Detroit is on the brink of a transformative development in the New Center area, with a proposed $3 billion project known as the “Future of Health.” This ambitious endeavor is a collaborative effort between Henry Ford Health, the Detroit Pistons, and Michigan State University. Despite facing some opposition at public hearings, the project aims to significantly expand Henry Ford Hospital and introduce a range of new facilities, including a towering 21-story hospital building, 662 mixed-income apartments, a cutting-edge medical research center, and a convenient parking deck.
The Detroit City Council is scheduled to review proposals for tax incentives for five of the six components of this project on Tuesday. These incentives, which include tax breaks and future tax captures, amount to a substantial $296 million over a 35-year span. The developers have stressed that these financial incentives are essential for the viability of the projects, except for the Henry Ford Hospital expansion, which is the largest of the six projects with a budget of $2.2 billion. Given its nonprofit status, Henry Ford Health is exempt from property taxes and is not seeking additional incentives for this part of the project.
A significant portion of the requested tax incentives is intended for three apartment buildings associated with the Pistons. This element of the project has sparked controversy, with some public hearing attendees criticizing the notion of using taxpayer money to support projects benefiting wealthy individuals, specifically pointing to Pistons owner Tom Gores, the founder and chairman of Platinum Equity.
At a recent hearing before the council’s Planning and Economic Development committee, several speakers expressed their support for expanding Henry Ford Hospital but opposed granting tax incentives for the residential developments linked to the Pistons organization. It’s important to note that Henry Ford Health owns all the land designated for these projects, which means they currently do not generate property tax revenue. However, once the projects are completed, the sites for the apartment buildings would be added back to the city’s tax rolls, as they would no longer serve the nonprofit purposes of the health system.
City officials have addressed concerns about the potential impact of the development’s tax incentives on Detroit’s schools. They have clarified that the proposed tax capture would not divert funds from the city’s schools because the Detroit Public Schools Community District receives its funding through the state’s School Aid Fund, ensuring that school funding would not be compromised by the project’s tax abatements or captures. This development, therefore, stands at the intersection of healthcare expansion, residential development, and educational funding, highlighting the complexities involved in balancing the needs and concerns of the Detroit community.
At the heart of the proposed incentives for the “Future of Health” development in Detroit is a significant financial mechanism known as a Transformational Brownfield. This local and state-level tax capture strategy, valued at $241 million, stands as the largest requested incentive for the project, spanning over 35 years. In addition to this, the development is poised to benefit from $55 million in tax abatements, as outlined in a report by the City Council’s legislative policy division.
The concept of a Transformational Brownfield is not new to Michigan, being one of the state’s most robust development tools. However, its application has been selective, with only four prior approvals, including a notable instance last year for the District Detroit development, a $1.5 billion venture that has faced delays and is yet to commence construction.
The “Future of Health” development, encompassing five projects with a combined budget of $773 million, includes a notable transaction where the Pistons are set to acquire Henry Ford Health’s current corporate headquarters, One Ford Place, for $7.3 million. This acquisition aims to transform the building into residential apartments, with Henry Ford Health retaining land ownership and leasing it to a Pistons-affiliated entity, though lease terms remain undisclosed.
These five projects, if realized, could generate significant economic benefits, including an estimated $85 million in net new tax revenue for Detroit and $226 million for the state over 35 years, as per the developers’ Transformational Brownfield application. When including the Henry Ford Hospital expansion—which is not seeking incentives—the projected tax revenue increases to $118 million for the city and $276 million for the state, factoring in state and local income taxes from the anticipated payroll expansion. The job creation aspect of these projects is also notable, with an expectation of 2,145 construction jobs and 735 permanent full-time positions, 540 of which would be new.
Despite the promising figures, detailed reports on the project’s economic impact, conducted by RCLCO Real Estate Consulting, remain confidential. Both the developers and the Michigan Economic Development Corp. have refrained from releasing these reports, citing outdated information and ongoing approval processes. The Michigan Strategic Fund’s final decision on the brownfield request, expected in April, hinges on prior approval from the Detroit City Council.
