to full market rates we are going bankrupt.

The city can say,we invested X amount of dollars,if you are going to convert to market rates then you have to reimburse the taxpayers or you do not get the time released monies,if the rate of return exceeds the amount of public support then they will just convert to market rates and forgo the incentives.

So in theory the taxpayers are funding the construction to build the below market rate units,millions,then spending money,millions more per month,to subsidize the rents,then within a couple of years having to do it all over again somewhere else.

It a very expensive way for the taxpayers to provide temporary solutions.

I kinda think in Detroits case it may be more feasible to spend the money fixing the existing housing that is in bad condition and making more home ownership available along with investing in those occupants into a better lifestyle with more stability with permanent solutions.

The old school projects became a lifetime commitment,it was not incentivizing the residents to expand,we seem to be spending more money on investing in units instead of people with no long term solutions.