(Source: MIRS.news, Published 06/07/2024) Democrats are considering linking next year's budget to an economic development reform proposal that could transform Detroit's Renaissance Center from General Motors' headquarters to new housing and a regional hub for mass transit.
Behind the scenes, General Motors, the Renaissance Center's owners and mega-developer Dan Gilbert's Rocket Companies are pushing to reform Michigan's corporate incentive fund – the Strategic Outreach and Attraction Reserve (SOAR) Fund – which is already positioned to receive $500 million in the Fiscal Year (FY) 2025 budget in corporate income tax revenue, multiple sources tell MIRS.
Specifically, during the Detroit Regional Chamber conference on Mackinac Island, Dave Massaron, General Motors' chief economic development and real estate officer, and Jared Fleisher, the vice president of government affairs for Rocket Companies, were pushing lawmakers and other interest groups to get behind the proposal.
The legislation on the table – HB 5768 , HB 5769 and HB 5770 – sets aside $600 million annually into the SOAR Fund over the next 10 years. Of that, $250 million annually is dedicated for grants to large corporate developments, $200 million for significant transit projects and $100 million to affordable and workforce housing, among other things (See "Major SOAR Reform Glides Through First Hearing With more Than 90 Cards In Support," 6/4/2024).
Fleisher testified in support of the bills during this week's House Economic Development and Small Business Committee hearing. He argued that the right-sizing of SOAR means good transit and affordable housing that creates communities that people want to live in. The alternative, he asserted, is driving Michigan into a “dead-end road with no direction."
“This is a package that brings it all together,” he said.
MIRS has learned that the idea – if some Democrats decide to take a leap – won't be as simple as the state writing a check for developers to transform the Renaissance Center into a hub of apartments and new commercial occupants.
Instead, there will be an array of projects – ranging from infrastructure to transit to local education opportunities – attempting to ensure the surrounding area is so desirable that chances of the Renaissance Center becoming vacant are diminished.
The Renaissance Center project wouldn't be the only recipient of the dollars set aside for grants to corporations, as the Michigan Economic Development Corporation (MEDC) is sitting on several other projects it would like to move on.
However, revamping what is arguably the state's most iconic skyline in Detroit is a priority. The idea of the skyscraper becoming abandoned blight or torn down altogether isn't likely to be something elected leaders want to see happen on their watch.
Instead, if the riverfront property is transformed into a hub for business with links to the airport, Oakland and Macomb Counties and other parts of Southeast Michigan, it could preserve its regional importance.
One idea being considered is tying the entirety of the $600 million per 10 years into one large bond proposal, so the money can be used up front to make the transformative vision of Downtown Detroit, along with numerous other major projects across the state, happen.
The Renaissance Center – or the RenCen – is a complex of seven connected skyscrapers facing the Detroit River, and has been occupied by General Motors since 1996.
In April, the automotive manufacturer announced it would be moving out of the RenCen in 2025, relocating its headquarters to a smaller space in the new Hudson's building, which is owned by Gilbert's real estate firm, Bedrock.
Bedrock, will be involved in repositioning the Renaissance Center following General Motors' move next year. In General Motors' April press release, it pointed to a report indicating that 80 percent of current office occupiers have adopted or will adopt a hybrid work schedule in the aftermath of the COVID-19 pandemic.
MEDC and its affiliated Michigan Strategic Fund (MSF) confirmed to MIRS that they recognize the RenCen as "certainly an iconic component of the City of Detroit."
However, MEDC Public Relations Manager Danielle Emerson said the landmark building has "no specific designations or protections assigned to it by either the MEDC or the State Historic Preservation Office."
On Thursday, when MIRS asked MEDC Chief Executive Officer Quentin Messer Jr. if MEDC was looking to do anything to save the RenCen, he didn't say no.
"I think that there are ongoing conversations," Messer said. "With regard to the Renaissance Center, there's always going to be conversations, and I think there will be subsequent opportunities to really delve more deeply into that."
Senate Economic and Community Development Chair Mallory McMorrow (D-Royal Oak) – one of the most vocal advocates for reforming the SOAR Fund – said the idea of General Motors and Bedrock retrofitting the RenCen as housing is "super exciting to me," but she hasn't been a party to any legislative conversations about it specifically.
When asked if legislators have a responsibility in ensuring the RenCen does not become an abandoned landmark, McMorrow said "I think there's a balance."
"Our majority has been particularly critical of the amount of funding that has gone to developing new sites on green fields versus redevelopment of empty sites or brownfields, so we're looking at ways to better incentivize re-use through economic development," she said.
Meanwhile, Rep. Jason Morgan (D-Ann Arbor), a lead sponsor behind the House's SOAR Fund reform, said there have been several rumors about what his legislation would do, and the one coining it as solely a RenCen rescue fund is "a new one to me."
"We aren't setting anything in place right now about what kind of things would be funded with this program," Morgan said. "As far as I'm aware, this is just one of many rumors, and you know, quite frankly, I think as I've listened to the rumors about this package, I think some folks really are just having a tough time accepting that we really can do things differently in the Legislature. We truly can have a package that has a whole bunch of great things that pull together all of what everyone is looking for in terms of economic development."
He said housing, transit, community revitalization and other shared priorities can be put forward in a collaborative package, "and it just is as good as it seems" without not being straightforward.
As for believing legislators have a role to play in preventing the RenCen from becoming blight, Morgan said he doesn't know, and he just honestly hasn't thought about it.
In a setting where Democrats are divided on how much the state should invest in preserving the RenCen, they could find it difficult to get Republicans to join the crusade – if they seriously decide to take the task on.
For example, Rep. Tom Kunse (R-Clare) said he is unwilling to go to any of his district's constituents, and say to them that they need to pay more in taxes to help the RenCen, especially because "General Motors has not exited. It has abandoned the RenCen."
"The 100th (House) district is the poorest district in the state of Michigan," Kunse said. "How do I go to people in Mecosta County . . . and say 'you know what, we need to send your tax dollars to Detroit?' How could you possibly make that argument?"
He said he loves Detroit, believes Downtown is awesome, but after General Motors was the beneficiary of $666.1 million in SOAR Fund incentive grants in 2022, it is "absolutely not" the Legislature's role to cover the tab in preventing its headquarters from becoming vacant.
Moreover, while Kunse is not the official voice for the House Republican Caucus, he said he would feel very confident in saying Republican representatives don't have much appetite for becoming engaged in RenCen rescue bucks.
He added that the present-day system of corporate incentives in Michigan has become "the Novocaine drip," because "once you start, it's never enough."
"Unfortunately, they can't get away from it, but they don't know how to quit," Kunse said. "The Democrats have created a monster, and now…you can't feed it enough."
As for the general topic of SOAR Fund reform, the Governor's Press Secretary Stacey LaRouche told MIRS that the Governor feels the House bills "will deliver long-term and fiscally responsible resources to ensure our state continues to win major job-creating projects."
The Governor's office is hoping the reform will get done “alongside a balanced budget,” which legislators have until July 1 to complete for FY '25.
