‘Extortion’ tactic: GM panned for floating five-tower RenCen demo if tax breaks rejected
Violet Ikonomova, Detroit Free Press
Updated 9 min read
If General Motors and Dan Gilbert can’t secure the public funding they say they need to revamp the struggling Renaissance Center, the automaker says it’s prepared to demolish the five towers it owns and bear the full cost.
GM confirmed in a statement to the Free Press that full demolition is a possible alternative to its proposal to partially demolish and renovate the complex, after it faced pushback from a chorus of lawmakers opposed to helping publicly fund a plan to tear down two towers and renovate three. That plan has also drawn critics from the architectural and preservation communities, who called it shortsighted and ill-conceived.
By threatening to tear down the group of skyscrapers that includes Michigan’s tallest if taxpayer support doesn't come through, the developers are trying to force their vision on the public, said Detroit-based urbanist and University of Michigan architecture professor Craig Wilkins.
Conceptual rendering of proposed RenCen revamp.
“It’s not uncommon that big corporations, when they want to do large-scale projects, present things in an either-or fashion to shape the debate in the direction they would like,” Wilkins said. “The idea of ‘if you don’t go with this, then we’ll just tear it all down’ seems like extortion to me, and I don’t think the public should allow itself to be extorted.”
Gilbert and GM are seeking $250 million in subsidies for their $1.6 billion plan to "right-size" the 5.5-million-square-foot complex while adding public space and improving walkability between Detroit’s riverfront and downtown.
The automaker has said it will explore other public funding options if it can’t obtain state support. It has declined to provide details about what pots of money it may try to tap, but Detroit Mayor Mike Duggan has signaled a willingness to kick in city support. The building could also potentially obtain a historic designation to open the door for federal tax credits.
If it’s unable to secure public funding, GM has said it would fully demolish the main cluster of towers rather than sell to speculators who might let them decay. It has described its planned $250 million investment in the revamp proposal with Gilbert as "philanthropic."
“Our desire is to preserve the iconic skyline that is synonymous with Detroit by funding the overwhelming majority of the project in partnership with Bedrock — but all options remain on the table,” GM spokesman Kevin Kelly said in a statement. “If it ultimately comes to demolition, General Motors is willing (to) cover the cost, so the site doesn't fall into disrepair.”
The automaker has until April — a year from the date it partnered with Gilbert — to decide how to proceed, according to a person familiar with the matter who was not authorized to speak on the record.
Wanted: Public input
Under the revamp proposal unveiled Monday, one of two remaining 39-story office towers would be converted to housing while offices in the other would be renovated. The 73-story central tower that houses a Marriott hotel would also see some floors converted to housing.
Land freed up by demolition would meanwhile be used to create “signature public spaces” and a promenade to better connect downtown with the riverfront, a news release from GM and Gilbert’s Bedrock said. An entertainment district mentioned in the release is not reflected in the project cost. The revamp is expected to carry the complex through the next 25-50 years.
GM Chair and CEO Mary Barra announces General Motors moving its global headquarters to the newly completed Hudson site, during a Bedrock news conference held at the Hudson site in downtown Detroit on Monday, April 15, 2024.
The proposal comes amid reduced demand for downtown office space and as GM prepares to move its headquarters several blocks north, to Gilbert's Hudson’s Detroit development. That building was backed by significant public investment on the promise that it would attract new jobs and tax revenues to Detroit. With GM so far the only tenant announced for the development’s “office block,” it's not clear whether that will occur.
While the request for public support has drawn critics, full demolition of the city’s marquee structure, which occupies prime riverfront land, is also unpopular.
Tearing down the five GM-owned towers would likely represent the largest voluntary skyscraper demolition in world history. Such demolitions are rare nationally — even more so if a building is structurally sound.
Wilkins told the Free Press he opposes both the possibility of full demolition and aspects of the concept plan proposed Monday. Removing the five primary towers would create an “ugly,” “uninspiring” vacant parcel, while the revamp option does not appear to have involved adequate public feedback or consideration of how to use the freed-up space, Wilkins said.
Decisions about the future of the complex and surrounding areas should involve more public input, Wilkins said, particularly if developers seek public support.
“We shouldn’t settle for one or two public entities being able to determine our public life based on what is good for their bottom line,” said Wilkins. “Why should we have to settle for ‘something’ when we can have the best?”
Alternatives: 'Why not convert more of it to housing?'
Michael Poris, founding principal of McIntosh Poris Architects and a longtime Detroit preservation advocate, said the fewer towers demolished, the better.
“With the history of demolition in Detroit over the last 70 years, this conversation should be put to bed,” said Poris, noting that neighborhoods have been cleared for freeways and historic buildings replaced by parking lots. “We haven’t even healed all the problems that came from demolishing things, so the idea of continuing all that now is absurd.”
