The Mid development in Midtown seems headed toward a financing blow as its developer continues to try getting the project out of the ground.
Nearly $9 million in Michigan Business Tax brownfield tax credits reach their 10-year expiration Thursday because the development team has not fulfilled its promise to build at least seven stories of one of its proposed buildings by June 10, 2021.
That stipulation is spelled out in a Michigan Strategic Fund memo from April 2020 revising the scope of the plan, reducing the project from 25 stories of hotel space to 15 stories, and allowing for just the first seven stories of the hotel tower to be completed in order to receive the tax credit.
“In particular, the (MBT) statute requires projects to be completed within 10 years of the issuance of a preapproval letter,” said Gordon Goldie, partner in the Plante Moran PLLC Housing and Community Development Solutions division in Auburn Hills. “If a project is not completed within 10 years of the preapproval letter, the project will not be entitled to receive a Michigan Brownfield tax credit.”
In particular, according to memos from the Michigan Strategic Fund, The Mid’s development team was to have seven floors of a 15-story hotel completed by Thursday, with investment totaling about $50 million of a $164 million phase of the project. A permanent certificate of occupancy was expected by Dec. 31 this year.
However, the project site remains barren, with little work being done and a scrim wrapped around its fencing.
Otie McKinley, a spokesperson for the Michigan Economic Development Corp., confirmed in April that the project’s MBT credit expiration is June 10 but would not elaborate on the consequences of missing that deadline. I left McKinley a message again Tuesday seeking elaboration on the consequences.
I’ve also asked The Mid’s development team to talk in detail several times on the pending tax credit deadline but only received the following statement:
“Confirming The Mid project was delayed due to the impact of COVID-19 and it is now back on track and moving forward. The team is currently working on updating materials, including construction plans, and will be able to answer questions more specifically in the coming months. The team is very bullish about the future of this project and the positive impact it will have on Detroit.”
It’s the latest setback for what most recently was a $377 million, two-phase development that was first revealed in March 2019 immediately north of the Whole Foods Inc. store at Woodward and Mack avenues.
The tax credits are part of the financing package for the development.
It has received approvals for $58.3 million in brownfield tax-increment financing, as well.
As of last year, the 15-story hotel tower was to be topped with another seven floors of some form of residential space, bringing the total first phase to 22 stories, a reduction from the original plan.
The Mid’s first phase was slated to include a 25-story hotel and condominium building with 225 hotel rooms and 60 for-sale units, although in January 2020, I reported that the condominium portion of the tower had been torpedoed.
As part of a second phase, a 27-story residential tower with 180 apartments is planned, smaller than the 30-story, 250-unit residential tower that was anticipated in March 2019, according to an MSF board briefing document.
At the time, the project also included in the second phase was a 12-story building with about 198 co-living units. Approximately 750 parking spaces were also part of the project mix, with 325 in a one-level underground garage and 419 spaces in a five-level deck above ground.
Between 75,000 and 100,000 square feet of Woodward-facing and other interior retail was planned for things such as smaller neighborhood retail to grocery space.
The precise scope of the project these days, however, is not completely known.
An entity registered to Ciena Healthcare CEO Mohammad Qazi, 3750 Woodward Ave LLC, paid $15 million for the land in September 2018 after Wayne State University Physicians Group scrapped a plan to build a $68 million medical office building and parking deck on the site.