Joining us for the budget finance and audit standing committee on today, Wednesday, May 20th, 2026.

Mr.

Clerk, will you please call the roll?

Good afternoon, Councilmember Denzel McCampbell.

Member McCampbell did indicate that he would not be present today.

Clerk will still know.

Councilmember Letitia Johnson.

Present.

Councilmember Mary Waters.

Present.

And Vice Chair, there's a quorum.

Thank you.

Having a quorum present, we are now in session.

And good afternoon, everyone.

Member Waters, is there a motion on the minutes?

Hearing no objections, that action shall be taken.

We are going to move into public comment.

If there is anyone joining us who'd like to make a public comment, whether in person or virtually, please raise your hand.

Please raise your hand.

Noting that we do not have any hands raised in the committee of the whole, we will cut off the collection of general public comment at 10.

That is in two minutes.

Good morning, Miss Duncan.

How many hands do we have raised virtually?

Good morning, Madam Chair.

There are currently nine hands raised.

All right, let's give everyone two minutes.

And we will get started with the first caller.

The first caller, Madam Chair is Mr.

Foster.

Mr.

Foster, good afternoon.

You have two minutes for general public comments.

Oh good afternoon, duty, chair.

All right.

I appreciate a lot of direction that we're going, but we still have a technical parkers and y'all are here.

For example, a 6.23.

If we're talking about making new changes and make it sure our neighborhood visits straight and all these other things that how we meant doing things in lieu of taxes.

The whole purpose of taxes are there to ensure that the services are rendered until the people, right?

That's all even though this is a new ordinance.

I'll just ask you all to evaluate the effectiveness of it and then have a force going to down the line, maybe the consequences of these things.

We can't continue to do these things, waiting on income to come in three, four years later with a new administration, possibly, right?

You know, and so we cannot afford to gamble our resources.

And that's what it appears to be.

Not trying to get anybody in trouble or pull everybody's coach here.

But like for example, if we did a 75 million dollar deal in November, and this deal is contingent upon state reps and senators and everything else, and they are on the ballot to get elected this year.

How are we moving if we don't even know what position that the state is in or anybody else is in?

Where are we the first people committing our funds and money to these type of things?

Thank you.

And so those are just names like we have to change our mind to think and stop trying to play on our citizens' uh illiteracy or a lack of understanding into government, right?

Be admiral people, be moral people.

You have to think and make good decisions for those that don't have the ability to think for themselves.

You don't exploit people, right?

And I hope that this city started to change its direction, start to change its culture, start to stand up, have some integrity, and stand up for those that can't stand up for themselves.

Thank you.

Just want to note that the collection of public comment has concluded.

Who do we have next?

The next caller is Betty A.

Varner.

Betty A.

Vernon, you have two minutes for general public comment.

Uh good afternoon.

Uh to all within the sound of my voice.

This is Betty A.

Varner, president of the Soda Elsewhere Block Association.

Here again, advocating for uh my community slash neighborhood, our community, and our thinkal corridor.

We are asking for uh monies to be uh put towards our think of corridor.

Last year we had uh a lot of successful uh meetings where residents from this area, they uh attended the meetings, they had ideas.

We got a lot of good information from the city of Detroit with the ideas uh to what could happen and what they would like to see on our thinker corridor, but they say the problem is monies is not available.

We are asking for the administration, the city, the mayor, uh honorable mayor, to uh find monies for our thinker corridor.

We just want to be treated like other uh corridors and other residents of the city of Detroit, where money has been uh put towards those corridors, those neighborhoods.

There's been beautiful development.

We're asking for the same for our corridor.

There's a uh Finkel Business Association that we are working with now.

When I say we, I'm talking about the Soda Elsewhere Black Association.

I'm impressed.

It's uh the Sims.

They started this business association, and they have purchased multiple buildings and started businesses on Finkel Corridor.

They're doing their part.

They've also purchased um vacant lots that's across the street from their businesses.

We have purchased vacant lots and have created a park, have purchased additional lots to expand.

So we're just asking for help.

We're doing what we need to do.

Thank you for this time.

Thank you.

The next caller.

The next caller is owner Papa.

Owner Papa, you have two minutes for general public comment.

And good afternoon.

Thank you through the chairman.

Happy Heard.

Good afternoon, yes.

Thank you.

Um I'm agreeing with Mr.

Foster.

6.23.

We're tired of pilots.

We're tired of people getting reductions in their uh income taxes.

Do you know that the American Revolution was fought on the basis of taxation without representation?

And then seven, that's exactly what I feel like.

I don't deserve what I'm getting from this body.

Um the aviation subdivision looks horrible compared to the way it looked when I moved there as a little girl.

It looks horrible.

And um we don't have any representation.

Uh pilot programs need to be a feasibility study needs to be done because it is not helping us as a city to keep reducing our general fund of which you get paid out of.

And it's absolutely absurd.

I said this morning, you all are retarded.

It's something wrong with you all.

If you think we're going to continue to let you let everybody off on their taxes while you're trying to squeeze every tax dollar out of us, you're you're out of your minds because what you're gonna get is a revolution.

People aren't going to pay you anything, and then what are you going to do?

What are you going to do?

You're not going to be paid.

This is this needs to stop.

The ordinance that the audit that came through this on there, we need we need to go over the the audit because the audit presents information that we need to work from.

9.8 on the last agenda was absolutely absurd to come through her committee when you're increasing everybody's salary by 10,000.

Have you done a feasibility study to find out if we can afford that?

We just got out of bankruptcy yesterday.

And I would like my letter.

When we went into bankruptcy, I got a letter saying we were in bankruptcy now that we're out.

Please have them send me my letter saying we're out of bankruptcy.

Uh uh, this is ridiculous.

Thank you.

Thank you.

The next caller.

The next caller is what happened to Mayor Duggan.

What happened to Mayor Duggan?

You have two minutes for general public comment.

May I be heard?

Yes.

Yeah, no, it's what happened to Mayor Duggan's charter mandated meetings.

Um, it would be nice if you could read the name appropriately.

Um the reason I asked that is I did a FOIA request for some of Mayor Duggan's charter mandated meetings.

The FOIA department belatedly responded.

Then they sent me some stuff that wasn't responsive.

Then I said, where's the rest of the meetings?

And they said, Oh, media services, it must be a problem with media services, they don't have them.

Last I knew, at least under the last administration, the last director of media service was Jasmine Barnes, who was chief of staff, as I recall, correct me if I'm wrong, uh, to uh them council president Brenda Jones.

So something's wrong if some of these videos are missing.

Um, also 6.25, the memo about the data centers.

Is that who the solar firms really are for, the data centers, because of the increased load on the grid?

And why didn't the city make the people who got the sweetheart deal on the historic state fairgrounds, which never should have been sold?

That was a violation of the Detroit City Charter.

How come they weren't asked to put solar panels on their acres and acres of warehouses there?

And Mayor Duggan lied when he said that everybody decided to give up their home voluntarily for the solar farms.

That's absolutely not true.

I've learned of some more dirty dealings with that solar scam.

So uh, which I will be further looking into.

Also, I urge you to pull back on Matt Walters, learn about his past, talk to Cindy Dara, talk about the scam that they and some other people kind of played on her with 498 Peter Burrow.

And can we please get an answer?

Are these these contemplated data centers?

Is that what the solar farms are really about?

Because they're not going to directly power the buildings, and you we were not told about your definition of thank you.

The next caller.

The next caller is Nini's friend.

Nini's friend, you have two minutes for general public comment.

Well, Letitia Johnson.

Can you hear the echo in the background?

Well, let me step outside so I can be outside outside with this.

We're not saying this.

Angela Whitfield uh Callaway kicked me off the meeting this morning because I spelt NYGA.

That's the National Youth Generational Group Association.

Uh and Bob Carmack, Robert Carmack, Mr.

Robert Carmack was one of the first few members of the National Youth Generational Group Association.

The N-words.

That's the National Youth Generational Growth Association.

Sisters and soldiers.

My N-words with S on the end.

Sisters and soldiers.

Now Letitia Johnson.

You cheated in.

So is Mary and Mary was cheated in.

And Angelo Whitville Callaway was cheated in.

See, Sandra Smith is a hundred and four five, hundred and five-year-old voter, according to the Detroit uh voter roles.

But she didn't vote absentee in no election.

Her granddaughter, her granddaughter, her own granddaughter told me that she voted in that year's elections, but she's a district to resident.

District two resident.

But she didn't vote for her grandmother because she was taking care of her during COVID time because her grandmother, since the age of 97, 98, didn't know who the mayor was, nor the president.

Real talk.

The next caller.

The next caller is Jadante Smith.

Jadante Smith, you have two minutes for general public comment.

Good afternoon, yes.

I was I've missed a lot of public comment, and there's been a lot of interesting developments in the last couple days, especially uh earlier.

I was a city council and uh I was talking to uh uh Wimber uh Kimberly or whatever his name is he has a weird really girly name, uh Kimberly Kerwin Kimberly, Wimberly, uh from Scott Benson's team, which is a policy analyst analyst.

I was talking about Chrono's concrete, um, and about uh just about some issues over in District Three, and Tiambe, uh, who is Scott Benson's executive assistant happened to be sitting there, so happened to be on the phone with someone else as I was talking to Carl when just so I had a video that I recorded earlier today about the conditions of Chronos.

People are dumping trash around Kronos, even though there's already trash there, people are dumping tires and up in pallets, broken sidewalk all around Chronos concrete, and the conditions are terrible.

Uh inside and outside neighborhood is is uh really because of it.

But Tiana Bay told me that I wouldn't be able to have a meeting with Scott Benson because she didn't like my attitude.

That is not how city council works.

We don't pay anybody 105,000 to decline meetings with their constituents and people who are members of the community who have issues in their districts because they don't like somebody's attitude.

I don't like Scott Benz' attitude.

I don't think he should be free.

I think he should be in prison.

I don't like Mike Duggins' attitude.

I don't like his attitude as mayor.

I don't like Mary Sheffield's attitude.

There's a lot of people's attitudes I don't like, but they are still elected official with Mike Duggins anymore, but you all are elected officials.

I agree with a lot of people who called in.

I agree with uh Joanne.

I agree with uh owner poplar.

I think some of you are retarded, you gotta be retarded to think that you're going to do us wrong and get our money and just think that we're gonna just lay down and take it, and we're not gonna hold you guys accountable.

Some of you are going to prison.

I'm gonna say it very simply.

Some of you are going to prison.

Avanas Rosh Maul giving all these bribes.

That's not gonna stand up.

The Maroon family giving out these bribes, that's not gonna stand up.

Uh, Eric Sabrie and the fact that he's only taking certain properties and he's not giving out full uh differences when they sell people's houses that have been foreclosed upon.

That is illegal.

There's a lot of things that are legal in the city of Detroit, and you guys are going to be held responsible for it.

So you got to be careful what you vote and who you take money from.

Thank you.

The next caller.

The next caller is legendary Detroiter.

Legendary Detroiter, I believe that's Mr.

Crowley.

Who's already absolutely correct?

Have a great day.

The next caller, William M.

Davis.

William M.

Davis, you have two minutes for general public comment.

Uh good afternoon.

Can I be heard?

Good afternoon, yes.

I like to start off by saying that uh Judge Thomas J.

Tucker in a the final decree uh ending the Detroit bankruptcy yesterday.

Um there was going there was a scheduled hearing this morning at the bankruptcy court at 11 a.m.

That uh Darren Quinn had put in.

Uh you know, ask that the final decree that be ended yet because of the ongoing problems with the annuity claw back.

Umfortunately, I wasn't able to let everybody know that that meeting this morning at 11 was cancelled because we still have some people who go down there.

Uh but I think this gives us an opportunity to in the the city of Detroit City Council can now do more without asking the federal court, bankruptcy court, they could do more to help the city Detroit retirees because we have and continue to suffer.

Uh, this whole grand recovery has been on our backs and continue to be on our backs every month.

Not only did you know, not just the pension cut and the cost of living cut and you know the annuity claw back, which was substantial, which meant that some of us got like a 22.25% uh cut going back to 2013.

