Dan Gilbert has spent billions of dollars successfully rehabbing properties in downtown Detroit. And that track record seems to have enabled him to secure hundreds of millions of dollars in incentives from the city of Detroit and state of Michigan, even without proof of financing, a lengthy investigation by the Detroit Free Press found.
Bedrock Detroit, the Gilbert-owned development company, sought tax credits and land from the Michigan Economic Development Corporation and the Detroit Economic Growth Corporation for its mega-projects at the Hudson’s site and Monroe Blocks. But in response, neither agency required Bedrock to submit a detailed financing report.
Bedrock told the Michigan Economic Development Corp. that the Quicken Loans family of companies would be the “primary” office tenant in the projects, according to state records. But the MEDC never obtained copies of any signed leases “as there were no active leases,” [MEDC spokesman Otie] McKinley said.
In the end, the Downtown Development Authority sold land to Bedrock for $1 and the Michigan Strategic Fund approved $618 million in brownfield tax credits.
Financial experts interviewed thought the public deserved more due diligence from these public agencies. “[Evidence of financing and future tenants] should have been provided by a date certain,” Bernard Weinstein, an economist in the Cox School of Business at Southern Methodist University, told the Free Press. Because they didn’t, he said, the deals should have been “tossed out.”
The article also suggests that Bedrock has had trouble securing anchor tenants for its mega-projects, which is likely why all have been delayed.
Construction on the Hudson’s structure itself has yet to begin, and it may no longer be the tallest in the state. Bedrock is now seeking a hotel operator for the building because they tend to be easier to secure financing for.
Construction has yet to begin on the Monroe Block, which broke ground last December. It’s currently redesigning its plans for the project and is likely to scale back there as well.
Bedrock did just announce a lead architect for the Book Tower redevelopment and released new renderings for it as well. In total, those three projects plus the expansion of the Quicken Loans headquarters at One Campus Martius will cost an estimated $2.6 billion.
Gilbert’s health has also been an issue of late, as he suffered a stroke in May. It’s unclear when or if he’ll resume a prominent leadership role at his family of companies.
All of these issues raise doubts about the viability of these projects. It’s certainly a blow to a development company that has huge ambitions, but hasn’t yet proven that it can pull them off.