Redevelopment of the Hudson's building is one of the greatest urban developmental opportunities in America! It is a tremendous asset to the City of Detroit, to the developers who might win the prize of restoring it, and to millions of people who would experience and enjoy this building through the next centuries.
Explain the value of this "tremendous asset".
This 2 million square foot structure is constructed as solid as a pyramid. If restored, it could stand as long as any building in Europe – a thousand years! Its frame is worth some $50 million dollars. Congress has passed legislation to encourage re-development of buildings like Hudson's. The tax credits on Hudson's are worth another $30 to $60 million dollars.[3] But beyond the economic factors, Hudson's could be one of the top tourist attractions in the region, depending on its uses. [4]
If it is such an asset, why hasn't a developer stepped forward?
On November 5, 1996, the voters changed the economic realities of Detroit by saying "YES" to some $500 million of Stadiums and $2 billion of casino development. General Motors has moved downtown. A recent housing study says there is a demand for 10,000 units of housing in downtown Detroit! With the huge investment in Metropolitan Airport, the Empowerment Zone running through the City, with the national economic expansion in its 8th year, the redevelopment of Hudson's is now possible. Possible! It is one of the most attractive development opportunities in the country![5]
Well, it's sitting empty right now in 1998! Why have not developers stepped forward?
They have! At least two in 1997. Don't you remember in January, 1997, developer Randal Alexander made an exciting presentation to City Council.[6] Later a group that included Arnold Schwartzenegger came to town.[7] These and other developers have been re-buffed by the City.[8]
Both the Free Press and the News have spoken with five national historical redevelopment companies that have expressed a keen interest in making proposals on Hudson's.[9] If the City issued a request for proposals (an RFP), like they did for the Campus Martius proposition, the developers would push each other over in stepping forward!
Then why is the City so set on demolishing Hudson's?
See if you can find anyone in the City who can explain it. We can't. It makes no sense.
Well, let's see, we have heard it said that the building has been stripped of its copper plumbing and electrical wiring, that the roof leaks, that it's full of asbestos, that the basement had three floors of water in it, and that it's way beyond repair.
The plumbing and old electrical would have to be replaced anyway. The roof can be repaired. The asbestos has to be cleaned up for demolition or restoration. The water has been pumped out. These are not real issues. The building is in far better shape than other landmarks that have been successfully restored.[10] Let this be the problem of developers who thrive on these challenges![11]
Well, OK, but I think we have all heard that it's too big of a project.
The building is about 2.3 million square feet. High ceilings of 13 feet. Built like a pyramid. There is room for some 1500 parking spots, 600 +/- apartments, and both retail and commercial space. There is a huge demand, right now in 1998, for the apartments and the parking.[12] “Class A" commercial space is in demand and in short supply because of General Motors' move to the Renaissance Center. It's not too big.
How does the Coalition know that it's not too big?
It is the City of Detroit that has failed to determine what is too big, too expensive, possible or impossible to do. But the City has not studied Hudson's. It is acting as if someone else had done the "due diligence" – but no one has done it!
Well, what do City officials know about Hudson's, its demolition and renovation?
In sworn testimony, three leaders of the City of Detroit have declared that no individual or authorized governmental body performed standard due diligence as regards the Hudson's building:
What is the Coalition to Save Hudson's position?
Go back up to that previous question – "Then why is the City so set on demolishing Hudson's?" Don't you think it's intellectually honest actually to ask the City. Don't guess. Don't ask us.
OK, we promise to ask the City, but what is the Coalition's position?
Good luck finding someone in the City. Most of the long-term professionals in the City oppose demolition.[18] The Mayor is the only person who can even speak in generalities on Hudson's, but most of you stop asking follow-up questions as soon as he asks where you live.
Are you going to tell us or not?
OK. Hold a hearing. Issue a Request For Proposals (RFP). Let the developers say it is too big or too expensive. It's their money. Issue an RFP – they will come.