You know, so hopefully now more could be done to assist and aid us, and also more could be done about ending this separate and unequal treatment between the two pension funds.

Uh granted, my pension fund is uh has more blacks and brown people, more females, more people to live in the state of Detroit.

Uh, and we it should be a greater effort to try to help us and to equalize some of the differences, you know, try to make it more equitable for those of us in the general retirement fund.

Thank you.

Thank you.

The next caller.

The last caller, madam chair, is caller number ending 534, caller number ending 534.

Caller ending in 534.

You have two minutes for general public comment.

Thank you.

That now concludes our general public comment, and we will move back to the agenda under unfinished business.

Without objection, I'd like to combine line items 5.1 through 5.4, as well as 5.6, 5.7, and 5.9.

These items have yet to receive a response from the administration.

Is there a motion for a two-week bring back?

Motion.

Hearing no objections, those actions shall be taken again.

That is 5.1 through 5.4, 5.6, 5.7, and 5.9.

That now brings us to line item 5.5.

Status of council member Gabriela Santiago Romero, submitted memorandum relative to participatory budgeting expansion.

Is there a motion to receive and file?

Motion.

Hearing no objections, that action shall be taken.

Line item 5.8 is the status of council member Gabriela Santiago Romero.

Submitting memorandum relative to a building, a free fair pilot.

Is there a motion to bring line item 5.8 back in two weeks?

Motion.

Hearing no objections, that action shall be taken.

Line item 5.10.

Status of council member Denzel Anti McCampbell.

Submit a memorandum relative to closing the gap.

Building a Detroit where residents earn what Detroit pays.

Is there a motion for a two-week bring back?

Motion.

Hearing no objections, that action shall be taken.

Line item 5.11.

Line item 5.11 is to amend chapter 17 of the 2019 Detroit City Code.

This is to process claims in excess of $50, but not to exceed $5,000 for the Auditor General and claims against the city.

Is there's a request for a two-week bring back?

Is there a motion?

Hearing no objections, that action shall be taken.

Line item 5.12.

Line item 5.12 is status of the Office of the Auditor General, Citywide Payroll Performance Audit Discussion.

There is a request for a three-week bring back.

Three weeks.

Motion.

There's a motion to bring line item 5.12 back in three weeks to allow for a discussion with the full committee.

Hearing no objections, that action shall be taken.

That brings us to new business.

And without objection, I'd like to combine line items 6.1 through 6.15.

6.15.

Yes.

These are budget memo responses that have been received.

Is there a motion to receive and file?

Line item 6.1 through 6.15.

Awesome.

Motion.

Hearing no objections, that action shall be taken.

All right.

We are now at line item 6.16.

Line item 6.16 is contract number 600 3546-a2 100% city funding.

Amendment number two to provide a description for insurance brokerage services contractor alien insurance services in contract period through June 30th, 2027.

Contract increase amount $3,708,673.

Approve or discuss.

Motion.

Discussion.

Miss Sullivan.

Good afternoon.

Through the chair, we have John Naglik and Christopher Jones.

Thank you.

If we can please promote them.

And when you see yourself on the screen, please introduce yourself for the record.

Good afternoon, Madam Chair.

John Naglik, uh Chief Deputy CFO, Finance Director and Controller for the City.

Good afternoon.

Feel free to proceed in just sharing with us what we have in front of us.

Yes, thank you, Madam Chair.

So the council will remember that the council members will remember that the city has because of it's a required by the charter, and it's also a very good idea.

We have a risk management council.

And this insurance is covered on pages four and five of the report, which uh any members of the public that would like to see the risk management report, it's under the OCFO tab under other reports.

Um but I think the council members will recall that um the city is largely self-insured.

So for all of our automobile coverage, which includes all of our police vehicles, all of our fire vehicles, all of our buses, uh anything that's in the city's fleet, we are self-insured for automobile losses.

We are also self-insured for workers' compensation.

Um that part of um risk management is managed by the human resource department because workers' compensation uh frequently involves them finding out why injuries are occurring and working with um department safety departments to train workers to avoid injuries in the future.

So auto and workers comp are two big categories of insurance that we are self-insured for.

And the third category is we all see um you know, all too often is um general liability.

So lawsuits against the city were also self-insured.

But we do buy insurance, and that's what um this Alliant coverage uh um uh affords us.

Um five years ago, we did an RFP and we hired Alliant.

Um, they're a large uh broker that specializes in public sector, helping public sector entities buy insurance.

So for in addition to the city of Detroit, Wayne County is their client, Huntingdon Place is their client, Detroit Public Schools are their client, the state of Michigan's their client, the Detroit Trans World Airport is a client, and the city of Cleveland's a client, but but we the city of Detroit are a client.

And what that broker does is shops our insurance each year and then binds coverage.

And the risk management report shows what those coverages are.

The largest category is our property insurance.

So all of our city buildings are covered by property insurance.

And council will recall, and you know, some of these losses that I'm going to mention predate both of you.

But there was a large several years back, a fire at a D D dot garage that was devastating.

That was covered by insurance.

A few years ago, there was a large amount of flooding.

So we do buy property insurance, and that's really our largest uh category of purchased insurance.

Um we have one billion dollars worth of coverage on all of our city buildings.

Um in addition, the type of coverage we buy is we have cyber coverage, so we work with um Department of Innovation and Technology to have insurance against any cyber claims that you know we we might need coverage for.

Um we have airport liability, so the city airport has an insurance policy that covers its liability.

Um the city's police helicopter uh is is covered uh both for the the hull of the aircraft itself as well as liability.

Um we're required by state law to have a treasurer bond, so a bond on our treasurer because we collect property taxes for other jurisdictions.

Um we have um the uh fire department's um workboat, um we have we have coverage on that.

Um and um uh and then we also have pollution liability coverage.

So we recently you know we have five million dollars worth of coverage uh as a result of the ongoing um issue with the um dirt and some of the remediated sites, you know, that is a developing story.

Uh we have filed a claim and and we have five million dollars of claim, which is called pollution liability.

So these are very important insurances.

Virtually all of the contract is um paying the actual insurance companies that Alliant identifies for us.

Uh their broker fee is actually a very small amount of the contract, it's $11,000 this year.

Uh so um we fully intend to uh you know again, we don't like coming to council to extend a contract without having gone through an RFP.

Um most of our coverage renews on July 1st.

So we of course have had a lot going on with the transition to new administration and um probably should have started sooner with putting together an RFP with OCP, uh but because we were up against July 1 for our renewal of our policies, uh we're here before you asking for a one-year extension, and as Chris Jones, uh my colleague in OCP will you know indicate um if if council, if we're fortunate enough for you to approve this contract so we can bind our coverage, we will immediately get to work on a new RFP.

Uh certainly Alliant has been a great vendor, they've done a great job for us, but there are uh other brokers, uh some of them are located in the city of Detroit.

We want to give them a chance to you know bid on our coverage and take a look at it.

So we will we do plan to immediately launch into a new RFP, but the one-year extension is to allow us to bind this very important uh insurance coverage in, and as I indicated, most of this $3 million is actually the uh insurance itself.

And and when we pay that, we pay it directly to those insurance companies.

So Alliant is working with us to submit whatever we need to get our quote from these insurance companies, but then when it's time to pay for that coverage, we the city using this budget appropriation and and the contract, if it's approved by city council, we process the payments to the insurance company.

So I hope I haven't gone too deep into it, but I wanted you to see just you know why all the time you hear we are self-insured, but this is one big category of insurances where we we have historically bought coverage and and have needed the coverage, quite frankly.

All right, thank you so much, Mr.

Naglik.

Um I appreciate the thorough response.

I wasn't certain until seeing the table that this was for the premium for uh the insurance coverage.

So thank you so much for sharing that.

Um member waters, any questions, comments?

All right.

Is there a motion online item 6.6?

Oh, I'm sorry.

Mr.

Corley.

Thank you.

Um Madam Chair, City Council.

Just a quick question from Mr.

Naglik.

So the amount is about 3.7 million.

That's before council.

What was the last couple years if you have the information?

Is around the same.

I do.

Um, Mr.

Corley through the chair.

Um, in the risk management report from last year, the the premium for fiscal 24 was 4.1 million dollars.

In fiscal 25, the premium went down to 3.3 million dollars.

Uh a lot of that, as you know, it just depends on what's happening in the insurance industry.

When there were a huge amount of climate-related claims across the country, insurance gets harder to buy and the prices go up, but we we've actually been able to re reduce it quite substantially from that fiscal 24 of over 4 4.1 million dollars.

And so, madam chair, so we're going up though, you know, for this year, about 400,000 or so.

What's kind of driving that?

Again, an insurance market.

Um, you know, there, you know, whenever there are substantial claims from public sector due to you know due to weather, do due to fires, uh, the insurance market gets gets tighter.

Uh uh but Alliant, you know, has done a great job and is indicated has kind of a blue ribbon client list where they do this all the time with all these other big public sectors and really help to get us the best price we can possibly get.

Okay, thank you, madam chair.

Thank you.

Member Waters.

Uh thank you.

Thank you, Madam Chair.

I just want to um was there an RFP.

Um yeah, through the chair to member waters.

Um in 20 in 2021, we did do an RFP and looked at all the brokers that wanted to bid on this and decided on uh Alliant at that time and and this five-year contract that's ending on June 30th of 26, you know, unless extended, uh, that did in fact come from a very robust RFP, which again we we will do again.

If if council grants us this one year extension, we will immediately get to work with OCP to issue a new RFP.

And um again, we've been happy with this vendor, but we learn all the time that when we RFP things we we find maybe people we weren't aware of, and uh even if we can find you know really good people within the city, we like to reward that when we can find it.

I I just I am curious though, um the um the delay, you know, it's almost every time we get these kinds of contracts, it's always yeah, you know, they're delayed.

I mean, I don't know what keeps us from getting that getting this to us sooner.

Yeah, through through the chair to you, member waters.

I mean, I I'm again I don't like to ever be in this position of asking for these one year extensions.

I see other departments do it, and I know how council feels.

Um in this case, you know, you can appreciate we've had a heck of a lot going on with um you know the transition to you know um you know mayor and new council members uh as well as you know the very detailed budget, you know, that you you all just went through.

So we just quite frankly didn't have the capacity to get it done sooner and talk to OCP about um wanting a one-year extension so that we could just bind c you know we don't certainly don't want to have a lapse in coverage.

Uh so again, we we apologize for having to come and ask for this, but we fully intend to do a robust RFP and we'll come back to you again with a multi-year contract with the results of who who we select from that RFP process.

Okay.

All right, thank you, madam chair.

Thank you.

Thank you.

Is there a motion on line item 6.16?

Motion to uh approve.

There's a motion to send line item 6.16 to formal with the recommendation to approve.

Hearing no objections, that action shall be taken.

That moves us on to line item 6.17.

This is from the Office of the Chief Financial Officer in the Office of Budget, submitting report relative to the large events report for quarter three of fiscal year 2025-2026.

Is there a motion to discuss?

Motion discussion.

I believe we have Mr.

Naglik who is joining us for this line item as well.

Mr.

Naglik, are you still there?

Um yes, ma'am, I am.

Um thank you, madam chair.

Um, usually my colleagues from ODFS present this, but I know uh the report is submitted under my name, so I'm certainly aware of it.

Um one of council's requirements for us is that we report on the large events to you quarterly.

Um this is both with our police department and fire department.

Uh so when they are asked to do incremental work beyond the normal policing that we give to any business in the city, um they they have to uh apply uh for the police department, typically it's it's um uh you know, police presence at large events, um directing traffic, making sure people are you know safely getting in and out of the arenas with the fire department.

It's typically when there's pyrotechnics used and you know, large stage shows and they need a permit.

And um, my colleagues in ODFS, you know, Never Snazarko from um for for the police department and Nicole Fambro for the fire department.

Um when when they presented this to council before, have always said that these fees are based on uh us assessing the actual incremental cost to the to these entities, and so uh this report complies with your requirement for us to report out quarterly how much incrementally we're um we're we're getting from you know from these entities that we charge for our police and and fire services.

