April 28, 2023
By Mike Shane
The Detroit City Council recently approved $748 million in tax breaks for two billionaires for a $1.5 billion development project in District Detroit, an area that includes a portion of downtown Detroit. The joint venture is between the Ilitch family’s Olympia Development of Michigan/Ilitch Holdings with a net worth of $3.8 billion and Steven Ross’ Related Companies with a net worth of $7.6 billion.
On April 25, 2023, the Michigan Strategic Fund Board, a unit of the state government, approved $615 million. The remaining $133 million is subject to a different approval process that will be addressed in a final vote of the Detroit City Council later this year.
The total tax breaks received by District Detroit since 2012 amount to an estimated $1.8 billion. According to BridgeDetroit,
“The deal would be among the largest incentive packages ever assembled in the country for a redevelopment project, and the government lift’s value would equal 64% of the approximately $2.8 billion in investment completed or proposed in the district.”
The District Detroit proponents maintain that the subsidies are necessary because the banks and the bond market will not finance the project without subsidies. The rate of return without subsidies is estimated to be 2% and with subsidies 4.4%…