So what is the fuss?
Local architects, planners, and taxpayers are completely stymied at the stubborn rigidity of the City. It is set on spending tens of millions of scarce tax dollars to tear down an historic structure. Hudson's is eligible for tax credits equal to 30% to 40% of the total cost to restore it. The Detroit DDA is about to spend tens of millions of local dollars to demolish Hudson's and to create an un-buildable site. Instead, the City should let State and Federal sources provide some $30 to $60 million in tax credits to recycle and to re-use this national landmark.
But doesn't the City have a different plan – Campus Martius?
The City says it would like to see some 2 million square feet of new office towers built on 5 sites: the Kennedy Square site[19], the Kern Block, the Crowley site, the Monroe block and the Hudson's site. The City acknowledges that new construction is so expensive that it would require rents higher than tenants are willing to pay. So no construction is feasible at this time.[20]
Well, Hudson's has sat empty for 8 years, let's give that Campus Martius proposal a chance. Maybe some developers will get interested.
These are not mutually exclusive projects. You can build at least four projects on 4 Campus Martius sites that have sat empty for as long as 30 years, before you even have to look to the Hudson's site. And there are other sites downtown for office towers too. But there is only one Hudson's. And it is ready for restoration today!
Is the Hudson site important for the Campus Martius project?
No. The Hudson's site is the least economically feasible of 5 un-feasible sites. In addition to the high costs of new construction, the Hudson's site will have an unstudied engineering problem with its foundation – 80 feet of fill, and a People Mover foundation. Furthermore, there will be limitations to any Federal, State or local subsidies to any new project on the site, because there are consequences to laws against demolishing buildings eligible for historic registry.
Come on, Hudson's has sat empty since 1990. Is it really possible to develop the Hudson's building today?
It's illogical to point to Hudson's and say it should have been developed. Virtually no market oriented development has taken place during that same period of Detroit's history. Until the November 1996 election, new construction in Detroit was economic suicide (see footnote #5.).
Well, the Hudson's demolition does not seem to make sense. Why has the City got its head in the sand, and its fingers crossed?
Ask the City? Its public relations policy on Hudson's is "not to relate to the public". We have repeatedly requested meetings with the Mayor to no avail.[21]
What should be done?
There is a happy co-incidence between what makes good city planning and what both State and Federal law mandate. So simply follow the law: publish an RFP (request for proposals). If credible developers make credible proposals, pursue the proposals. If no credible proposals come forth, let the wrecking ball swing.
What is going on at Hudson's today?
Illinois-based Loyalty Environmental Inc.,[22] is removing the asbestos. Asbestos abatement is required for either demolition or renovation. This process is slated to go on through March, 1998 – but we are not privy to whether the project is on schedule.
So when does the actual demolition begin?
When the asbestos abatement is complete, demolition can commence. On 12-23-97, the DDA voted to demolish Hudson's by implosion – the quickest and cheapest method of demolition. The minutes of the meeting corroborate the deposition of Larry Marantette, that no engineering studies had been performed to study the feasibility or safety of this method.
How much will the demo cost?
Under oath, Lawrence Marantette, admitted he had a conversation with a demolition man who said it would cost $12 to $15 million. But he could not remember who he talked to. He said he had no bids, written estimates or studies.[23]
The resolution presented to the City Council, February 5, 1997 gives the slickly prepared impression that the $12 million is a real number. But in the "therefore be it resolved" section of the resolution, no limits were imposed on the DDA.[24]
What if it costs more than the $12 to $15 million?
We do not know. While Marantette wrote the recommendation to demolish Hudson's, he testified he did not know either.[25]
Can the Mayor use part of the $60 million HUD Grant received for the demolition of buildings across the City to help cover cost over-runs from the Hudson's demolition?
We do not think so. The Historic Preservation Act under Section #106 requires a hearing to consider alternatives before any federal funds are involved in the demolition of buildings eligible for the National Historic Registry.
