It’s not all about Detroit, say backers of brownfield bill

Hudsons

Dan Gilbert's involvement in a series of bills led to speculation that the incentive could help a number of his proposed projects, such as the redevelopment of the former J.L. Hudson's department store site on Woodward Avenue. (Photo by Kirk Pinho/Crain's Detroit Business)

LANSING — Late last year, Detroit billionaire Dan Gilbert visited the Capitol to personally lobby lawmakers to pass new tax incentives he promised could help unlock billions of dollars of development in Detroit.

The measures didn’t pass.

As supporters prepare to try again, Gilbert — and Detroit — will shade into the background in the push to pass what popularly became known as the “Gilbert bills.”

This time, the rest of the state will get the spotlight from backers of a proposal to create a tax incentive for “transformational” brownfield projects. Proponents plan to focus less on Detroit projects, in part to sell outstate legislators and their constituents on the opportunity they say the incentive would create in their backyards, and in part to insulate the campaign against  critics who characterized the bills as a way to pad billionaires’ pockets with public money.

Gilbert’s Rock Ventures LLC was one of the chief architects of the concept. While the campaign that backed it the first time around included other Michigan cities, Gilbert’s star power in the state’s largest city made him the public face of the legislation.

The Saginaw-area senator who likely again will be the lead sponsor of the bills said Gilbert and his team haven’t been asked to step aside. Rather, developers and business leaders in other communities will be asked to step up to battle misconceptions that the legislation would help Detroit at the expense of other cities.

“We were so focused on crafting the right legislation that we took our eye off the messaging ball, which is vitally important,” said Sen. Ken Horn, R-Frankenmuth, who added that he bristled at hearing the “Gilbert bills” moniker.

“It’s my responsibility as the (committee) chairman, I feel, to bust those myths,” said Horn, who leads the Senate’s economic development committee, where the bills likely will land. “We’re going to talk about the vision that we have for Michigan (and) the type of people that we’re attracting into Michigan. They’re investing their personal incomes into these projects as residents of these projects, as tenants to the office spaces and the retail spaces.”

A personal appearance

Gilbert, founder and chairman of Quicken Loans, Inc., and Detroit’s best known real estate developer, initially operated mostly behind the scenes on last year’s legislation, which would have allowed developers to capture a portion of state income tax revenue generated by new developments on brownfield sites, typically former industrial or commercial land that may need some environmental cleanup.

But by December, time was running out on the two-year legislative session in Lansing, and the five-bill package was still days away from the governor’s desk.

To save it, Gilbert testified before a House committee that the proposal would close the financial gap between construction costs and market rents in cities like Detroit, and noted that projects in Kalamazoo, Jackson and Petoskey also might finally see life.

“This is going to have an echo effect across the entire state,” he said then, “not just Detroit.”

State senators, chamber leaders and economic development professionals from across Michigan are scheduled to unveil the new bills at an event Tuesday in Lansing. The bills, when reintroduced, will have to restart the approval process.

Jared Fleisher, Quicken’s vice president of government affairs, said representatives from Gilbert’s team will attend the Tuesday event alongside possibly more than a dozen other members of a coalition supporting the incentive. No one on Gilbert’s team, however, is listed as a speaker. Contrast that with last fall, when Matt Cullen, Rock Ventures’ principal, led off the first round of committee hearings on the bills.

The coalition, known as MI Thrive, has grown to nearly 40 members, Fleisher said. The group is expected to release the expanded list Tuesday. Fleisher said members live “from Monroe to Marquette.”

“We don’t want to downplay or hide the fact that Detroit is going to benefit from this legislation. It will,” said Dan Austin, a senior account executive with Van Dyke Horn Public Relations in Detroit and a spokesman for the coalition. “At the same time, we need to make it clear that Detroit is not the only city that is going to benefit from this legislation. And as part of that, we are attempting to prove to the people of Michigan that, yes, the cities in your community, in your region, are going to benefit as well.”

In addition to Van Dyke Horn, MI Thrive plans to hire Lansing-based public affairs communications firm Marketing Resource Group to work on the incentive campaign.

The incentive would require developers to meet minimum investment thresholds in order to qualify for the tax capture, which start at $500 million in Detroit and go down from there based on a city’s population. Tax captures would be capped at $40 million annually, and the state could approve no more than five per year. Horn said he removed a five-year sunset clause in the forthcoming version, which Gov. Rick Snyder previously supported, though Horn added that he would be open to negotiating the provision as the bills move through the Legislature.

When the bills were introduced last September — they later died at the end of the legislative term — Gilbert’s involvement led to speculation that the incentive could help a number of his proposed projects, from the redevelopment of the former J.L. Hudson’s department store on Woodward Avenue and a $1 billion Major League Soccer stadium on the site of the stalled Wayne County Consolidated Jail project on Gratiot Avenue.