Poris called it premature for GM to base such a consequential decision on the current demand for downtown office space, which the Free Press previously reported was down just 6% below pre-pandemic levels in the quarter before GM announced it would move to Gilbert's nearby property. The downtown office vacancy rate was 19.4% at the time, and the vacancy rate at GM’s four RenCen office towers was reportedly only slightly higher.
The Renaissance Center in downtown Detroit sits in the background as people walk along the Detroit RiverWalk on Thursday, March 11, 2021.
“I just think it's a huge waste of resources,” Poris said. GM says it has spent more than $1 billion on the complex since purchasing it in 1996, and Poris noted the building’s brutalist base, which would disappear in the revision plan, is architecturally noteworthy.
“It’s pretty fantastic,” he said. “We can’t build like that today.”
While Poris said partial demolition would be better than total demolition, he questioned whether the idea of additional building uses to allow the complex to remain in its entirety had been considered.
“If you can convert some of it into housing, why not convert more of it into housing?” Poris asked. Or the developers could bring back the complex's movie theater, add another hotel or create senior housing that puts to use the enclosed, mall-like design, he said.
Alternatively, Poris said portions of the complex could sit empty and be “tactically preserved” for future development.
McIntosh Poris Architects founding principal Michael Poris stands near awards that line the walls of his business in Birmingham on Monday, March 11, 2024.
Detroit has seen several long-idled historic structures revived and repurposed in recent years, including the former Michigan Central Station resurrected by Ford and a Lincoln Motor factory converted into a mixed-use artists complex. The former Fisher Body Plant is slated to soon become apartments. All were vacant for decades.
Real estate scholar: Partial demolition is right approach
But Bill Bubniak, director of the Weiser Center for Real Estate at the University of Michigan’s Ross business school, said those and other alternatives are unworkable.
Letting the buildings idle would project an image of vacancy as the city begins to shed its negative reputation, and keeping the complex in its entirety to convert more towers to housing would likely outstrip demand. Tearing down five towers, meanwhile, would create a mammoth hole at the heart of the city that could sit empty for decades.
“Not doing anything is absolutely not the solution,” he said. “I feel the (partial demolition and renovation) plan that’s proposed is the right one.”
Bubniak called it a laudable merging of business and public interests — preserving needed hotel space, improving walkability and reducing vacant office space while boosting housing supply in line with demand.
Conceptual rendering of promenade in proposed RenCen redevelopment.
Bubniak acknowledged that Gilbert, the largest owner of downtown commercial real estate, stands to profit from any demolition because it could drive up demand at his other properties, which include the new Hudson's tower. But he said the city is fortunate to have in Gilbert a developer who can afford to take on projects the scale of the Renaissance Center.
Bedrock has committed $1 billion to the renovation and GM is expected to contribute $250 million. Under an agreement signed by the companies in April, Bedrock has the right to buy the original five towers and acres of parking lots to the east.
“There aren’t other developers that can have long-term views at the billion dollar level in Michigan — you may see that in Manhattan — but most conventional developers need to see a payback in maybe five years,” Bubniak said. “It’s been known for a while that the RenCen has been troubled — where are all the (other) investors that want to take this and bring it to another level?”
However, Bubniak added that developers seeking public money should “show the public that what they’re doing makes sense and that this is not all about private profits.”
“The public deserves to see if (the conversion of office to residential) makes sense financially and they deserve to see a demand study,” said Bubniak, noting that with residential conversions running between $200-$300 per square foot, it could prove more cost-effective to tear down the buildings and develop anew. “The public does deserve to know, has the cost analysis been done properly of rehabbing the hotel (tower) and consolidating the office space?”
Minority Leader Matt Hall, R-Richland Township, speaks to reporters on the floor of the Michigan House of Representatives Thursday, Nov. 7, 2024, after House Republicans selected him to serve as the next House Speaker.
Lawmakers from both parties in Lansing expressed quick opposition to the idea of helping publicly fund a complex revamp. Incoming Republican House Speaker Matt Hall, R-Richland Township, called the tax incentive ask insulting, while state Sen. Mallory McMorrow, D-Royal Oak, said the portion of northwest Detroit that she represents wouldn’t benefit from the proposed redevelopment.
Detroit’s top officials were more receptive to helping fund the project.
In response to a Free Press inquiry, Duggan said "we will need a public/private partnership to get this done," and City Council President Mary Sheffield, expected to run for mayor next year, said she was "looking forward to further exploring a potential public-private partnership." Both applauded the proposal, with Sheffield calling it "a rare and clear path for growth" and a "transformation most cities could only dream of." Neither provided details about what shape city subsidies could take.
In Lansing, some lawmakers noted their colleagues could change their tune.
Said subsidy foe Rep. Dylan Wegela, D-Garden City, "Lansing has a way of getting people to do things that they don't agree with."
Free Press staff writers Clara Hendrickson and JC Reindl contributed reporting.
This story was updated to add additional information.
Violet Ikonomova is an investigative reporter at the Free Press focused on government and police accountability in Detroit. Contact her at vikonomova@freepress.com.