All right, thank you.

Uh member waters.

Thank you.

Um so this is a flat rate.

Is this a flat rate?

Because it never changed even you know, according to the size of of the event or the duration.

It just seemed to be one flat fee.

Is that are we looking at an increase in a fee at some point or I mean or is it just standard?

What what's going on with it?

I would have to defer to my colleagues in ODFS to answer that specifically.

Um I I know that when I've again witnessed them deliver this to council in previous quarters, they always say that it's based on what actual cost is incurred.

We're not making money or losing money on this.

We're actually charging for their services.

So I I'm not an expert on their fee schedule and how they determine it, but that's the the what I do know about it.

Hmm.

Okay.

But if if if you wanted to bring it back, we certainly could at the next meeting have both of those there um so the two people I mentioned uh Never Snazarko and Nicole Fambro, they are what we refer to as agency CFOs.

So they they report to um the Office of Departmental Financial Services, and they are the absolute experts at what happens within their agency.

So if you wanted to get more specific, I you know would encourage you to you know bring it back and let you know let Mr.

Nazarko and Ms.

Fanbro um, you know, get get more in detail.

Well, maybe you can answer this question then.

So how early are residents notified um about the the whole traffic, the closures, noise, how so I mean and and and I want to ask that question because you know uh there's some folks that live down by at water, and of course we prepare for the grand prix, and they can't sleep.

Yeah, um so through the chair to you, member waters.

I'm sorry, I I I don't know the protocols that you know DPD takes to let people know when there are going to be street closures.

Okay, all right.

If you don't know, you don't know.

Thank you.

Thank you.

Did you want to bring it back or send a memo asking the question?

I could just send a memo.

Okay.

All right, I think it would be good to know how they determine it, especially the police department, how they determine the cost.

Um I know there are flat rates, like I'm looking at the quarter quarterly report with the amounts, the dollar amounts that they charge for each event.

Um, but it would be good uh to the administration to Miss Sullivan to get a breakdown of these numbers.

Would you like a motion?

Send a memo.

Yeah, we'll we'll send a memo.

I I did see the head now, Miss Allian.

Thank you.

Mr.

Corley, did you have anything?

Right.

Member Waters, is there a motion to receive and file line item 6.17?

Motion.

Hearing no objections, that action shall be taken.

Thank you so much, Mr.

Naglik.

Line item 6.18 is submitting report relative to the financial report for the nine months ending March 31st, 2026.

Is there a motion to discuss?

Motion.

Discussion.

Here he comes.

I believe we have Mr.

Johnson here, Ms.

Agoy, and we have not sure if Mr.

Naglik is going to join in on anything.

Thank you, Madam Chair, and Councilmember Waters.

I am Donnie Johnson.

I'm Deputy Chief Financial Officer and Budget Director for the City.

Afternoon.

Good afternoon.

And I'm Valeria Goli, City Treasurer and Deputy CFO within the office of the CFO.

Good afternoon.

Do you need permission to share your screen?

I do, and I raise my hand so that it can find it quicker.

Thank you.

I know that's helpful.

And Mr.

Johnson, I know we go over these quarterly.

Um or however often uh monthly.

We do have a quite lengthy agenda.

If you can just give us a summary, we would appreciate it because I think we're going to have a long discussion about one of our line items.

Understood.

Yes, ma'am.

Um I will move expeditiously through this presentation.

Um this is the financial report for the nine months ended March 31st, 2026.

Um, as a um just highlight to note that on April 30th, the city did submit the approved FY27 budget and four-year financial plan to the FRC.

It was accepted by them.

We have presented to them the budget and all looks on track for our ninth waiver.

On our budget versus actuals, um, we continue to see um year to date uh municipal income taxes continue to run below expectations as expected.

Wagering taxes are overperforming as we've come to expect at this point.

Um, state revenue sharing is down again as we expect.

Um, obviously, Treasurer Goalie will be able to provide more details on the revenue side.

On the expenditure side, we are seeing a surplus in salaries and wages and employee benefits.

Um that is driven primarily by vacancies.

In March, you will see for the period report that there was a deficit for the period, and that is a result of um one time.

This was a question from LPD specifically, but that was a result of the one-time lump sum payments that were made to union employees whose collective bargaining agreements were completed and who had retroactive payouts.

So for that monthly budget, we did overexceed the budget, but on the course of the year, we're in very good shape.

Um, professional contractual services, we are 15.1 million dollars under budget.

Uh I do expect that to tighten up as we get to the end of the year when a lot of our vendors begin um let's just call it catching up on their invoices to the city as we reach the end of our fiscal year.

We will usually receive many millions of dollars of invoices right toward the end, and we get those all added in and accrued.

Um otherwise, we are generally on track.

We continue to overperform on revenues year to date, 38.8 million, 19.1 million underspend on the budget year to date, leaving us an operating surplus at the end of March of 57.9 million dollars.

When we project out the year, obviously the revenue projections stay static because they are the result of the February revenue conference, so we are still projecting that 13.8 million shortfall on our revenues.

Um, how we are still projecting a 16 million dollar underspend on our expenditures, giving us a 2.2 million dollar operating surplus.

Add that to the 42 million dollar income tax reserve that looks like we won't need to tap so far this year.

Cross our fingers, Lord Will and the Creek don't rise.

We will have a 44.2 million dollar operating surplus at the end of this fiscal year.

I do expect over the next couple months in this expenditure projection section to start having more fine-tuning on those numbers.

We're hitting that last quarter of the fiscal year.

Now is when I can really start doing a lot more accurate projections of where we think the expenditures are gonna hit.

But all in all, I do believe we're gonna end this fiscal year in the black.

Um, and I don't really have any meaningful concerns in that regard.

No real updates on this slide, so I'm gonna proceed on to the personnel um updates month over month from February to March.

We did see an increase of 31 total FTEs across the entire city.

Um, our primary um movements in the personnel space was police and fire.

Police had a large drop of 33.

This is primarily students who did not either um matriculate out of the academy or who did not were not retained with the city for some reason or another.

Um, I do believe there were a number of retirees.

I don't know the number off the top of my head, but I do believe retirements, we did have some retirements uh in the police department as well.

Fire department 37.

We did have an academy class come in, so we see a lot of student firefighters, some of coming onto the books.

Other than that, um relatively normal movements, transportation is down 21.

This is primarily students who didn't uh make it through the training program to become bus drivers.

Um other than that, we are going to start seeing the general services seasonal head count there on the far right.

That's you're gonna start seeing that go up.

We've begun to staff up for seasonal activities, both recreation, grounds maintenance.

So we're up 60 month over month.

We're gonna see that continue to grow over the next few months while they staff up on their seasonal side.

Other than that, no really big ticket news on the personnel side.

That being said, I'm gonna turn it over to Treasurer Goalie to go through the revenues.

Slide eight looks at income tax collections.

Um, as Mr.

Corley identified in his email, um we are about 10 million higher than we were at the same point last year, and um it is due to higher withholding and higher individual offset by the lower corporate.

Uh we do expect that the shortfall projection of 56.9 million for income tax collections may have been a little um conservative.

We don't know the amount yet, but we will be working with LPD and Auditor General when we do the internal um review of our revenue estimates that happens every May.

Um I will just take one moment to address Mr.

Corley's other questions on revenue since they were covered by um Mr.

Johnson's slides.

Uh wagering tax, we do expect that it will end the year slightly higher than we projected in February, just maybe one or two percent.

Again, we'll look at that with you at the uh revenue estimate review, but we expect utility user tax to remain very close to the February estimate.

And there was also a question from Mr.

Corley that um you all saw regarding uh revenue sharing, and he's asking whether the results of the revenue um the state level revenue share um revenue estimating conference, which projected lower uh sales tax revenues at the state level will impact revenue sharing at the city's level.

And we do expect there to be a slight revision downward, but we don't expect it to be that much.

Um our um economist is expecting one to two percent, but we will be working with LPD and the auditor general on those uh on the review of those estimates.

The next page is our cash position, um, which is strong, the total general ledger cash balance of 1.6 billion compared to last year, it is a lower balance, but that's due to spending of ARPA dollars, the same things we talk about in the month, the legacy pension payments, etc.

The next page is um accounts payable.

Oh, I missed operating cash, sorry.

Umperating cash activity is strong, and we have no concerns here.

The next page is accounts payable, and um you can see under the AP aging, the current month, there are seven invoices, 31 to 60 days, and two that are 61 or more days.

I did want to uh I did follow up, just ask them when does the clock clock start for when they count um how many uh days uh it takes to pay an invoice and the clock starts for the um AP aging when the supplier uploads the invoice into Oracle.

For example, if the invoice has a date of February 1, 2026, and the supplier does not upload it into Oracle until March 1, 2026.

The aging for reporting begins on March 1st.

Um the next page is uh the property tax collection rate analysis.

Um not much change from the year before.

Uh I did want to note if you do notice that commercial the um adjusted tax role is lower, and that's because even though taxable values are going up, um the uh decrease in the debt millage rate going down impacted that.

Um, the next page is our investment portfolio summary.

Um the right hand side we we do it by categories, and the right hand side gives detail of performance summary and a total portfolio gains of 41.6 uh 8 million.

Um the slide 14 titled Pension Payments.

This is a requirement of the Financial Review Commission that we um provide this slide to demonstrate that we have made um the payments on time and uh we have done so.

The final uh slide 15 and the detail that follows shows is our report on outstanding debt.

If you look at the column principal outstanding, you can see we have approximately 1.5 billion in debt outstanding that includes unlimited tax general obligation debt for which the debt millage is used to pay, uh limited tax general obligation debt and Michigan transportation fund bonds.

As Mr.

Corley pointed out, we no longer have HUD Section 108 loans outstanding.

Um I don't know the date, I think it was April.

Uh those have been paid off and um previous uh when they were outstanding CDBG funds were used to to repay those loans.

And that concludes my report.

And that concludes the presentation.

All right, thank you so much.

Um I do have two questions.

So when you uh take a look at the staffing levels, there's still a significant number of people under ARPA.

Do we have a sense of when those numbers will come down significantly and if they are if we have the funding to be able to shift them to departments?

Um so we would start to I think we're gonna start to see those positions coming down over the summer.

Um I think uh we're we know that a number of pro programs and projects have started to close out.

Um the ARPA reprogramming resolution that was um wet at formal yesterday is sort of indicative of that that number these programs are starting to hit their their they're coming to an end.

A lot of them are coming to an end over the summer, during the summer, about middle of the year.

We tried to target the middle of this calendar year for the end point for a lot of programs because that gives us around six months to close things out before that December 31st deadline with with the federal treasury.

So I would expect that over the course of the summer we will see that start to decline a lot quicker.

Um in terms of retaining all of the ARPA staff.

I I I can't say for sure whether every single person is currently on ARPA would be retained.

It it may not be their desire to stay, to be honest.

I mean, some may be willing ready to move on to other opportunities.

However, we do have a lot of vacancies across the city, and so we are directing people to those spaces.

So, you know, if they're working in a particular department, odds are that department probably has vacant positions that we're more than happy to have those folks slot into.

So I think we would be able to accommodate quite a few people.

Okay.

All right, thank you for that.

Um, and then my other question is is around collective bargaining bargaining agreements.

Do they typically um want to say rotate, but do we have a few that are being negotiated in any given year so that not all of them are being negotiated at any one time, which can pose a significant um challenge to the the overall budget.

Do you know of any that are larger that are in current contract negotiations?

And do you anticipate the negotiations having an impact on the budget?

Um so I'll start with sort of the spirit of the first part of the question, which is you know, do we how many do we have generally up each year for negotiation or consideration?

It varies year by year, so we have quite a number of of bargaining units in the city.

Um, and so there very few of them are synced up with each other.

They're kind of all on their own cycle.

Now, sometimes fortuitously we end up kind of at least in the same year where we're working on something.

So this year in particular, we've had a a pretty sizable number of collective bargaining units.

Most of them have been smaller units, somewhere between, you know, I would say anywhere from 25 to a couple hundred members.