Horn last week cited a number of projects throughout the state as possibilities if the incentive were approved and developers were found, including redevelopment in Oakland County of the Pontiac Silverdome and the Northland Mall in Southfield.

“These are pent-up potential projects that will not happen but for some little spark that causes them to take off,” he said. “This is indeed a statewide program, and it’s not centered around any one particular community.”

About The Author

Lindsay VanHulle

Lindsay VanHulle covers business and Lansing for both Bridge and Crain's Detroit Business. She can be reached at lvanhulle@bridgemi.com

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Comments

Barbara Stevenson
Mon, 02/06/2017 - 11:52am

I think that this bill should offer a lower threshold that would allow non profits to benefit as they use sites with environmental issues to build, or renovate existing structures that also have environmental issues! They would never reach amounts in these bills yet they are a vital part if most cities and would be better able to create safe healthy spaces to serve people statewide!

Michigan Observer
Mon, 02/06/2017 - 4:03pm

The article says, "To save it, Gilbert testified before a House committee that the proposal would close the financial gap between construction costs and market rents in cities like Detroit, and noted that projects in Kalamazoo, Jackson and Petoskey also might finally see life." In other words, none of these projects are viable without taxpayer subsidies. So, what assurance do we have that they will be successful? The fact that Senator. Horn " said he removed a five-year sunset clause in the forthcoming version,..." is an indication that he doesn't believe they will be. I'm sharply downgrading my opinion of Governor Snyder, whom I have strongly supported in the past.

If Senator Horn's comment that “We’re going to talk about the vision that we have for Michigan (and) the type of people that we’re attracting into Michigan. They’re investing their personal incomes into these projects as residents of these projects, as tenants to the office spaces and the retail spaces.” is indicative of the quality of thought of its advocates, then we should definitely pass on this legislation. People are not investing their personal incomes into these projects as tenants.

Rich
Mon, 02/06/2017 - 5:29pm

Giving taxpayer funds to developers is wrong, wrong, wrong. If the desired site is a brownfield, then the asking price for the parcel should be lower than market to account for the added costs to the developer. If the developer is not willing to pay the lower price, then the project will not stand on its own. The taxpayer should not be asked to subsidize Gilbertville.let the government go after the polluting owner if they want clean-up funds.

Zeke
Mon, 02/06/2017 - 9:36pm

Michigan citizens don't want to be in the insurance business where all the risk is their money without any guaranty of return. Michigan citizens don't want to be taken advantage once more by big business. That's exactly the intent of this effort - to fleece the common man.
Politicians who push this abhorrence have no soul especially for their constituents. Who elects these people who prey on the gullible with smoke and mirrors that certainly hurt them.

Kevin Grand
Mon, 02/06/2017 - 7:47pm

"We were so focused on crafting the right legislation that we took our eye off the messaging ball, which is vitally important,” said Sen. Ken Horn, R-Frankenmuth, who added that he bristled at hearing the “Gilbert bills” moniker."

Yeah, it's sure good to see that Sen. Horn has a potential future working for Dan Gilbert, much like we've seen in the past with other State Senators.

What's galling here is that nowhere else in Michigan is nearly as desolated and run down as Detroit.

Of course this bill is all about Detroit!

It's insulting to everyone's intelligence to suggest otherwise.

If Lansing is actually looking at doing some good for Michigan Taxpayers (for a change), instead of focusing on a well-connected few, Sen Horn and his colleagues should instead concentrate on something more broader-based such as the abolishment of the Michigan Income Tax and/or elimination of Gov. Snyder's pension tax.

Jess
Mon, 02/06/2017 - 8:19pm

Nothing new here...same offers as have been presented many times before by those that believe gov't should be picking winners and losers....Does anybody remember Global Watt in Saginaw....that the MEDC promoted? So far that venture has cost taxpayers and boondoggled investors about $30MM. Every time somebody suggests that taxpayers must subsidize....turn and run the other way. Any company that puts a building up to garner tax abatements won't be around very long after the abatement runs out. If a property is worth the money then investors will buy it. No amount of state rebates, deferrals or enticements will attract any business that is viable without subsidies ad infinitum from the gov't.

Eddie Hejka
Tue, 02/07/2017 - 8:17pm

These billionaires are addicted to taxpayer funded welfare for the rich. Thay make me sick.

Frederick Stonehouse
Tue, 02/07/2017 - 9:37pm

For the bill to be fair and not seen as what it clearly is, another give-away program to Detroit, it must be applicable to ALL Michigan cities..

John Q. Public
Wed, 02/08/2017 - 7:33pm

Two things I've learned on the lawmaking playground:

The benefit of proposed public policy to the general public is inversely proportional to the number of dollars spent on public relations to promote the policy.

When the authors of legislation get angry at criticisms--or even just observations-- it means the critic is really close to the truth.