City Council OKs $51.8M tax break for Ilitch-Ross real estate development

Detroit ― The Detroit City Council on Tuesday approved a 10-year, $51.8 million tax break for four residential and commercial buildings in downtown Detroit within the Ilitch organization and billionaire developer Stephen Ross' $1.5 billion District Detroit real estate development project.

One aspect of the project involves converting the office space in the Fox Theatre into a new hotel facing Woodward Avenue.

The council unanimously approved the commercial rehabilitation exemption certificate requests for 2211 Woodward, 2200 Woodward, 2250 Woodward and 2300 Woodward. There was no discussion.

The developers will save $51.8 million in property taxes on what otherwise would have cost $128.8 million over 10 years. Detroit will net $77 million in property taxes in that period, city records show.

The city property tax break is part of $798 million in total tax incentives and breaks the Ilitch's Olympia Development of Michigan and Ross' Related Cos. are seeking for new construction of three mixed-use buildings and renovation of a fourth building along Woodward across from the Ilitch-owned Fox Theatre. Last month, the developers won approval of the state's economic development board for $615 million in tax-capturing incentives.

Andrew Cantor, vice president of development of Related Cos., said last week they are looking to start construction by the end of this year and the project will be completed within five years.

"It is an ambitious plan to bring about a mix of uses all at once and create that live, walk, play and learn environment we believe is missing right now," he said.

2211 Woodward

The developers plan to convert office space in the historic Fox Theatre into the Fox Hotel. Construction is anticipated to begin in the spring of 2026 and be complete by spring 2028, but no later than 2030. It will not alter the Fox Theatre, which is separated from the office space in the building.

The converted space will have 13,322 ground square feet of retail and 194,000 square feet of hotel, with approximately 177 hotel rooms. The office space in the Fox Theatre building previously was used by the corporate operations of Little Caesars Pizza, the Ilitch-owned pizza chain that built a new headquarters next door to the Fox.

The Fox project is expected to create 940 direct on-site construction jobs and 258 permanent jobs. They are requesting a 10-year tax break on the project.

The existing taxes on the property are about $166,000. But upon completion, the tax bill is estimated to be $948,000 after the abatement is applied. With the abatement, the project benefit is anticipated at $2.5 million over 10 years.

The developers will save $4.4 million in taxes over 10 years on this project.

The property is owned by the Ilitch family's Olympia Entertainment LLC. There is a community benefits agreement and development leaders said they are reaching out to local vendors to occupy the first-floor retail.

The developers have said the project will not alter the Fox Theatre, which Little Caesars co-founders Marian Ilitch and her late husband Mike purchased in 1987.

2200 Woodward

At 2200 Woodward, the developers plan to construct a $340 million, 17-story mixed-use building totaling 700,000 square feet. The building will feature 500,000 square feet of office space, 28,000 square feet of first-floor retail, 181,000 square feet for a two-level underground parking deck with spaces for 300 cars and a public plaza on Columbia Street.

Currently, the 1.85-acre parcel is used for a Ilitch-run surface parking in front of Comerica Park, home of the Ilitch-owned Detroit Tigers. The project will create 2,470 construction jobs and 2,114 permanent jobs, according to the developers.

The existing taxes are currently none. The new property taxes are expected to be $1.2 million annually after the abatement is applied. The property is expected to bring $59 million in city benefits over 10 years

Developers will save $34.7 million in taxes over 10 years, city records show.

This property is owned by the Detroit/Wayne Stadium Authority.

2250 Woodward

Between Montcalm and Columbia streets, the developers plan to construct a $216 million, 21-story multifamily residential tower totaling 294,000 square feet.

The project will feature 287 residential units, of which 20%, or 58 units, will be affordable at 50% Area Median Income or below. It will have 27,000 square feet of first-floor retail facing the Fox Theatre and underground parking for 200 cars. The project will create an estimated 171 construction jobs and 137 full-time jobs.

Upon completion, the development will produce new property taxes at $176,000 after the abatement is applied. With the abatement, the project is estimated at $1.2 million over 10 years, city records show.

The developers will save $5.1 million in taxes over 10 years.

This 1.46-acre parcel also is used for parking, according to City Council's legislative and policy division.

This property also is owned by Detroit/Wayne Stadium Authority. Construction is expected to begin in October 2024 and be completed by August 2026.

2300 Woodward

At 2300 Woodward, developers plan to construct a five-story, mixed-use building with 18,400 square feet of ground retail space and 131,100 square feet of office space.

The project cost is estimated to be $84 million and it's expected to create 630 construction jobs and 618 permanent jobs, according to the developers.

Existing property taxes are $4,036 and upon completion of the new project, property taxes are estimated to be $247,000.

The city will collect $15 million in property taxes over 10 years, while developers will save $7.5 million in taxes during the time.

Construction for this project is expected to begin in April 2025 and be completed by October 2026.

srahal@detroitnews.com

Twitter: @SarahRahal_