Feb 16, 2024 - News

The Detroit Future of Health development's nine-digit gap controversy

An overview rendering showing various buildings lined with trees.

An overview of the $3 billion Future of Health development. Rendering: Courtesy of the city of Detroit

A $595 million gap exemplifies the tension at the heart of a crucial public financing deal for a mega-development proposed by Henry Ford Health (HFH), the Pistons and Michigan State.

Why it matters: Monthslong negotiations over the "Future of Health" project's community benefits — a list of commitments from the developers in exchange for substantial tax breaks — have been fraught with confusion and disagreement over the true value of the project's promises.

State of play: The $3 billion project proposes $2.2 billion in new hospital development from HFH, plus housing and retail from the Pistons and research space partnered with Michigan State, all around HFH's New Center campus. Construction is slated to run from the middle of this year through 2029.

Driving the news: City Council may vote as soon as Tuesday on the Community Benefits Agreement, $297 million in tax incentives and other public financing for the housing, parking and research facility as well as rezoning the project needs to move forward.

  • HFH isn't seeking tax breaks, but its expansion is part of the overall project and community benefits process. It also owns the land in question.
  • The Gilbert Family Foundation is giving nearly $375 million in grant funding for two facilities within Future of Health.
  • Seven of the nine-member Neighborhood Advisory Council of nearby residents signed a letter recommending the list of benefits to City Council last month.
Planned Future of Health developments
Data: City of Detroit; Map: Axios Visuals

What's happening: Developers have said in public meetings that they're providing $604 million worth of benefits for nearby residents, including $90 million to operate the new research center and $300 million in uncompensated care costs.

Yes, but: Tonya Myers Phillips, community partnerships and development director with Sugar Law Center, which helped advocate for the Community Benefits Ordinance in 2016 and still monitors its use, analyzes the total as just $9 million.

The big picture: The sides disagree on what constitutes a new benefit that helps improve the average taxpayer's quality of life.

What they're saying: "There are a lot of nice-sounding words and paragraphs, but looking at the tangible things that touch people's lives that an average Detroiter can access, we don't see it. … The project itself is not a community benefit," Myers Phillips says. She also argues the list includes "preexisting programs" and nonbinding language.

  • NAC co-vice-chair Joanne Adams tells Axios she declined to support the benefits list, partly because the developers failed to provide the community adequate funding or power over its own future.
  • Myers Phillips also described the process as confusing for the public to follow, with Adams adding that it felt "choreographed" and rushed.

Yes, but: NAC chair Lynda Jeffries, who signed in favor, told City Council last week that members were diligent in analyzing the deal and the majority felt it was fair and equitable.

  • She pointed to urgent care and behavioral health services added to ER plans and support for redeveloping a vacant school.
  • Plus, City Council's legislative policy division concluded in its analysis that the project is a net-positive tax benefit to the city, bringing in $118 million over 35 years.

Plus: "This process is just one facet of our community engagement around our reimagined Detroit campus," HFH said in a statement to Axios. "Over the past two years it's been our pleasure to engage with the community. … We are committed to continuing these conversations long after the Community Benefits process is complete."

Flashback: We saw a different gap last year. The $1.5 billion District Detroit, in its own community benefits process, claimed a total $167 million in community benefits.

Drilling down on dollars

Illustration of a hundred dollar being built by construction vehicles. 
Illustration: Aïda Amer/Axios

Here are some examples of benefits under the $604 million total being put forth by the city and developers, a huge figure compared with other CBAs:

$90 million to operate one of the proposed projects, a medical research center.

Up to $55 million in infrastructure improvements, which are required for the development, per the agreement.

Making "reasonable efforts" to spend $100 million of its project costs on local and minority-owned businesses.

  • Getting developers to contract more with businesses owned by longtime Detroiters is a big deal for many City Council members.
  • Sugar Law's concern here, per its analysis, is that the spend is a goal, not mandatory.

$300 million in uncompensated care costs for HFH over 30 years after the hospital expands.

  • Sugar Law considers this an activity that HFH already needs to do under its status as a nonprofit.
  • HFH said in its statement that the list of benefits it's offering "builds on [its] history of going above and beyond the IRS requirements for nonprofit hospital status."

Other listed benefits include:

  • $2 million for home repair expenses in surrounding neighborhoods.
  • $500,000 for a rental assistance fund.
  • Giving nearby Detroiters' applications priority review for HFH jobs for a year or more.
  • $300,000 in microgrants for community organizations.
  • $3 million for 50 MSU scholarships.
  • Continuing existing implicit bias training and several educational programs.

Go deeper: Pistons seek valuable tax breaks for housing development

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