On 2-7-97, the City Council did authorized the DDA to sell municipal bonds to finance the demolition. Probably the DDA will just sell more municipal bonds to finance this huge unnecessary hole into which to dump the rubble of Detroit's history and the building blocks of its future.[26]
[1] Detroit News cyber poll in November of 1997, indicated 67% of readers wanted to see Hudson's saved.
[2] J.L. Hudson's was closed for business in 1983. The executive offices were closed in 1988. Maintenance crews left the building in 1990.
[3] Using historic credits and moderate and low income housing credits, the Hudson's development could receive total tax credits worth 30 to 40 percent of the cost of the entire job. Say a development cost $100 million. The developer could claim credits of $30 to $40 million. It could sell off the rights to the credits to a corporation that had $30 to $40 million due in income tax. The developer would then have the cash to put down on a $100 million project. Coupling these credits with costs for redeveloping that are substantially lower than new construction, and you have got a project! It's not rocket science!
[4] Greenfield Village, Henry Ford Museum, Detroit Institute of Arts, Detroit Historical Museum, African American Museum–people are very interested in the past. The hard noses at Universal City in Orlando have created de novo a turn of the century NY cityscape because it attracts lots of tourist dollars.
[5] The few developments that have occurred prior to 1997 highlight the economic absurdity of venturing into downtown Detroit: Henry Ford was able and willing to lose his equity in the Renaissance Center to help turn around Detroit, and his financial group ultimately lost its entire investment; the Max Fischer/AI Taubman team demanded and received grants from the City worth some $10 million and additional tax abatements to develop the Riverfront Apartments (Grants do not have to be paid back.) (Remember the controversy: "Tax Max and his Pal Al".); GM stole a new headquarters which would cost one billion dollars to build today, but paid only 7% of replacement cost to acquire it.
[6] Free Press, "Developer has Eye on Hudson's–Plan Would Convert Downtown Building" January 13, 1997, Lekan Oguntoyinbo.
[7] Metro Times, “Muscled Out” 7-16-97, Curt Guyette (cguyette@aminc.com).
[8] Metro Times, "Downtown Showdown", 2-1-97, Curt Guyette (cguyette@aminc.com).
[9] Detroit News, "Last Ditch Effort to Save Hudson's"; October 31, 1997, Mark Puls (313-222-2035); Free Press, "Combatants square off over fate of Hudson's" November 17, 1997, Jennifer Dixon (313-223-4542).
[10] Randal Alexander (608-258-5580) to Architect Douglas McIntosh of Mclntosh Poris, Feb., 1997 (248–258-9346).
[11] "The building is in fantastic shape for a building of its kind and age," said Denver architect David Tryba (303 629-9363), whose portfolio includes historic renovations around the country. "It's built like the pyramids–absolutely solid. No one could ever build that building again." Tryba, who has been on every floor of Hudson's, said he would consider working on its restoration–but only if asked by Mayor Dennis Archer or other City leaders. Free Press, 11 - 17-97, Jennifer Dixon (313-223-4542).
[12] Study for the Detroit GDP, by Zachary & Associates (313-963-1410), a Detroit economic development, planning and historic preservation company: demand for 10,000 units of housing in downtown over next several years, without taking into consideration additional demand from GM, casino or stadium developments. Diane Jones stated that housing of all types and prices...."is absolutely ripe for new development" Free Press 10-24-97, Jennifer Dixon (313-223-4542).
[13] No engineering studies have been made that explore the demolition options for Hudson's basement: 1) leave the basement intact and put a tower on top of it; 2) demolish, remove, and back fill with compacted sand; 3) demolish and fill with rubble. No report has been created exploring how demolition can avoid harming the People Mover foundation.
