Feb 16, 2024 - Development

Pistons seek valuable tax breaks for housing development

Pistons owner Tom Gores reacts to a play during Tuesday's game against the Los Angeles Lakers at Crypto.com Arena.

Pistons owner Tom Gores at Tuesday's game against the Los Angeles Lakers at Crypto.com Arena. Photo: Katelyn Mulcahy/Getty Images

The Pistons' first foray into residential housing seeks various tax breaks worth up to $230 million, the team confirmed to Axios. It's part of the mega-development proposed by Henry Ford Health (HFH), the organization and Michigan State.

Why it matters: Team owner Tom Gores views the development as an extension of a community-building legacy highlighted by the team's 2017 move downtown to LCA, which wasn't developed by the team and received more than $400 million in public subsidies.

  • Gores even cited the project in response to frustrated fans' "sell the team" chants during the Pistons' historic losing streak.
  • "They don't understand what we're doing in the community," Gores told the media after the Pistons' 25th straight loss. "We're doing multibillion-dollar things outside of [basketball]."

Driving the news: Plans for two new apartment buildings and retrofitting a Henry Ford office building into a third in New Center are expected to cost $322 million.

  • The tax incentives are needed for profitability and to offer lower rents in 133 of the buildings' 662 units, according to city documents detailing the project.

The latest: As a development partner alongside HFH and MSU, Gores and the Pistons are helping to address the city's shortage of affordable housing options, team spokesperson Kevin Grigg tells Axios.

  • "That is on top of all the other things he has done in the community — including the organization's move back to Detroit."

State of play: Of the $297 million in tax subsidies sought for the entire Future of Health project, $230 million would go toward the Pistons' housing plans, including:

  • $55 million in property tax abatements.
  • Tax reimbursements over 30 years worth up to $175.4 million through the state's Transformational Brownfield Plan. These incentives would only be realized if the buildings are finished.

Of note: This is the organization's first residential project. It developed the Henry Ford Detroit Pistons Performance Center, a practice facility and team headquarters that opened in New Center in 2019.

Between the lines: Of the Pistons' 133 "affordable" housing units, 10% will be for households earning about $19,000, or 30% of the local Area Median Income as defined by the federal government.

  • 80% will be for those earning up to 50% of the AMI ($32,000).
  • 10% will be for those earning up to 70% of the AMI ($44,000).
  • The other 529 units will be market rate.

What they're saying: Tonya Myers Phillips, community partnerships and development director with Sugar Law Center, tells Axios that flaws of the Pistons' project are being overlooked because it's a piece of the larger Future of Health puzzle.

  • "It's not a good project by itself," Myers Phillips says.
  • "[The Pistons] need these anchor institutions to shield it from scrutiny, and I would just implore council members to pull back the curtains."

The bottom line: The Pistons' project would have a return on investment of -6% without the incentives, but a 4.5% return with them, city documents show.

Read more about the Detroit Future of Health development's nine-digit gap controversy

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