Um the largest negotiation we have ongoing right now is DFFA, the Detroit Firefighters Association.

Um that is a very substantial collective bargaining agreement.

We expect it to take a while to complete, um, and it will certainly have an impact on the budget.

Um it is something that we've been anticipating and preparing for for a couple years.

Okay.

So when our larger ones like um DFFA um uh DPOA, the Detroit Police Officers Association, the Detroit Police Lieutenant and Sergeants Association, as we we know their schedules.

So we, you know, my my team and the labor relations team, obviously, and HR, we keep a schedule and we kind of know who's coming up and when we look ahead to each every time we do budget development actually, we go, okay, who's next, who's coming up next year, the year after, and we start to put in place provisions to make sure that we're ready for for the eventuality.

You never know what you're gonna get, so you do your best to anticipate it, but um we generally do try to anticipate that through the budget process.

Okay.

And so your team is involved in those negotiations?

We we do not participate in the negotiations themselves.

We do the fiscal analysis and often that does take the form of it can be very um granular and very um day to day meaning they're having a negotiation on Monday they may come out of that session and shoot an email over to my deputy who handles a labor and calculations my deputy along with two members of the team and they go before the end of today can you run these numbers and see what that means and then we do that we turn it around they go back into negotiations and we do that sometimes days and days and days until we get to numbers that we can all agree on.

So that's our role in the process we don't actively negotiate that's not our role but we do a lot of the back end.

You're preparing the budget for the negotiations.

Basically yes.

All right thank you.

Member Waters all right so good afternoon.

Good afternoon what what happens if wagering um declines um are we too dependent on it else you do well I mean from a policy perspective I mean I can say you know are we too dependent on it?

I don't think so because we do still um budget conservatively with regard to the revenue when we do our revenue conferences we kind of under budget at the revenue conference so we don't assume it in our baseline revenues.

Everything we receive over that every time we talk about these reports and how they're overperforming it means they're overperforming against what we actually budgeted for.

So we keep our budget our revenue budget very conservative because we don't want to become we don't want to be have run that risk of suddenly that coming out so it is a it is a thing that we you know I know uh Valerie here will will say it's a thing that my shop and her shop often kick back and forth about well how much exactly should we estimate for the gaming revenue because of course I always need another million or so in something and then they're always reminding me no no no we need to stay conservative and they're right we do need to stay conservative because anything could happen with gaming.

And through the chair we do in the revenue estimating we are generally conservative because it is based on behavior and it's considered a volatile uh tax revenue there's no legal mandate to gamble there is a legal mandate to pay taxes and so that's the difference between those two revenue sources.

Well let's see now speaking of behavior so how we tracking the social impact I'll associate it with increased gambling activity.

Social impact and costs in fact so through the chair to council member waters um I don't know that the city is actively engaging in any kind of research on that but I do know that there are other organizations that do and I do know the state of Michigan keeps an eye on that.

One thing that you know we know the state funds and and keeps operating is obviously the helpline so for for um folks who believe they may have a gambling problem and that group also is looking at numbers and statistics to figure out how they should target their campaigns where they should go where they're seeing increases in activity where they might be seeing those things the state's kind of better positioned because they have access to a lot of data that we don't really have access to because it's also important to remember that a lot of our revenue that comes into the gaming tax isn't actually coming from Detroiters it's coming from Michiganders generally and so you know someone in you know um up in you know bad acts can be on their phone gambling via the MGM casino that revenue is our revenue even if they're not within the borders of Detroit.

Now if they leave the state it's not ours anymore but um it's geofenced but um I think that's also a really important thing to note is that the the wagering taxes do not fall the burden does not fall exclusively on Detroiters it is spread statewide and we do find that a lot of the outstate gambling is that's a big source for us.

Folks love the apps you know right thank you of course Mr.

Corley Thank Madame Chair I'll go uh real quick which is the time appreciate the responses to the questions um what's good is that if we aren't going to end up with higher revenue for income tax and casino uh wagely tax that would offset just like um pending um downward um collections and state revenue sharing so that's good to hear um we had uh the payout for collective bargaining um uh arrangements uh recently so I'm just wondering what the projected salaries and wages um target for the year 10 million point five that might be too optimistic on the on the spinature side I don't know so that uh through the chair sorry uh to Mr.

Um we had uh the payout for collective bargaining um um uh arrangements uh recently so I'm just wondering with the projected salaries and wages um target for the year 10 million point five that might be too optimistic on the on the spinager side.

I don't know so that uh through the chair, sorry, uh to Mr.

Corley.

So that projection of 10.5 takes into account the lump sum payments that have already been made because it's taking into account all the activity up through this report.

I would say that this is my guess is salary and wage number that might actually go up a little um as we see vacancies continue.

One of the reasons that drives that is that um the C this is gonna sound a little counterintuitive, but because seasonals are not super highly paid, but there are so many of them.

Seasonals have been an increasingly difficult position to fill.

Um, and so we know that we're budgeted for you know uh almost a thousand seasonals between general services and DPW.

Um, however, they're almost never able to get up to that full total early in the season, and so that lag in that that filling all those spots that actually ends up benefiting us as we get later in the year as sort of a late breaking savings.

It's a savings we don't really want to be honest, because we kind of we need those seasonals to do the to do the things we want to do.

Um, but from a from a budgetary standpoint, um I I can usually count on a little bit of a savings there.

Um so if anything, I would expect the 10.5 to possibly go up a little.

Um but I mean I'm I I'll always say anything can happen.

You know, anything we know now, take nothing for granted, anything can happen in this world.

So I appreciate that, Mrs.

Johnson.

Um I do share the concern that um council member waters raised about the potential you know impact on individuals that that are gang gaming.

You know, I'm I'm right now reading an article.

Uh a I'm a member of the AARP, I think it is called, and and uh recently they have a real good article on you know the number of seniors are and the the number of seniors throughout the country, there's an increase in them gaming online.

Um and so it would be good to to hear maybe from the Michigan Gaming Control Board, I think it's called to see if they track you know um data on compulsive gamer gaming um because you know if they're you know we have a lot of seniors, you know, obviously Detroit, and so it would be good to see if um Mr.

Gold Goldie or Mr.

Johnson can reach out to the Michigan Gaming Control Board to see if there's Detroit specific information on um gaming because you know it's real, it's real.

Um so thank you, madam chair.

Thank you.

And to that, Ms.

Goli, uh I do have a district four resident who works for the Michigan Game Control Board, so I can certainly um help facilitate that.

And I will I will also um go back and I will um you know bring this uh topic and these concerns to both um director Abazid and um uh uh the H and uh for the health department as well as um the HHFS, the human homeless and family services department.

Both departments may have some kind of connection to the kind of service organizations or groups that might also be able to contribute information to this.

So I'll bring it back to them as well.

Thank you.

All right.

Uh thank you all for that.

If there are no additional questions or comments, is there a motion to receive and file line item 6.18 motion hearing no objections, that action shall be taken.

We appreciate you.

Thank you.

Thank you both.

Moving on to line item 6.19.

Line item 6.19 is a request for a neighborhood enterprise zone certificate for the construction of a new single-family house at 2455 West Forest Street in the Core City Neighborhood Enterprise Zone Area.

Good afternoon, Mr.

Gulak.

Afternoon, Madam Chair, Chris Gulak, CPC staff.

And we may be joined by the petitioner.

Uh her name is Karen Kelly.

I'm not sure if she's raising her hand in the audience.

Did you say Karen Kelly?

Yes, Karen Kelly.

Okay.

Hi.

Sorry, I don't know how to put my video up start video.

Um there we are.

Hi.

Hello.

Uh Mr.

Gulat, the floor is yours.

Thank you, madam chair.

I have a brief um slide for this request.

Staff did submit.

Can you see my screen okay?

Yes.

Thank you.

Staff did submit a uh a memorandum and a resolution for your consideration.

Thank you, madam chair.

We did receive a an NAZ certificate application from the clerk's office for your consideration.

It's for to build a new single family house.

It's located um at 17th and forest at the southeast corner, which is referred to as the core part of the Core City neighborhood area, west of Grand River, south of Warren, north of Buchanan, shown as this red dot.

Zooming in closer, it's the southeast corner.

Unfortunately there was a house there unable to be saved and it's either slated for demolition or already been demolished.

The petitioner bought this land from the land bank.

So you can see the um uh house here um this is in the um core city NEZ which was established way back in 2004 and that has about 144 acres it's shown as this green box on the screen so the land is zone R2 two family residential uh the petitioner bought the land from the land bank um in December 2025 so the petitioner is Karen Kelly who's with us here today uh she's proposing to construct a new two story house for her family's residence the petitioner and her husband are going to be the general contractors um so the uh prices aren't as high as you normally see uh but the estimated project cost to build is 31500 but like I said they hope to do some of the work themselves to save save on cost uh the house would have about 2800 square feet and three bedrooms it would have an attached garage at the rear of the house and a rear parking pad uh for accessibility the house is a private residence so it does not require accessible components however the petitioner indicates they will have a a first floor first floor bedroom and due to the modern design of the house um there are no steps to access the house from the outside so a person in a wheelchair could um access the house um the petitioner submitted the application in April to the clerk's office they have not applied for building permits yet so they meet this they meet the um parameters of the NEZ Act here's the site plan showing here 17th street on the left here and forest on the north side it's a modern house it's a it's a C shaped house here shown it's been reviewed by the planning department um there's a a C shape internal internal courtyard here um so these are some of the uh this is um I believe looking south from forest at the design and then looking from uh looking eastward at the uh from the street would be this elevation um and then here are some of additional elevations from the south looking northward from the south and then at that courtyard uh looking westward so the staff is confirmed it's in the NAZ zone uh staff's recommended approval and a resolution is submitted for your consideration uh thank you madam chair thank you miss kelly anything you'd like to add no um if you have any questions I'm here to answer but no there's nothing that's pretty much it it's a little bit smaller that the outside envelope is 2700 square feet but the inside's like about 22 so it's not quite that big all right thank you um I will just ask uh very quickly so is the site currently vacant land or is the structure still there it's being demolished rehab already demoed it was a burnout the house had burned from the inside out um so we demoed it already okay very recently and you and your family are planning to live in the property or are or are you building it to sale no no no live absolutely okay do you a lot of work to build a house definitely living in it do you currently live in the city I do okay all right um all right thank you member waters any questions um well just a couple yeah the timeline for the construction is what um as soon as we can pull permits and I'm still waiting um for one more meeting with BZA we're asking for uh a five foot variance from a 20 foot setback to a 15 foot setback that meeting's taking place on June 8th um we expect that we'll get it since it's typical for the neighborhood um and others have received the same allowance um so as soon as we get that uh we intend to start building and as quickly as we can get it done basically um obviously dealing with subs and uh having um people in the government come out and check along the way all those things take time but we're planning on being as as quick as possible about it and this for a family of what it's my husband and I my daughter

Um, and others have received the same allowance.

Um, so as soon as we get that, uh we intend to start building and as quickly as we can get it done, basically.

Um, obviously dealing with subs and uh having um people in the government come out and check along the way, all of those things take time, but we're planning on being as as quick as possible about it.

And that's for a family of what?

It's my husband and I.

My daughter does live in the city as well.

Um, it's possible our parents are both getting older, and so it's possible at some point in time, you know, his mom or my parents might move in as well.

Oh, well, I was asking because I was a little confused about the 800 square feet, and then you said something else, but that's that's pretty small, isn't it?

No, no, no, uh 2200 square feet.

Oh, you said 22.

Well, get the 800.

I don't know.

Okay.

All right.

Well, thank you.

I will be kind of small.

Thank you, Madam Chair.

Thank you.

Uh, just very quickly.

Do you would you happen to know the parcel size of the lot?

It's a double lot, so it's uh 60 feet by I think 115.

Okay.

We've combined two lots over there.

Got it.

And is it two stories?

It is in parts.

Some parts it's one story and some parts it's two stories.

Interesting.

It's got a an angled roof, so only one part of it's a little bit higher than the other.

Like it's like about 21 feet on the one side, and I think goes down to about 17 going into the um courtyard area.