The anticipated return on investment for the “Future of Health” development, pegged at 4.5% with the incentives, contrasts sharply with a potential negative return of 6% without them, highlighting the critical role of such financial incentives in making the project viable amidst Detroit’s economic landscape.
Community engagement has also played a significant role, with a Community Benefits package receiving preliminary approval from a local advisory council. This package includes various commitments from the developers, such as accepting housing vouchers, establishing a home repair fund, providing rental assistance, and offering scholarships, though the total value of these benefits has been a point of contention.
The expansive Henry Ford Hospital expansion, a cornerstone of the development, promises to enhance healthcare facilities significantly. This $2.2 billion project will introduce a new 21-story tower and various healthcare facilities, funded in part by significant contributions from the Gilbert Family Foundation and Henry Ford Health, aiming to commence construction within the year.
The Henry Ford + MSU Medical Research Center, a collaborative venture between Henry Ford and Michigan State University, involves the construction of a $393 million, eight-story facility at 6175 Third St., offering over 325,000 square feet of space. A key feature of this center will be the dedicated floor for the Nick Gilbert Neurofibromatosis Research Institute, focusing on research related to neurofibromatosis, a genetic disorder that was the cause of Nick Gilbert’s death at the age of 26. This institute is expected to generate 558 permanent full-time positions with an average salary of approximately $137,800 annually. Nearly 200 of these positions will be relocated from an existing research facility within Henry Ford’s One Ford Place at 6005 Second Ave. The groundbreaking for this significant project is anticipated in the upcoming spring, with completion targeted for the second quarter of 2027.
The One Ford Place redevelopment is spearheaded by a Pistons-affiliated company, planning to transform the site into three apartment buildings totaling 662 units. The initial phase, a $190 million project, will convert the existing One Ford Place headquarters into 403 mixed-income apartments, including a variety of studio, one-bedroom, and two-bedroom options. One Ford Place, an architectural marvel dating back to 1918 and designed by Albert Kahn for the Burroughs Corp., underwent a significant Brutalist-style renovation between 1968-1970 and has been part of Henry Ford Health since 1992. This redevelopment will also introduce over 17,000 square feet of commercial space, creating approximately 98 new permanent jobs. Construction is expected to commence in April 2027, with completion by the second quarter of 2029.
Additionally, two new apartment buildings are planned: a six-story, $79 million structure at 725 Amsterdam St. offering 154 mixed-income units and a similar six-story, $54 million building at 675 Amsterdam with 105 mixed-income units. Both buildings will include retail spaces and are scheduled for construction in the second quarter of 2025 and 2027, respectively, with a two-year completion timeline.
A significant component of this development is the construction of a six-story, $58 million parking deck at 6205 Third Ave., designed to accommodate the residential and professional needs of the area. The deck will initially offer EV charging stations for about 10% of its 804 parking spots, with construction slated to start in the fourth quarter of 2025 and finish by the second quarter of 2027.
A commitment to affordability is evident as 20% of the 662 apartments will be designated as affordable housing, with rents significantly reduced to cater to various income levels, including units for those earning up to 30%, 50%, and 70% of the area median income (AMI). Rents for these units are structured to be accessible, with the developers also planning to utilize Low Income Housing Tax Credits, Federal historic tax credits, and a Payment In-Lieu-of-Taxes (PILOT) incentive to support the affordability aspect. This PILOT is expected to result in approximately $6 million less in net taxes paid over 35 years.
The Transformational Brownfield component includes capturing incremental local property taxes, 100% sales tax exemption on construction materials, 100% state income tax capture on construction labor, 50% capture of state income taxes paid by permanent employees for 20 years, and 100% capture of state income taxes paid by residents for 20 years, further underlining the comprehensive nature of the incentives and benefits associated with this ambitious development.
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