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MSF Board moves include downtown Lansing development and affordable housing reduction for District Detroit

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A largescale development project around downtown Detroit will see less affordable housing under a new deal approved Tuesday by a state board.

The agreement with the Michigan Strategic Fund Board involves one of the properties that make up the sprawling District Detroit. That’s a project around downtown Detroit in the area surrounding the Little Caesars Arena, where the Pistons and Red Wings play.

In 2023, the state agreed to eventually reimburse the entire project a total of around $615 million through its Transformational Brownfield Program  if it meets certain conditions.

The original deal called for the mixed-use property involved in Tuesday’s update to include a certain number of affordable housing units.

In turn, the reimbursement would come from the income tax collected from workers at the location.

The new agreement shuffles around the funding source for those reimbursements to account for the missing affordable housing units.

Michele Wildman is with the Michigan Economic Development Corporation. She said it was a matter of financial viability.

“The development partners, together with the other partners that were in the broader project, have concluded that the affordability within this building will go away in order to best meet the needs of the strategy,” Wildman said Tuesday morning.

Wildman noted other supporters of the project, including city officials, were behind the change. She said other parts of the broader District Detroit agreement remained unchanged.

A briefing provided to the MSF Board cited a downturn in the market for office space as a reason for the switch.

Meanwhile, Tuesday’s MSF Board meeting also saw the approval of new project reimbursements for a downtown project in Michigan’s capital city.

At a total cost of about $316.7 million, according to briefing materials, the agreement would allow around $202 million to be reimbursed.

Around half of the reimbursements for the Lansing-based project costs would be paid for by local and school property taxes.

Despite the large state investment, the briefing materials show a projected return of less than one percent for the developer.

Quentin Messer Jr. is CEO of the Michigan Economic Development Corporation. He said the brownfield program that’s helping fund the project is for riskier investments like this.

“What you're seeing is a development team that's willing to take a bet. Obviously, it may not generate blockbuster returns, but there is a belief that there are other positive exogenous benefits that we want to come alongside as a state to make that happen,” Messer said.

Overall, the project is expected to bring over 550 new housing units to Lansing. 

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Colin Jackson is the Capitol reporter for the Michigan Public Radio Network.
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