Okay.

Um, and I believe it was indicated that there would be a bedroom on the main floor.

Is there a bedroom and a bathroom?

Two bedrooms and and two and a half bathrooms on the main floor.

Okay.

All right, that's good for accessibility purposes for sure.

Absolutely.

Um, and can you just share what part of the project are you and your husband maybe helping?

Uh, general contracting, doing a lot of the interior work.

Um, we built out a lot of kitchens before.

We've done tile work, um, a lot of the woodwork and things, and the interior of the house is being built um with a proprietary brick called an omniblock.

Um, so it's like a long, it's kind of like a CMU block, but it's the shape of it's more like a brick, and it's going to be burnished on the inside and out.

So that's going to be the final product, the finished surface on both sides.

So there's not going to be any drywall work.

Um that's pretty much gonna be what it's made out of in the in the exterior and interior.

Inside goes like a foam insert, so that's where you get your insulation from.

So it's a very simple structure, and um a lot of the things that will be built inside we we're capable of doing and um are planning on doing ourselves.

Okay, I'm sorry, maybe um I missed this.

So you said I heard you talking about the the block, the brickwork.

Um, where does the insulation go if you don't have any drywall on the interior?

So the block itself is actually a very thick block, it's eight inches deep, and there are these inserts that go inside of the block itself, and so you can expose the interior and the exterior, and you have the insulation inside.

It creates an envelope inside.

It's um a brick called Omni Lock.

The company's called Omniblock.

They've um been around a long time, and there are actually some other structures that have been built with the block in Detroit.

Interesting.

Okay.

All right, thank you.

Uh member Waters, you had an additional.

Yeah, I may as I listen to her um discuss the various shapes of of this one house.

I um I wondered if if the roofing would have various shapes as well, or is it somewhat the same?

I mean, the roof is so far is gonna have a dip.

I mean, what?

No, no.

Um, the the structure that's a that's like two stories is gonna be a slanted roof.

Slanted, okay.

And that will and then um the two, there'll be a parapet wall with a not flat but curved kind of roof for the other two areas.

Okay.

Sure.

All right, thank you.

Um there are no additional questions.

Is there a motion on line item 6.19?

Motion to approve.

There's a motion to send line item 6.19 to formal with the recommendation to approve.

Hearing no objections, that action shall be taken.

Thank you so much, and good luck with BZA.

Thank you.

Appreciate it.

Moving on to line item 6.20.

Line item 6.20 is a neighborhood enterprise zone certificate request for the construction of three new single family houses at 4244, 4254, and 4260 4th Street.

This is in the midtown neighborhood enterprise zone area.

Is there a motion to discuss?

Motion.

Discussion.

Mr.

Gulak.

Good afternoon again.

Thank you, Madam Chair.

Chris Gulak with the City Planning Commission.

We're joined by the petitioner who's been here before, Lucas Bondi.

Yes, that's correct.

Lucas Bonnie, good afternoon, then.

Thank you so much for your time.

Yeah, Lucas Foundry Bondi's construction.

Good afternoon.

Mr.

Gulach, you have the floor.

Thank you, Madam Chair.

Uh yes, Mr.

Bondi submitted uh three um any certificate applications to the clerk's office and we're forwarding forwarding to city council for your consideration.

This is to build new three new single family homes in the midtown area.

Can you see my screen okay?

Yes.

Uh this red dot shows the map.

It's on the east side of uh 4th Street just south of County Met, north of Willis, just east of the lodge, some vacant land there.

Um Mr.

Bondi purchased some lots there, and he's interested in constructing some infill single family housing.

Uh this shows a 3D view of uh the east side of 4th Street.

There's a mix of you know multi-family, single family, and commercial in the area.

This shows a street view of the lots.

So zooming in, this isn't well, this is in the midtown NEZ, which was created way back in 1999, has about 86 acres.

It's shown on the map here and outlined in turquoise.

Um so the properties are vacant.

There's own R2, two family residential.

Uh the owners and the petitioners of these LLCs, which are which are owned controlled by Mr.

Mr.

Lucas Bondi of Bondi Construction and Design Corp.

And Mr.

Bondi has um uh renovated numerous properties in the city as well as constructed new units.

Uh he's also he's worked in um Corktown, North Corktown, and in this area.

Um so the proposal here is to go construct three new single family houses for sale, and then the new owners could could apply for the uh uh NEC certificates to the assessor's office if they're approved.

So each house would contain about 1700 1700 square feet, they'd be two stories and have three bedrooms.

Um Mr.

Bondi said the estimated construction cost per house, just the hard cost is 250,000.

This hard cost and soft cost that they each one costs about 500,000.

He hopes to sell them for about 599,000.

Uh regarding parking, they do propose a detached garage at the rear of each uh house accessed by the alley.

Uh regarding accessibility, uh Mr.

Bondi said they indicated there'll be standard accessibility features for a single family house, but because of the narrow lots and the two stories, there's no exterior accessibility features.

So here's some uh drawings for the proposed houses.

This is the one on the corner, be two-story infill.

It shows the elevations.

Uh then the second one is shown on the screen, and then the third one is shown on the screen as well.

So two stories long rectangular houses.

Um so the staff confirmed it's it's in the NEZ.

Established recommended approval, and a resolution is for the council's consideration.

Thank you, madam chair.

Thank you.

Mr.

Bondi, anything you'd like to add?

Um, no, I think uh yeah, as usual, um, Mr.

Gulak covered it fairly well.

Um, yeah, just to kind of summarize again.

Uh plan is to build uh these three stack houses and list them on the uh market at market rate uh to go to the end users uh so hoping to sell the individuals as their primary residences.

All right, thank you for that.

Um so Mr.

Bondi, the can you share are these modular builds?

They are not modular, no, they're gonna be stick framed, uh two by six exterior walls.

Okay.

Um, and so it looks like from the um drawings, the pictures that were shown, that they all have one step to get into the building.

Is that correct?

Yeah, I would say um, I'm just thinking right now.

I think it's actually gonna be two rises.

So there's two courses of blocks, they're the raised slabs.

Um, so I do think there's gonna be two uh between one and two eight inch steps.

And you have a walkway pathway from the sidewalk leading up to that.

Yes, yep, there'll be a uh four foot walkway from the sidewalk to the front porch of each unit.

Is there a reason why you wouldn't do just a ramp that just slightly with a slight elevation that gets you into the unit?

No, we can do that.

Um I think um I think the grade on each of those would permit us to do that.

We could definitely do that.

I would certainly encourage you to consider doing that.

Um, one of the things that I know gets raised here uh in BFNA is about accessibility.

Uh and to be able to do it with an existing structure becomes a little bit more challenging than with a new build.

With the new build, you can certainly do the um uh a ramp, if you will, that just someone could just walk into the house as long as there's a bedroom and bathroom on the main floor.

Are you intending to have a bed and a bath on the main floor of each one of the properties?

So there is a bathroom, but not a bedroom on the first floor.

Um, and to your your ramp uh point, we can do that on these.

I could commit to to doing a ramp.

Okay, into each unit.

So they're all built like colonials.

Correct.

Yeah, it's uh three bedrooms, second story, and the first story is uh living room, kitchen, and dining with a uh yeah, bathroom off to the side.

What's the rough square footage on the main floor?

It's roughly 900 square feet main floor and roughly 900 square feet uh second floor.

Okay.

All right, thank you.

Member Waters.

So good afternoon.

So how quickly are you able to sell your homes on average?

How many of you done in total?

Yeah, I mean um quite a few in the city of Detroit.

If I was the guess, uh probably 70 or maybe 80 homes in Detroit.

Um over the past uh five years, like we saw back in 2020 and 2021, they were selling before we were done even.

Um, and the last uh few years has been a little different.

Um I would say the average home um has taken us, I'd say six months after completion to sell, like on average in the last three years.

Yeah, but it's it is a little difficult of an environment right now with interest rates, um, economy, you know, gas prices.

Um so none of these are sold right now or pre-sold, none of them are.

Um, but yeah, it's so it's been kind of a balanced market, but it's had more challenging than years past.

You do you still have some of the uh previous ones uh on their sale on the market?

How many would you have told?

Yeah, so uh the last project that I completed was Sycamore Park, it's in North Corktown.

It was uh 10 unit townhome project, and we completed it February 2025, and we just closed on the last unit uh earlier in May.

That was the last unit we had uh for sale.

Now remind me again, how much are they selling for?

These are our goal is to try to sell them for $5.99.

Have you been getting that?

We haven't we haven't had a no, I haven't had a development that we've had prices that elevated.

Typically, I've been a town home uh builder, most of our okay, our townhomes are selling between like you know 290 to 500,000 max.

Most are like in the threes and fours.

Okay, the the others.

Um then just one other thing, and I was listening to my colleague talk about the entrance.

And one entrance, maybe I misunderstood, but uh are they kind of like roll houses or something?

It you know, you have one interest.

What about the exits?

Yeah, so no, they're um they're single family homes, so they're gonna stand alone, they're gonna be about 10 feet apart on the exterior.

The way you were describing them, I I thought somehow another they might have been attached.

So, but okay.

All right, that's what I recall about that.

They said single family homes, but then during the conversation, it sounded as though they're gonna be something similar to something else.

So okay.

Thank you.

Thank you.

All right, thank you, Member Waters.

If there are no additional questions, is there a motion on line item 6.20?

Motion to approve.

There's a motion to send line item 6.20 to formal with a recommendation to approve.

Hearing no objections, that action shall be taken.

All right, good luck.

Thank you so much.

Thank you, Mr.

Gulach.

All right.

Without objection, I'd like to combine line item 6.21, 6.22, and 6.24.

These are there's a scribner's error on line item 6.21.

6.21 is the downtown development authority operating budget for fiscal year 2026.

2027.

6.22 is the operating budget for the same fiscal year for the 8 Mile Woodward Corridor Improvement Authority.

And 6.24 is for the local development finance authority.

Is there a motion to approve or discuss?

Motion to approve.

There is a motion to approve line item 6.21, 6.22, and 6.24.

They are all very basic uh operating budgets that have been provided to us.

There is a scrivener's error on 6.21.

So should it be as amended?

It says fiscal year 2027 through 2027.

Yes, 26.

Okay.

Is there a correction for so motion to approve um 6.221 as amended 2026 through 2027?

Thank you.

And madam chair.

Mr.

Corley.

Thank you.

For line item 6.22.

Um the cover letter in the resolution was not submitted, but it has been submitted by the um DGC.

So the clerk's office should have it.

So this will let you know.

Thank you.

Mr.

Clerk.

Yes, we did receive it.

Thank you.

Thank you.

And it will be available for the general public to view on the website as well, correct?

Correct.

Thank you.

All right.

There is a motion to send line item 6.21 as amended to formal with a recommendation to approve.

Hearing no objections, that action shall be taken.

There has also been a motion to send line item 6.22 and line item 6.24 to formal with a recommendation to approve.

Hearing no objections, that action shall be taken.

And now line item 6.23.

You'd like for me to go to 25 and 26 and then uh come back.

You don't mind, madam chair.

All right.

Um line item 6.25 is council member Scott Benson submitted memorandum relative to data center tax revenue impact analysis.

Is there a motion to refer line item 6.25 to the legislative policy division and bring back in three weeks?

Motion hearing no objections, that action shall be taken.

And line item 6.26 is council member Angela Whitfield Callaway submitted memorandum relative to request for a resolution promoting property tax rate reductions.

Is there a motion to send line item 6.26 to the legislative policy division and bring back in two weeks?

Motion.

Hearing no objections, that action shall be taken.

And now we shall review line item 6.23.

Line item 6.23 is City Club Apartment CBD 1501, Washington Boulevard payment in lieu of taxes.

Is there a motion to discuss?

Motion to discuss.

Discussion, we have several folks joining us in person, and then we have a couple of people joining us virtually, I believe.

Please introduce yourself for the record, those that are in person first, and then we will turn to those that are joining us virtually.

Afternoon.

Michelle Oberholzer Zimmerman, Housing and Revitalization Department.

