Last week, Rock Ventures made another ill-advised power move trumpeting all the supposed financial benefits that Rock CEO Dan Gilbert’s dream of a new soccer stadium complex would bring to Detroit. Then the Ventures release contrasted the Glories of Soccer with the relatively wimpy economic impact – by comparison – of moving forward with the stalled Wayne County Jail. Gilbert, who keeps signaling that he, Gilbert, The King Of All Downtown, shall not be denied, is essentially trying to embarrass Wayne County Executive Warren Evans into folding by flexing his massive dollar signs.
But nobody elected Gilbert.
What Gilbert still doesn’t seem to grasp is who it is he’s up against, perhaps because he’s so used to being the one that everyone else is up against. Not to say that Gilbert has no chance of prevailing because he may yet have his way, if only because of the way money always seems to step on the throat of everything else in its path. But if he thinks he’s going to make Evans jump, heel, and roll over then he should stay tuned to whatever channel it is he’s watching because I guarantee that show will not end the way he thinks it will.
First, here is what Gilbert said, and I am including the PR in its lengthy entirety rather than picking and choosing what was said. But if you get tired, please don’t skip out before scrolling down to Evans’ response, which politely but forcefully equates to something that cannot be reproduced in a family newspaper. But just picture a middle finger in your mind.
Why? Simple. Because it seems no matter how many times and how many ways Evans tries to explain to Gilbert what will be required for him to sign off on an agreement allowing Gilbert to dance away happy with his soccer stadium, Gilbert keeps playing deaf. As if he doesn’t have to listen to Evans because, well, he’s Gilbert. King of All Downtown and all that.
The best example of that hubris was when Gilbert and team made their well-publicized bid for the soccer stadium to the Soccer Authorities That Be, stating that the Gratiot site was the only site under consideration. Even though neither Evans nor the Wayne County Commission had entered into any sort of agreement – or even the hint of an agreement – with Gilbert. So then how could he so brazenly state that the stadium WILL be built on the Gratiot site no matter what when he doesn’t have any agreement and Evans still had so many questions that needed to be answered?
Oh. Right. Because he’s Gilbert.
And speaking of questions, I have a few of my own. Like, where is the study showing that there’s this unquenchable appetite for soccer in Detroit? And how many multi-use sport team complexes do we need downtown anyway? The Lions, the Tigers, the Pistons, and the Redwings all have deep, deep emotional histories anchored into the fabric of Detroit going back decades. Are we really supposed to believe that Detroiters are so sports crazed that they will just flock downtown to see a soccer team, a sport that has zero history in this town and little evidence that it will strike a chord, simply because it’s a soccer team and Gilbert brought them here? And didn’t Evans and the County Commissioners already say they had to have the lawyers thoroughly vet Gilbert’s proposal before they could move forward? And that this might take a few months? So is Gilbert trying to get the jump on public opinion because he’s afraid of what the lawyers might have to say?
Anyway, here’s what Rock Ventures announced:
Rock Ventures Releases University of Michigan Economic Impact Study:
- New Downtown Development on Gratiot and Consolidated County Criminal Justice Complex Would Create $2.39 Billion Economic Impact for Wayne County and Southeast Michigan and add 2,106 permanent jobs
April 4, 2017 [DETROIT] – Rock Ventures has presented the Wayne County Executive and County Commission the findings of a study examining the economic impacts of moving forward with a planned commercial development on the 15-acre site of the unfinished Wayne County jail on Gratiot Avenue and constructing the proposed Wayne County consolidated criminal justice center on East Forest Avenue.
Conducted by the Center for Sport & Policy at the University of Michigan, commissioned by Rock Ventures and supported by the Downtown Detroit Partnership, the study estimated an economic impact of $2.39 billion from the construction of the combined project. By contrast, the total economic impact of completing the jail on the Gratiot Avenue site is estimated at $352 million, or over $2 billion less than the impact of Rock Ventures’ proposal.
In addition, the planned development on the Gratiot Site will generate long-term economic impact upon completion, including an estimated 2,106 permanent jobs within the commercial and entertainment complex. These jobs are estimated to generate $6.4 million in local and state income tax revenue every year, including $4.9 million in State of Michigan income taxes, and $1.5 million in City of Detroit income taxes.
“This study is a continuation of our efforts to provide the county and other stakeholders with the necessary analysis and information to fully evaluate the proposal we submitted on February 6,” said Matt Cullen, Principal of Rock Ventures. “The Gratiot site is a critical gateway to downtown Detroit and we are excited about the opportunities a project of this scale and quality would provide for our entire community. This development will be a real catalyst for the city and county and we need to make sure we get it right.”
