DALLAS --Wayne County, Michigan and Detroit have agreed to a land swap that could pave the way for a sports stadium and a complete reboot of the county's plan to build a new jail.
If the county settles on the new site it would free up the site of its half-built, bond financed jail in downtown Detroit to house a Major League Soccer stadium. A decision of whether to resume building on the existing site or use the new site is expected in December.
Under the agreement announced Thursday, the county would take ownership of a portion of a Detroit Department of Transportation property where the new jail would be built under the proposal being pursued by the firm Rock Ventures, which is pursuing an MLS expansion franchise.
In return, the city would receive ownership of the 1.4 million-square-foot American Motors Corp. site on Detroit's west side, which is currently owned by the county land bank.
“This agreement gets us one step closer to a deal with Rock Ventures. Acquiring this land was one of the significant hurdles to Rock’s proposed criminal justice complex,” County executive Warren Evans said in a release. “We worked out a tentative deal that makes a lot of sense for the City and County, and we look forward to finalizing the agreement.”
Detroit mayor Mike Duggan said the swap delivers land the city doesn’t need in return for land it wants to take on as a redevelopment project to improve the neighborhood. Duggan yesterday revealed details for a $318 million neighborhood redevelopment plan that will see the city sell $125 million in privately placed bond and spend $193 million of city, state and federal money to fix hundreds of miles of city roads, as well as sidewalks, over the next five years.
The land swap requires final approval from the Detroit City Council, the Wayne County Commission and the Wayne County Land Bank Board.
Acquiring the land puts into place one piece of the plan to move the county jail proposed by Rock Ventures. The plan still hinges on the Internal Revenue Service decision on whether the county can use jail bond proceeds from the original borrowing to build on the alternative site is still pending.
“It remains a critical obstacle to reaching a contract with Rock Ventures to complete the new criminal justice complex,” said Evans spokesman James Martinez. “We remain cautiously optimistic that this will get resolved in a way that allows us to move forward. Ultimately, it’s the IRS’ decision and timetable and we respect that.”
The IRS in July 2015 began conducting a targeted audit of the Wayne County Building Authority's 2010 bonds due to concerns about possible tax code violations, according to a disclosure notice the county filed. Jail construction began in 2011 but was halted in 2013 due to rising costs.
The IRS notified the county about six months ago that the audit was resolved without any adverse action and no penalties would be imposed as long as about $50 million of remaining proceeds were used to complete the project on the current site.
Opting to move the site would expose the authority to losing the federal subsidy payments the county receives for the taxable bonds that were issued under the recovery zone economic development bond program. At risk is a total of about $170 million in subsidies, which includes more than $50 million the county has received so far.
Moving the site would free up the downtown location for a soccer stadium. Dan Gilbert, the founder and chairman of Rock Ventures and Quicken loans, together with the Detroit Pistons Owner Tom Gore are seeking an expansion team, which they want to have play in a $1 billion mixed-use development anchored by the stadium at the 15-acre consolidated jail site.
In return for the jail site, Rock Ventures would build the county a new criminal justice center with a 2,280 bed jail, criminal courthouse, prosecutor offices, sheriff administrative offices and a juvenile detention facility at an approximate cost of $520.3 million.
The county would be responsible for $380 million plus the cost of acquiring the land and Rock would cover any cost overruns. The $380 million would be funded through a combination of unused proceeds from a $200 million direct-pay, taxable recovery zone economic development bonds sold in 2010 by the Wayne County Building Authority and the issuance of about $200 million of new bonds, according to Evans.
Last month the county commission approved extending a deadline to decide the fate of the jail by two months to Dec. 1. The county is also considering a proposal by Chicago-based Walsh Construction to finish the jail at the original site.