Good afternoon.

And folks on the screen, please introduce yourself for the record.

Rebecca Labove, Housing and Revitalization.

Good afternoon.

Matthew Walters, Walters Group.

Afternoon.

Liz Rogers, legal counsel for the developer.

Jake Osterman, Planner and Real Point here on behalf of the developer.

Good afternoon, and thank you all for joining us.

Who would like to get us started?

I will to the chair of City Club Apartment CBD is a mixed-use commercial and multifamily residential development located at 1501 Washington Boulevard, Detroit, Michigan.

The property currently benefits from a commercial rehabilitation exemption certificate as well as a neighborhood enterprise zone certificate.

The property is currently in receivership.

However, downtown Detroit owner LLC, a Delaware limited liability company is seeking to acquire the property out of receivership and utilize the City of Detroit recently adopted pilot payment in lieu of taxes incentives.

And amending the existing PA 147 and PA210 resolution, which will go before PED planning and economic standing committee tomorrow.

These actions are all intended to support the project long-term financial viability, continue operation, and overall success.

Thank you.

I would like to pass it to my colleague Michelle.

Thank you.

To the chair.

This development includes 288 residential units, which are all included in the current NEZ.

There are also two commercial units, which are part of the PA210.

Downtown Detroit owner LLC has applied for the City of Detroit's expanded pilot, which would cover 224 of the residential units, all of which would be restricted at 120% of AMI under the pilot.

This is considered workforce housing.

And due to the proposed average restriction, this project is required to obtain both the approval of housing and revitalization department as well as city council before it can receive the pilot.

The HRD underwriting team has reviewed the project financials and has proposed a pilot rate of 7% of annual rental revenue.

HRD has reviewed the developer's application and issued its conditional approval as of last Friday, May 15th.

As the pilot would cover units that are currently part of the NEZ, the NEZ would shrink to the remainder of the residential units 64, and that would include 51 market rate and 13 units restricted to 80% of AMI.

The PA210 would also shrink in the portion of parking lot and common areas associated with that abatement.

As part of the pilot application, a tenant retention plan was developed to establish protections to existing residents, including residents of units currently restricted at 80% AMI, as well as residents of market rate units that are becoming restricted.

All low-income legacy residents will benefit from tenant protections that limit rent increases to 3% annually, no more than 3%.

If these resolutions are not approved, our understanding is that the receiver intends to proceed with mortgage foreclosure.

If these resolutions are approved, downtown Detroit owner LLC intends to move forward with acquisition, and the property will exit receivership.

Before the pilot can take effect, the new owner would have to execute an affordability agreement with HRD and be approved for a certificate of compliance on the property.

The pilot and abatement modifications are expected to go into effect in the 2027 tax year.

In closing, HRD supports this plan.

We believe these resolutions represent a positive stable solution to stabilize the property to extend tenant rent and income protections, avoid the negative consequence of foreclosure while maintaining property tax revenue for the city.

And we welcome your discussion.

Thank you.

Thank you.

Does anyone on the screen have any additional uh Ms.

Chair?

We would like to present a few slides on the property if acceptable.

Sure.

Who is presenting?

If you can raise your hand so you can be promoted.

Who has the slide presentation?

I should say.

I do.

Okay.

Mr.

Austin.

We will promote you as a panelist so you can share your screen.

Can you guys see my screen?

Yes.

Yes.

Okay.

Thank you so much.

I will kick things off.

Again, Matt Waltos with the Walters Group, uh consultant representing the development team.

Thank you so much, members, Member Johnson and Member Waters for having us here today, and to the HRD team for accompanying us to present this project.

So as you see, this City Club CBD is located at Washington Boulevard and Park Avenue in the CBD in the downtown neighborhood across the street from Grand Circus Park.

It is a 288-unit building that was first construct started construction in 2017 and obtained a C of O in 2021.

We have with us today Jordan Sassoon, who is the representative of Sequel, who is the development team that is partnering with the existing lender to bring a resolution or a solution to the property being in receivership and avoiding foreclosure.

So I will let uh Mr.

Sassoon continue the uh the presentation.

Thank you, Matt.

Uh Jake, next slide, please.

Uh if I could just take a minute just to walk through uh a little bit of the history and the current status.

Um of it's been touched on already.

Uh you know, the as Matt mentioned, the project uh opened in late 21.

Um, through the COVID recovery of sorts, uh, struggled with some significant uh market disruptions and operational uh issues at the property, all resulting in uh quite significant uh financial distress at the property.

Uh in total, uh the existing ownership uh and capital sources have invested more than 110 million dollars into the property to date.

Uh and the existing loan is in excess of 85 million dollars.

Uh the property was uh marketed for sale in the middle of 2024, um, approximately almost two years ago to the date.

Uh we participated in that process and offers uh at the time uh were in the 50 to 60 million dollar range.

Um our interest from the beginning had always we had followed closely the uh the city's efforts to bring forth this uh uh pilot ordinance um in 24.

Um, however, due to the significant capital investment that had gone into the property and what the mortgage balance was.

Uh following the sales effort, uh the property went into formal default enforcement proceedings uh uh ensued, and an appointment of receiver uh took effect in the end of uh this past August.

Uh since that time, we've been successful in uh uh building our partnership with the existing uh capital group, existing lender in particular, to uh support the receiver uh and support the property and the tenants to uh existing tenants to ensure a smooth transition uh ideally out of receivership.

So we have uh there is a new property manager that had took over the property um over the course of the last um uh since that sales process, who's been successful in stabilizing operations, um, increasing occupancy, and most importantly, providing uh the desired services and experience to the existing tenant base.

Um so we uh and concurrently through that process, uh we've worked obviously as um Justice and uh Michelle just outlined closely with HRD over the course of the last five to six months to develop this stabilization plan uh for the property to address um the cash flow issues and the expiring abatements that are um forthcoming uh to ensure that the the property uh and most importantly the the residents uh that live there today and in the future uh can look to uh this property as a safe and secure environment to call home.

Uh so I appreciate uh the opportunity to present this.

Um I'll just go through one more slide and then I'll turn it over to Jake.

Um the alternative uh is of course uh a completion of the uh lender's rights to enforce its remedies against the existing ownership group um which likely means foreclosure uh amongst other uh remedies that um we of course are not involved in it would not be involved in um and so uh we're uh hopeful uh that with your consideration uh that path A uh is the uh path that uh in the narrative that we can write for this property thanks Jordan and I'll just go through a couple slides really quick here and um feel free to interrupt me with any questions as I go um the key dynamic here is we're restructuring the property and the property tax abatements in order to one preserve the legacy residents' ability to remain in place at the property and two uh stabilize the property tax liability for the long term so this property can one have uh and maintain its it's its value and uh two uh avoid a uh a significant deterioration in value from the from the uncapping of those property taxes um so it looks like mr ostman has frozen and the PA210 covers floors one Jay can you you froze for a second can you back up just 10 seconds yeah sorry I froze for a second Matt yeah just back up like 10 seconds okay you're good now um the property tax restructuring proposal basically current state there's an NEZ on the property and there's a PA210.

The NEZ covers floors two through six uh and floors and the PA210 covers floors one and the parking garage.

In the future state we are proposing that the NEZ covers floors one and the residential units associated with that and the sixth floor and then floors two through five would be covered under a pilot and then the PA210 would be reduced to focus solely on the the 1200 square feet of commercial at the property.

Whereas the property right now today is 80% market rate and 20% affordable we're effectively going to be flipping that to 20% affordable or 20% market rate and 80% affordable um this slide really kind of gets to the the the issue um fundamentally the the property taxes should the property continue down the path that it's on will be subject to an uncapping which will see a significant increase in its property tax liability a burnoff of the existing abatements and the net result is over a 600% increase in taxes from where it is today versus where the property was when it had the abatements in place.

With the the pilot we are able to mitigate a significant amount of the impacts of the the abatement burnout and in doing so this will still result in a net increase in revenues for the city where uh you know collections are today but it will prevent the significant loss in value that could occur if this were to go through a foreclosure and someone were to purchase it um you know based upon where the taxes would be when the abatements burn off um this is the last slide I'll go through and then Jordan I'll pop it back over to you to talk a little bit of about our leasing plan going forward.

As Jordan mentioned the property was constructed for 110 million dollars um you know the current foreclosure valuation on this based on where comparable properties are are trading today would be about 45 million.

So if this were to be foreclosed upon the property would lose 60% of its value from where it was constructed.

It is still a significant hit to the market generally.

But in doing so, you know, we are presenting a preventing a significant loss in value.

Michelle went through the details of the tenant retention plan.

I think a big question in all of this is that we are repositioning this asset towards workforce housing.

And in doing so, we are going to make extensive marketing efforts to ensure that these units are being rented to households that are income compliant and representative of the city workforce.

So I think Jordan, if you want to go into the housing for heroes program, that's probably the right next step.

Absolutely.

So thanks, Jake.

The um obviously, as Jake mentioned, there's uh, you know, besides just a restructuring of sorts of the of the incentives, uh, there's a the execution um is really about uh the mixed income nature of what this building is.

Uh today, uh, as been which has been pointed out a few times, the property is primarily market rate with a uh handful of um uh affordable units.

Uh and we are flipping the the percentages in um creating uh a you know 280 units of primarily affordable workforce housing with a handful of market rate units.

And so it's really a mixed income building where we are looking to bring Detroiters of all types under one roof uh and provide housing options to uh uh to to anyone um that desires to live here uh and that can qualify.

Uh and part of that marketing effort is focused, uh the largest portion of the building is obviously the the workforce component and under the pilot.

Uh and we have some experience um on some other projects and some other uh cities that uh we've launched similar programs called the Housing for Heroes Program.

Um and we worked closely with our public support partners.

We have in particular spent um uh time with uh the team at uh DPD and at FIRE.

Um we started conversations with Henry Ford and some other um uh public support partners to bring this housing type to their employee base and encourage them to uh consider this property as uh a amenity of sorts for their employee base, um, encourage them to live within the city, be close to um to work.

Um, and in doing so, offering certain benefits, including obviously convenience uh is is one, but also financial benefits and forms of uh reduced fees um and uh deposits.

And so uh we're working uh obviously we don't own it yet, so we can't make commitments um uh until uh we're in um we actually own the property.

Uh but we are starting those discussions and have started those discussions to build up a wait list of sorts so that when we do take over the property, we are in a position to constantly offer all of the large um employee bases, employer bases around the um around the city uh a great opportunity to uh have their employees uh call a a uh call this property home.

And so uh we're really excited about this program.

Um I think it brings a housing type uh to the city that uh hasn't been part of the recent you know new construction projects, most of which have been NEZ projects, which obviously means 80% market and 20% affordable.

So by focusing uh a portion of our building, a large part into this uh workforce uh component, we are attracting um and offering uh groups that otherwise didn't income qualify with the 80% units historically with uh safe and secure housing options that have uh you know um ceilings and caps and other benefits that will come along with it for as long as they desire to live at the property.

And so we're excited to roll this program out.

There's been great feedback so far.

Um Liz, who's joined us today can speak a little bit more about some of those conversations too.

Um, but we did want you to be aware of this um uh marketing effort that we've embarked upon and uh is a core thesis um and uh foundation of of the business plan here.

Absolutely.

So we just want to reiterate a few items for your consideration.

One, one really important distinction is that this developer did not have anything to do with the condition of the property as it exists now.

This developer is instead creating a solution that allows affordable housing to remain in the city and that pro and that provides an opportunity for hardworking firefighters, hardworking police officers to live in a building that will bring some stability to it.

We all know how much safer we feel when we know that there is a firefighter down the hall who lives there, and there is a certain amount of stability that comes with the building when a police officer or police officers and their families reside at that property.

So this really is an opportunity for public-private partnerships to work the way they were designed, which is where the interest of the city in this case and the interest of its residents can coexist with the interest of the developer in turning around a property that everyone can be proud of because it's a collaborative effort.

So we certainly welcome your questions, and we look forward to giving you more information about this project.

All right, thank you all so much for that.

I am going to turn the floor over to Member Waters to get us started.

