Land swap deal to build $520M jail clears hurdle with Detroit council vote

A plan to build a $520.3-million criminal justice complex north of downtown is moving forward after the Detroit City Council approved a deal allowing the city to swap land with Wayne County in exchange for the massive former American Motors headquarters site on Plymouth Road.

The vote came exactly one week after council decided to delay voting on the matter after a number of concerns were raised, including a lawsuit that sought to block the swap.

Wayne County Gratiot Jail Site

Wayne County Circuit Judge David Groner decided Tuesday to deny the request. Detroit Corporation Counsel Melvin (Butch) Hollowell applauded the decision, saying: "We are very pleased that Judge Groner has dismissed this case in its entirety, allowing this important land transfer to proceed."

Wayne County Executive Warren Evans told the Free Press last week that if council didn't approve the swap, it would have effectively put the county "back to square one."

Khalil Rahal, Wayne County's economic development director, called the affirmative vote a "step in the right direction," but said there's more work on the horizon.

"I think what you're seeing is folks are collectively seeing the options on the table, It is the best option and I think you're starting to see consensus around that," Rahal said after the vote. "We're moving in the right direction. It's certainly not the end-all be-all and it's certainly not done."

In fact, the Wayne County Board of Commissioners has yet to take action on the deal.

The deal between the city and Wayne County allows billionaire Dan Gilbert's Rock Ventures to build the complex, replacing the so-called fail jail site on Gratiot Avenue next to the existing county jail.

The deal would give the city the former American Motors headquarters site on Plymouth Road in exchange for 11 acres of city-owned land needed to build the jail complex.

And since the American Motors site is owned by the Wayne County Land Bank, the county would need to approve the exchange of that site.

It's been a long road for the county. A groundbreaking was held at the Gratiot jail site under the leadership of former Wayne County Executive Robert Ficano in September 2011. Work was halted in June 2013 when it was revealed that cost overruns were pushing the project $91 million over its $300-million budget. The idled site is costing taxpayers about $1.2 million a month in bond payments, storage and security.

County officials cautioned last week that if the deal is delayed into next year, it could cost millions more.

"The timing is significant to us," said Zenna Elhasan, director of corporation counsel for Wayne County. "... A lot of those price quotes that were provided to us are based on a construction schedule. ... We're talking about millions that would increase the budget."

Rahal said Tuesday the county will now continue to focus on negotiations with Rock Ventures.

Despite council's approval, uncertainty remains. The county has said an Internal Revenue Service decision related to the appropriate use of jail bond proceeds on an alternative site to Gratiot remains pending. The IRS is working to determine whether the county can use the bonds at Rock's proposed site.

Without a ruling in its favor, the county said no agreement with Rock is possible.

The most recent Moody's Investors Service credit opinion from May 2017 said the county has substantially improved its fiscal profile and has a positive outlook due.

But the report said the county's "debt burden will grow in the coming year" as it finalizes a plan to either construct a new jail or complete its existing project on Gratiot.

"The county is likely to finalize a plan to construct a new jail entailing the issuance of approximately $250 million in new bonds," states the opinion.

"The county is still assessing whether it will complete the partially constructed facility or begin construction of a completely new facility. The latter option would be aided by the sale of the current construction site property to a private developer. The county's budget includes a $10 million contingency that would fund a large portion of annual debt service on the forthcoming bonds," according to the opinion.

And a Moody's spokesperson said: "We’re monitoring the development to see how much additional debt the county may ultimately take on, but at this point it’s too preliminary to comment."

Evans said a final determination has yet to be made.

"Whatever we’re doing is contingent upon that coming back as either a favorable ruling or at least a not very costly ruling," Evans said.

Nearby residents have said they don't want the criminal justice complex near their homes.

Nicholas Miller, who lives within three blocks of the proposed site, filed a lawsuit last week in Wayne County Circuit Court against the city, Mayor Mike Duggan, the City Council and Council President Brenda Jones. Miller alleged the city should not be allowed to circumvent its own zoning ordinance.

Councilwoman Raquel Castañeda-López also raised concerns about air quality issues since the complex would be close to the nearby incinerator, but said Tuesday she was pleased by the county's efforts to mitigate concerns.

"There will be a minimum of two meetings held by the county in the community and one held by the city," she said. "For me that is really important."

Council also approved a resolution urging Evans to incorporate community engagement and mentoring programs into the process.

"I think our children need to be exposed to the positive side as well as law enforcement and they need to look at the facility as not just a jail but as an example of careers in law enforcement," said Council President Brenda Jones.

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