Cullen added: “While we are excited about the impact this project would have, we are still very focused on the County Executive’s direction that we need to deliver an effective, cost efficient solution for the Criminal Justice Complex.”
The total expected investment in Rock Ventures’ proposal is $1.88 billion at two important gateways to downtown. This is comprised of a new, $420 million state-of-the-art, consolidated criminal justice center that includes the construction of new adult and juvenile detention facilities, as well as a new criminal courthouse (replacing the current Frank Murphy Hall of Justice).
The proposal also calls for the transfer of the Gratiot Avenue Site to Rock Ventures for a planned $1.46 billion commercial development.
Jobs and Income Tax Generator: Short and Long Term
According to the University of Michigan study, the combined developments will support 32,133 jobs during the five-year construction period. By contrast, completing the jail at its current site on Gratiot, is projected to support only 3,810 jobs, a difference of 28,323 construction jobs.
The study also found the construction phase of Rock Ventures’ proposal will generate an estimated $51.9 million in total income tax revenue for the State of Michigan ($44.8 million) and the City of Detroit ($7.1 million).
Property Taxes and the Tools Necessary for Economic Revitalization
Currently, the Gratiot Avenue site is not generating any property tax revenue and would never generate property tax revenue as a jail site. In order to fairly represent the property tax benefits that could accrue to Wayne County and other jurisdictions, the analysis assumed the full use of tax abatements and tax increment financing (TIF) tools that are available or potentially available under current law.
Specifically, the proposed commercial development on the Gratiot Avenue site may be eligible for tax abatements and a brownfield TIF to offset the costs of demolition, site preparation, public infrastructure and structured parking. Whereas the Gratiot Avenue site generates no property taxes today, once the abatements and TIF expire, the analysis projects property tax benefits of $46.7 million annually (in current dollars).
“Providing analysis and context through studies such as this continues to be a top priority for Detroit’s business community. The magnitude of the economic impact outlined in the University of Michigan’s study demonstrates the tremendous benefits a project of this nature could have on our downtown,” said Eric B. Larson, Chief Executive Officer of the Downtown Detroit Partnership. “As downtown’s commercial spaces have filled and the existing building stock has been repositioned, there is a strong demand for new development to keep our transformation moving forward.”
“The contrast between the impact of the two options before the county is striking: The county can finish the current Gratiot site jail, creating minimal economic impact, produce no increase in permanent jobs and generate zero future property tax or additional city and state income tax for the next several decades. Furthermore, this option does not solve Wayne County’s significant need for updated facilities outside of the jail itself,” said Dan Gilbert, Chairman, Rock Ventures.
“The proposed new developments will create an estimated $2.39 billion of economic impact, support over 32,000 construction jobs, create over 2,100 new permanent jobs, produce tens of millions of dollars in property and income taxes for the city, county and state that will continue for decades, while serving as an exciting gateway to downtown with a large, multi-use development and at the same time provide the county with a new, state-of-the-art criminal justice complex, which includes not only the jail, but a new criminal courthouse and a new juvenile detention facility as well,” Gilbert added.
In February, Rock Ventures submitted an offer to Wayne County to build a new consolidated, high-tech criminal justice center (estimated cost of $420 million) on East Forest Avenue, for the sum of $300 million. The offer also included the transfer of the Gratiot Avenue site to Rock Ventures for a commercial development. The study released today was commissioned to assess the economic impact of that offer.
Got it? OK good. Now here, much more concisely, is Evans’ immediate response to all that:
“This study does nothing to sway my thinking. My standard for Rock’s proposal has been absolutely clear: Is Rock prepared to build the County a criminal justice complex in a timely fashion, with buildings that meet our needs, at a price Wayne County can afford? If they can’t meet that standard, everything else is irrelevant. This study moves us no closer to answering that fundamental question.
“I represent Wayne County taxpayers who continue to pay $1.2 million a month on a stalled jail they were promised years ago. I also have a responsibility to the employees, inmates and visiting families who suffer through deplorable jail conditions that continue to decline, due in large part, to that fact the County never completed the Gratiot jail after spending more than $150 million. If the benefits of one project over another are so overwhelming, it’s on those who stand to gain from it to create an alternative option to Gratiot that best protects Wayne County taxpayers. And they need to do it with the urgency and focus that takes into account the impact this project has already had on our residents, just six months removed from a consent agreement necessitated by a deep fiscal crisis.”