I have a lot of questions, which I've already queued up with the department.

So I'll hand it over to you.

I have a few myself.

All right, so I'm gonna go through uh some of them, then I have others after that.

Okay.

So the first thing I want to know is what is the measurable public benefit of granting this pilot?

That's number one.

Number two, how does the 7% pilot payment compare to what the city would receive under full property taxes over the next 15 years?

That's number two.

What happens after the 15 years pilot?

Will the rent spike after that?

Next one.

Why is a new high amenity downtown building already in receivership?

Is this part of a broader downtown market weakness weakness?

So the other thing I want to know is what specific financial or operational failures cause a 110 million dollar project to fail to fall into this situation.

We want to know what caused it.

It's um is this effectively a bailout?

Are we doing a bail out for you?

Uh, and what precedence does this set for other developers?

We want to know that as well.

Um I want to put all of those out there, and you can you can respond to them.

But is this the building where a number of seniors were living?

Am I right?

Through the chair, there are uh Jordan, you might know better.

There are, I'm sure there's a couple seniors, but it's not a it's not a senior.

It's on it's on Washington Boulevard on the north side of Washington Boulevard.

Am I correct?

This is not the Stevens or industrial building that's a low-income housing tax credit, if that's if those are the ones you're thinking of.

No, I'm thinking about 1501.

So the reason I'm asking is because it hasn't been that long since a number of seniors had issues with management there.

I I heard you say that we have some new sheriffs in town.

Umars as well.

No, there's no anticipation to be receiving any HUD dollars for this property.

Because I think that there were HUD dollars, vouchers and so forth associated with it that building previously.

Uh through the chair, Councilmember Waters, there is um easily confusion here because there's two buildings that are next to it that are across the street from each other that are both called city club apartments.

So there is the city club apartment building that's a high rise that has the large beautiful mural that's on it.

That is where there is a considerable number of seniors living.

Okay.

This and that, and I believe that is the building that received um HUD financing or some CDBG dollars.

Okay.

Oh, yeah, this picture is very helpful.

Thank you, Jake.

So you can see the building with like the yellow, the colorful mural on it, the high r it's like a 20-story high rise.

Uh-huh.

Okay.

That building is on the south side of what I believe is that Grand River.

Um, you're saying your building is on the south side because I think the senior one is on the north side um down by Grand River and Washington Boulevard.

Yeah, so the building that I believe, I believe the building that you're referring to is the building that's the high rise.

This the building that we're referring to is the six-story new construction building.

Uh-huh.

Uh just completed in 2021.

And this building is on Grand Circus Park.

So, yes, it's on Washington Boulevard, but it also borders Grand Circus Park.

Okay.

Through the chair.

Um, Councilmember, you might be referring to the Himmelhawk.

Uh-huh.

Oh, yeah, Hemohoe is across the street on Washington Boulevard, just south of the David Whitney building.

Okay.

Well, what type of, you know, protection is it going to be in for residents?

See, oftentimes we have um companies that come before us.

They get everything that they want, and then they treat our residents like crap.

Next thing you know, there are evictions here, evictions there, uh, rent skyrocketing.

Uh yet you're asking the taxpayers to foot the bill.

I I just um I'd like to know if you've had a conversation with those residents in that building, have you?

Uh, council member to address the fur, yeah.

Well, to the first question about what protection would be in place.

The great thing about this proposal is this is a true public-private partnership.

And so with the the tenant retention plan that the housing revitalization department has negotiated and agreed to with the future potential future owner, um, the city would be very much involved in the um uh relationship with the tenants.

All right, so member water.

It looks like Miss Lebeau would like to address that.

Oh, okay.

Good afternoon.

Um, through the chair to Councilmember Waters.

I was gonna speak to some of your earlier questions um that you asked prior to asking about the senior building about I I know I'm public benefit.

Going through them, I I'm just this this is a lot to be asking the residents to foot this bill.

Detroit is to foot this bill.

So and so uh I mean, you're private.

So, you know, why should the city further intervene in the private market failure?

Considering, I mean, the fact that you already have an NEZ, right?

And and other benefits, why should the city do this?

And I want to understand the current occupancy percentage today for the 288 units.

Sure.

So there are a number of questions there, and I I will leave some of those um details to the developer team to respond.

But um on you know, behalf of the city, speaking to what we see as the public benefit.

Um, you know, the pilot is a tool that we had always anticipated would be able to help create and preserve affordability for projects that were exiting their tax abatement period, so that we wouldn't have residents in those affordable units with nowhere to go.

Um, and also so that those projects would not see such a dramatic increase in taxes that they could no longer operate.

And you know, the reality is I think we we are not always responsible as the city for you know intervening in the private market.

Where you know, in this case, I think um the rents that were anticipated, you know, pre-COVID were not what they were able to collect.

And so um what we see is more an opportunity here for us to protect the residents who are there in exchange for the pilot, but also get more affordable and restricted units, um, and not just for the remainder of what the NEZ would be, right?

But for a longer term and with the opportunity to renew after those 15 years, so long as they renew the affordability, um, which I believe is the plan.

In this case, you know, it is true that the property got to that point um of needing the pilot before the end that the life of those abatements expired.

And you know, I'll let the team speak a little bit to um you know what the reasons were for that.

But this is an opportunity for us to to do those things to preserve the affordability to keep the residents who are there in place, um, but also to ensure that we don't end up um with more blight and vacancy downtown.

There are lots of times when projects come to us in need of help and it is too late, and there is not an opportunity for us to intervene.

Um, and it ends in massive relocation.

And we want to make sure that this property, you know, has this opportunity to take advantage of the pilot that we help to stabilize it.

That's in the best interest of of the neighborhood and of the residents who are there and the surrounding residents.

Um, and we believe that the plan we have in place that the developers have agreed to is going to provide strong protections for the residents who are there now.

Thank you.

Through the chair, um, council member waters.

I would like to pick off, pick up where Rebecca left off, because um I think there's a couple other questions that you had outlined that would be good to cover.

So actually you'd asked um, you know, the 7% pilot, and you know, how does that compare to where full property taxes would be the 7% pilot under the 7% pilot taxes are actually set to go up from where they are currently now over the next 15 years with respect to the abatement burnoff and and the like, it is it is very intentionally mitigating what the potential taxes could be if those abatements did burn off.

And in doing so, what it what it's preventing is uh a dynamic where somebody purchases this building and it goes through foreclosure and it loses all of that property value.

That would have an impact to all the other surrounding properties in the market of Detroit generally.

So if this were to lose 60% value overnight, it would realistically potentially impact assessments surrounding it by you know 60% over the next year.

What's the what's the income level in in that in that building?

So the it ranges between what and what it ranges between um you know, as low as I think 50 to 60 percent AMI all the way up to you know in excess of 200% AMI in the case of some of the market rate renters.

Um the vast majority of the residents are below uh 120% AMI, and uh 74 of the residents are below uh 80% AMI.

And under the tenant retention plan, those 74 residents that are below 80% AMI get long-term rent restriction, and their rents are effectively capped at 3% year over year for as long as they want to live at the property.

Is that because you said so, or is that going to be in writing?

That's in the tenant retention plan.

That's in writing by the by the parties.

Yeah.

And then to your earlier question about, you know, why is the building in receivership and is this a broader market concern?

It most certainly is a broader market concern.

Um, there was a significant amount of inventory that was brought to the city of Detroit at you know, top of market new construction in 2023, 2024.

And it's taken a long time for the market to absorb those new units and market rate rents are not what you know developers expected when they were when they were building those properties.

And you you're seeing it in headlines every day now.

Lafayette West just went into receivership, a portfolio off of East Jefferson, the Jeffersonian.

Um, there is gonna be more stress in the market associated with just the the key dynamics of interest rates are higher, rents are lower than people thought, insurance costs are through the roof, they're 200 to 300% what they were, you know, two, three years ago.

Utilities are going up, energy costs are going up, and then market assessments in Detroit for property taxes have gone up significantly over the last five to seven years in in excess of a hundred percent of where they were.

So a lot of these developers, they they built these projects with the abatement as their strategy for how they they manage you know property taxes and property taxes have since doubled because of assessments in Detroit.

So that's how we got into 110 million dollars.

Is that is that what happened?

Well, and Jordan can speak to um uh Jordan can speak to be happy to manage.

Yeah, Jake, I'll be happy to take that through the chairs.

So um the historical facts as to what's been invested and um how operationally, besides the market impacts that Jake just touched on, you know, as um as Liz Rogers mentioned as well.

Those are uh predate us, uh, our involvement in this project.

Um you must know how they got into it, even though yeah, no, I mean look the the cost, I mean there's a lot of history as to how the cost got so high.

I mean, it's fundamentally it started out with uh it goes back to 2014 when um uh the land was sold from the city to to the developer at the time there was a um uh there was a ribbon cutting and a groundbreaking, and they went on their way, and there was some significant uh uh unintended or unexpected conditions in the ground when they started digging a hole for the garage uh that ballooned the cost, and then they were delivered a project uh in COVID, which obviously we're all aware of the inflationary effects of COVID and interest rates and the delays and things ballooned and went from I think the original budget was 84 million and it ended up at 110 million.

And obviously they uh they being the existing uh ownership group uh uh struggled mightily to deal with those uh issues and uh ended up where they ended up.

Uh I think they have some other, you know, um uh corporate-wide issues, the property next door, the other city club, I think has its own financial problems too.

Um again, we're not privy to every single aspect, but I will tell you one thing that we uh our commitments in doing this uh project and working to get to this point with the receiver and with the existing lender was the only way we're interested in in pursuing this stabilization plan and this mixed mixed income strategy and bringing this project and turning it into a bright light rather than a dim one, is that the property must be maintained in a first-class manner.

It must be managed by a first class group.

We cannot pursue this uh request out of the city um sta at HRD or the council members without a commitment that everyone that lives there is going to be it.

We this cannot be a receivership story that is one that has problems with it.

It needs to be a well-maintained building, and we need to work together to ensure that the property doesn't have defer maintenance, that the property doesn't have unnecessary vacancy.

And so we have spent as much time as working with HRD, and we are work with the the receiver and the management group that was put in place in lieu of the existing, the existing owner manage the property as well, and that's why the vacancy rate has gone from 40% vacancy to nearly 10% or slightly less than 10%.

We've been very successful in helping stabilize the asset from uh from an from an occupancy perspective.

That doesn't mean it's stable from uh pro forma cash flow perspective when you factor the taxes into the into consideration, but we are proud to say that I think that it is in a much more uh uh it's a much more well-run building today with the receiver and the new manager in place than it was before those changes were made.

So, how long have we known this?

How long?

I mean, because it just just it wasn't didn't happen overnight.

How long has this been happening?

And then because I'm gonna have to end up submitting some questions in writing.

Yeah, I want to I wanted to pause there with um what was just said.

Um so it sounds to me like you're speaking futuristically.

So if the project penciled at 110 million dollars, or if it was 85 million dollars and it ballooned to 110 million dollars, the previous developers should have made some decisions there to address the drastic difference between the two, right?

So I'm not sure exactly what the previous developer did, but I understand they sold their interest back some time ago.

Um my question that I had to the housing and revitalization department or to any other entity, the DEGC or anyone who was involved in this project from the beginning.

I wondered if this project went through the community benefits ordinance, and if not, why not?

We we started out at 85 million, we ended up at 110 million.

Can someone please share that if you all know?

Yeah, to the chair.

Um we did discuss that this morning, and I put an inquiry into DEGC for their original underwriting, um, as well as any modifications that were made.

But um, my understanding is that the hard costs um still did not meet the CBO thresholds that were in place at the time that the project began construction and was being approved for those abatements.

You're saying not that the CBO thresholds changed, but that the cost for the project changed.

Yes, I believe that the hard costs, which are what um are you know assessed against the brushholds, were not in excess of the threshold at that time.

Yeah, but I did put the inquiry into DEGC, and I don't want to speak to you know their process, so I will certainly respond in a in a follow-up with more detail about uh their costs at the time because as you saw in the beginning of the presentation, the um the various incentives were passed at different points in the project's life cycle.

