The developer of a new luxury condo building in Brush Park demolished a historic house that he promised to save and is now being investigated by City Council about whether that makes the project ineligible for tax subsidies. It’s a possible signal that the laissez-faire era of tax-subsidized development in Detroit is coming to an end.
The five-story development at John R and Alfred streets near downtown, called CODA, plans to include 10 condominiums priced between $500,000 and $1.75 million above a ground-floor restaurant and second-floor office space. The entire project was estimated to cost developer Michael VanOverbeke $28.5 million.
VanOverbeke also planned to incorporate a brick carriage house built in the 1880s and situated at the corner lot into the design. But in October, VanOverbeke deemed the vacant and fire-damaged carriage house unsalvageable and demolished it.
“We tried everything we could to save it,” VanOverbeke told Outlier. “I sent all my architects and engineers and told them you have to come up with a better solution. But there was so much deterioration that when they took one board out of the building, one whole wall came down. No one could even work around it to brace it.”
That decision drew the attention of Councilmember Angela Whitfield-Calloway, who introduced a resolution on Oct. 11 to City Council asking the Detroit Economic Growth Corporation to investigate the demolition of the carriage house and determine if it impacts the project’s tax abatement. CODA was set to receive $4.8 million in state and city tax reimbursements through a Brownfield Tax Plan, a program designed to help redevelop blighted or historic structures.
Ramses Dukes, senior advisor to Whitfield-Calloway, said council should be informed when a project changes after it’s been previously approved, and that it needs to have the authority to deny it as well.
“The carriage house was the selling point of the entire development,” Dukes said. “So when we found out that it had been demolished, the councilwoman thought that was a substantial change and a material misrepresentation as presented to council and needed to be investigated.”
City Council’s Planning and Economic Development Committee referred the resolution to the DEGC and the city’s planning and law departments to investigate. Dukes also said Whitfield-Calloway wants to know what enforceability mechanisms the council has when a developer changes their plans.
There’s been increased scrutiny in Detroit of using public funding for private developments in recent years, with officials loudly questioning the use of tax subsidies as a tool to spur development. In July, City Council approved a $60 million tax abatement for Bedrock Detroit at its Hudson’s development downtown, but not without a lengthy debate, multiple delays and a last-minute walk-on vote.
Public school and library officials have also criticized the use of tax capture, which allows the Downtown Development Authority to divert property taxes within its footprint towards other projects. Large portions of that money would otherwise go to the library and public school systems, both of which are struggling to maintain their buildings.
Dukes said the issue of developer accountability, especially when it comes to tax breaks, is Whitfield-Calloway’s “No. 1 priority.”
“The CODA case is a microcosm of a larger issue when it comes to developers not meeting agreed upon expectations,” Dukes said. “We need to know as a legislative body what we can do to make sure developers aren’t using the city of Detroit as a cash cow.”
VanOverbeke said he was advised that the tax credits were not conditioned on him saving the carriage house. He added that the project won’t be possible without the tax reimbursement.
Lanard Ingram, director of public relations at the DEGC, said it’s currently preparing a report on the matter and didn’t comment further. The city also declined to comment.
VanOverbeke believes the carriage house was unsalvageable. He said the previous owner left a water line open, causing the building’s foundation to “cave in on itself” and sinkholes to form in the nearby alley.
The Historic District Commission agreed. A commission staff report called the carriage house’s state of decay “extreme” and recommended its demolition. Instead of recreating the building in its entirety, new plans call for building brick screen walls where it once stood and replicating historic details.
The commission unanimously approved the new plans on Sept. 14. VanOverbeke demolished the carriage house the week of Oct. 1.
VanOverbeke is known for redeveloping historic structures in Brush Park. He has bought and salvaged four previous buildings in the neighborhood since 1993.
“No one is more distraught than me that the carriage house had to come down,” he said. “My development was based on this building being the cornerstone. For 30 years, it’s been my passion to save these historic buildings. I wouldn’t have bought an empty lot — I’m not that kind of developer.”
If there are no more delays, VanOverbeke hopes to break ground in November and said CODA will take about 18 months to complete.
Reach AARON MONDRY at aaron@outliermedia.org or 313-403-7221. This article appears in today’s issue of The Dig, Outlier Media’s weekly newsletter on housing and real estate. Sign up to receive it.