[14] The abandonment of the DDA Plan to repair Hudson's, without proper hearings as mandated by Michigan Law, is part of the basis for the Wayne County Circuit Court suit: Anban Inc., et alii vs. City of Detroit & Detroit DDA. Wayne County Circuit Court. It is scheduled for trial in April, 1997 in front of Judge Sharon Tevis Finch.
[15] Beth DunCombe, Director of the Detroit Economic Growth Corporation (DEGG) in deposition on December 9, 1997, in Anban Inc., et alii vs. City of Detroit & Detroit DDA. Wayne County Circuit Court.
[16] Art Papapanos the Deputy Director of the Detroit Downtown Development Authority (DDA) in deposition on November 11, 1997; in Anban Inc., et alii vs. City of Detroit & Detroit DDA. Wayne County Circuit Court.
[17] Lawrence Marantette, President of the Greater Downtown Partnership, and board member of the DDA, in deposition on 12-18-97, in Anban Inc., et alii vs. Ciiy of Detroit & Detroit DDA. Wayne County Circuit Court.
[18] The director of the City's Historic Designation Advisory Board said a plan in the works to tear down the downtown Hudson's building would be "ill advised." William Worden warned in a January memo to the Detroit City Council that it should make its decision cautiously. "Since there is no new development on the horizon for this property, there seems to be no reason not to take the time for a more measured approach to the problem of the Hudson's building," he added. "Whether the building can or cannot be reused, the present demolition proposal seems ill-advised." His opinions also received backing from the Detroit City Planning Commission. In a separate memo, Marsha Bruhn and Robert Davis of the commission wrote to the City Council that many local people who are knowledgeable about the building believe "the City should focus its limited demolition dollars on buildings that are economically unfeasible to rehab and should try to conserve what it can."
The memo was spurred in part by a recent presentation before the council by Randal Alexander, a Madison, Wis.–based developer who wants to turn the old department store into 650 loft apartments, shops and a parking garage. He says he can do it for between $70 million and $100 million and estimates he could obtain financing because the building would qualify for a variety of income credits set aside for historic buildings. "No major North American industrial city located in the northeast quadrant of this country has had a downtown development turnaround without a strong element of historic preservation," Worden said. The plan has received a cold reception from City of Officials, notably from C. Beth Duncombe of the Detroit Economic Growth Corp. She has said the idea is excellent, but would be too expensive. Free Press, February 3, 1997, Lekan Oguntoyingo.
[19] Old City Hall sat here from 1859 to 1961.
[20] The Farbman Company disclosed at the 11th Annual U of M Real Estate Forum, a study of a 500,000 square foot, 25 story, $100 million office tower on the Hudson's site. But the study concluded that after the DDA's spending millions for demolition, and after getting the land for free, the building would not be economically unfeasible. Jay Lybik, a senior research analyst for Cushman & Wakefield of Michigan, a full- service real estate firm in Southfield, stated "...there is still too large a difference between current asking rates and projected construction rates to justify new construction." Detroit News "Office could cost $100 million...but plan may not be feasible." 11-14-97, RJ King (313-222-2504).
[21] In sworn testimony, the head of the DEGC claimed that re-developing Hudson's would use up the allocation of tax credits available for redevelopment of historic buildings! This preposterous statement and other alarming lapses suggest that one of the key persons on whom the Mayor relies for advice does not understand Tax Credits. There is no allocation. There is no limit! All developers of eligible historic properties can receive a 20% tax credit.
[22] Loyalty Environmental Inc., 8220 Kimball, Skokie, Illinois 60076,847-674-9600, fax 874-674-9635.
[23] Lawrence Marantette deposition.
[24] The demolition process could take up to two years, according to John Adamo Jr., vice president of Detroit-based Adamo Demolition Company. As demolition difficulty goes, "On a scale of 1 to 10, Hudson's is a 10," he said. Free Press, 2-6-97, Lekan Oguntoyingo.
[25] Lawrence Marantette deposition.
[26] This position paper was put together on January 6, 1998.