Through the chair, yeah, Ms.

LeBoe, I'm not sure the CBO ordinance was in place when these tax incentives went through the city council process.

And I don't know that I don't know that for a fact, but I yeah, I I remember this going through city council in 2014, 2015, and uh I believe it might have predated the ordinance, the community benefits ordinance.

Okay, if we can get confirmation on that, because I was told it was 2017 when they applied for the PA210.

So right, then I could be then I'm then I'm probably wrong.

No worries.

Um, the other question that I had was uh the capital stack.

I was trying to discern whether or not there was there were any public dollars, whether from the city, from the state, from the federal government, um, that were a part of the original deal.

There um were uh some MEDQ funds, formerly well, now currently known as Eagle, um, associated with some environmental cleanup costs at the site.

And was was it a uh a brownfield through the city as well?

No, it was um it was a state grant um that the project ultimately got.

Okay.

But Jake, through the chair, there was a brownfield TIFF.

Oh, that is a good one.

Yeah.

Apologies for that.

There was a brownfield TIFF within the the capital stack of the project.

Okay.

All right.

I think that that's going to um help me to make my determination, really looking at the capital stack.

I understand what was shared about the status of um the tenants.

Um, and if I could request an actual breakdown of what you all know, what you have in your possession relative to the unit type, the unit size, the uh rental rates currently, and then what is being proposed.

I saw the floors and the number of units on the individual floors.

If you all can associate an actual dollar amount in rent to those AMIs, that would be great.

Um also I think it was noted in the conversation that the existing NEZ is in effect for another nine years through 2036, correct?

10 years, correct?

Nine and a half to the end of 2026.

So yeah.

So we're falling short of the 10 that any lender might look to for 10 years understanding what the expenses would be as it relates to the building.

Um so we're asking to remove the existing NEZ and put the PA or the um pilot in place.

To the chair, it would be a financial number of yeah, it would be a reduction in the NEZ, so that timeline would remain the same for the units that retain remain in the NEZ for the 64 units.

Yes, exactly.

And the 15-year clock would start whenever the pilot goes into effect, which we expect to be next year.

All right, if somebody could just break that down to show NEZ AMI associated with a dollar amount for the rent, um that would be great.

And I did want to ask, and I'm gonna pivot back to Member Waters because I know she had a lot of um additional questions.

Um you asked for how long?

Yeah, the key is the pilot is for 15 years, and then it can be renewed for two more 15 year cycles.

Okay, so does that mean they're not gonna change anything for 15 years, madam chair?

They would that would be within the agreement with HRD, correct?

Through the chair, correct.

So with the 15 year renewals means that the workforce housing and uh affordable housing income restrictions would remain.

Um other question is anyone who is involved in this project and acquiring it.

Does anyone have a relationship with the current owners?

No, a business relationship, madam chair.

No relationships with uh existing ownership.

Great question.

And and that means no one, so Jordan, I don't know how to pronounce your last name.

Is it Sassin?

That's fine, yeah.

No, what is it?

Sassu.

Sassoon.

Um do you have any partners that would be working with you to acquire the building that have some financial relationship with you to acquire the building?

We are acquiring the building with the existing lender on the property is is converting its investment into an equity investment.

So they we're going to they will become a partner, but they are not the owner.

They are uh they are uh uh you know counter to the existing ownership group.

They're the ones with the you know, pending litigate threaten litigation and actually, you know, I think open litigation uh with the existing ownership group uh that created this dynamic.

Um they are uh kind of uh signing up for the long-term year to to be in an equity position and and have a longer term outlook and change their uh their future in a way, um, and uh signing on for this new uh arrangement, but there is no relationship between us or them with the existing ownership group.

Okay, all right.

I want to I'm going to leave it here.

Mr.

Osterman identified the fact that the cost of everything is going up, and that is partly why the building is in the position in the situation that it's in today, the cost of salaries, the cost of services, city services that we provide have gone up as well.

And we have to figure out a way where we don't keep city revenue stagnant while trying to provide support to these establishments to these buildings because we're saying that we're providing housing for Detroiters and stabilizing housing.

There is there are costs associated with everything that we do, and residents throughout this city tell us every day that we are here that we're not doing enough, and we know that we're not, right?

We're we're confined by the amount of revenue that we generate.

The thought would be, and the thought I think around the NEZ and any tax abatement is that incrementally property tax revenue grows, so there's a 15-year period that gives the developer the ability to pull everything together to build it, and within that 15 years, you can get it occupied, and as we know, everything increases, uh, including folks' rents.

We have the 20 percent that we have that's at an affordable rate to ensure that Detroiters still have access to these units that 80 percent, the rent is still going up.

What happens to our property tax revenue when we flip this, and we're providing for the developer the ability to still be able to pay the lender to pay themselves, but we're saying to the city, wait, we want you all to freeze the amount of revenue that you receive.

I saw the slight increase there.

That's to me insignificant when you look at the cost of this development project.

The ideal situation is that we're growing our property taxes or property tax revenue.

We see individual properties every day dealing with an increase in property tax revenue because our property values have gone up.

We all want our property values to go up, right?

Because we build equity in our properties.

We can't just continue to forego property tax revenue to be able to help something pencil to make it where this is a property that doesn't tank.

I mean, yes, I've I've seen the headlines, I've seen the the articles, the stories about all of these properties, and I say there may be a challenge on the front end, and how much we're paying to develop these, how much we're saying it costs, because if I were to break that 110 million down by less than 300 units, that to me sounds excessive.

It sounds excessive.

And so I'm saying to the administration, to everybody who's working on these numbers, we have to get these numbers figured out so that we don't continue to find ourselves in this position.

I know everybody at one point in time was building new, and everybody thought I guess our our rental rates were just going to continue to go up.

Now reality is setting in that we probably only have so many folks in the city who are able to pay really high rents.

There are a lot of things we have to figure out.

We've been talking about growing salaries for Detroiters.

Then maybe they can move into one of these units.

But we have to get there, we have to get there together.

So we are still tasked with providing training opportunities and helping our residents grow.

We need revenue to be able to do that.

So I know this is very complex.

I know that there are a lot of outstanding questions that are there.

Member Waters is going to, as she indicated, send her questions over via memo.

Um, I'm not certain that I need to send mine over.

I think we've had the conversation.

I saw folks jotting down a couple of things that I did request because I need to see the numbers.

Um, I need to understand how things were, how we got where we are today, and how do we get out of it without it being on the backs of Detroiters that end up having to forego something, a service, a training opportunity, um, whatever it is, because we're providing this support.

And it was noted that there are others that will likely be coming before us asking for something very similar.

All right.

Um excuse me, with Mr.

Walters, I saw several hands go up.

I'm going to go to Miss Oberhoser, uh, and then to Mr.

Corley.

To the chair, I I appreciate all your comments.

I understand this is a complex issue, and we look forward to to further answering your questions.

Um, I just have a couple of thoughts I wanted to share hearing your your um comments.

One is that um, and we'll do this math more thoroughly, but this does represent an increase in revenue from the baseline.

If this property were to retain the status quo, we would have fewer restricted units and less revenue than what we would enjoy through the pilot.

So that is one thing that um I do see as a benefit in both in both categories.

Um and the other thing is clarify what you just said, because I think when they showed the document on the screen, if we did, if we did not intervene to provide this, that the NEZ because it gets the property gets uncapped, the property tax revenue would almost double.

I'll clarify, yes, if there was not an uncapping, if this property were not in financial distress, if the abatements that were approved in years past just remained in place and this was a marketplace property, uh, if everything that had been anticipated came to fruition, there would be a lesser tax revenue for the city and fewer restricted units.

You are correct, though, that because of the financial distress, if it does in fact lead to foreclosure, there would be an uncapping.

But I don't know what opportunity that would really represent because while the tax taxation rate would be higher, there would also be major distress.

HRD has been uh presented with a portfolio of 60-something properties in Palmer Park that are under receivership, many of them vacant, many of them facing tax foreclosure on top of the mortgage issue.

We calculated $16,000 per month in interest and fees accumulating on these already distressed properties just in their property taxes alone.

So it is a frightening situation if it were to go down that path.

But the other thing I want to share, the nature of the pilot ordinance is such that City Council entrusted HRD with many of the approvals for the low-income housing.

And you will be receiving a report about the volume of work to date.

110 projects have been approved by Justice and Team representing 5,975 units, most of which are 80% AMI and lower.

And we do hear from residents who say I'm being punished for having a higher income, the missing middle.

You're all familiar with that concept.

So this is an opportunity to provide restricted housing, not market rate to that population, which is a demand that we're hearing from, but it also is an interesting dynamic for you that you're not seeing that the majority of what's being approved is for the those with the greatest need.

And so I just wanted to share the the other portion of uh properties that uh this ordinance has allowed.

Yeah, and that's it.

That's appreciated.

Um let's keep in mind location, right?

So if we're talking about something happening in our neighborhoods versus something happening with properties downtown, I think there's a different dynamic there, right?

Um so we look forward to the report.

I think um, colleagues, I thought that was something we were supposed to receive quarterly for us to understand uh where we are with pilots.

Um, but certainly do look forward to seeing that.

Thank you.

Mr.

Corley.

Thank you, uh Madam Chair.

Just a couple of questions.

So, you know, it it may be helpful for council members to receive some type of cost-benefit analysis, you know, as you see for regular NEZ and other tax abatement projects uh to make you feel hopefully more comfortable that the income tax revenue that's being projected to to be generated would be more than you know the the property tax revenue that we are losing, you know.

So so maybe a cost-benefit analysis can be attached, maybe DGC might need a help in that.

Um and I just had a question for the um HRD folks.

So are are you you know when you look at the at the numbers and the financials, are you comfortable that the developer has the financial wherewithal to take on this project through the chair?

I really wish Rebecca was here to answer that question because she has far greater underwriting experience than I do, and uh we have underwritten the project at those 7% rate.

There are concerns, certainly uh, if I may speak from what I've understood from her, there is no absolute guarantee that this is going to be successful.

We do see it as a far greater opportunity than the status quo based on the receivership.

Um I don't know if I'm fully answering your question, but through the underwriting um these we propose the lowest rate that is uh can contemplated through uh the administrative rules because there are significant expenses, and that's where we got that seven percent.

Um so that's as comfortable as I am answering that question.

Thank you, Matthew.

Thank you.

Uh Mr.

Walters, did you have something?

Uh through the chair, I really appreciate the your comments that you made.

Very well said.

Uh I just wanted to add that this property was vacant.

So kind of uh piggybacking on some of the other comments that were made.

Um the so this was this is the old Statler Hilton site.

It was demolished in the early 2000s ahead of the Super Bowl, and then it sat vacant for you know 15, 17 years or so.

Um and there was no cash injected by City of Detroit residents, right?

What was part of, and again, we're not the project team from 10 years ago, but from what we understand, um, you know, tax the tax abatements that were part of that or that that project in 2015, 2016, 2017, um allowed a project, a new construction project to get built on that site.

So there was no tax revenue on the vacant site that was owned by either the DDA or the EDC.

I can't recall which entity, which authority.

Um, but there was no tax revenue at that time.

And then the new construction project that only was able to move forward because of the tax abatements that were a part of the project.

Um, you know, as was just discussed with Michelle, um, are now being restructured in a way that allows for the continuation and and to not lead this project into foreclosure.

So you're you're you're 100% right.

And I again, I really appreciate what you said before about this about the city of Detroit residents having to um deal with this issue.

And um what I wanted to know, just note is that there is a slight increase with the pilot of tax revenue.

Um that it was a vacant site, you know, for 15, 16 years after the Statler Hilton uh hotel was demolished.

All right, thank you.

Mr.

Sassoon, and then we're gonna close this up.

Thank you, Madam Chair.

Uh, just to respond to one of the um your most recent comments just about the overall tax revenue, you know, and it uh sometimes these presentations and these slides um are intended to show a uh to tell to explain the the differences of the proposals, but at the same time too, they're they're somewhat imperfect.

Um I just want to make sure we're clear on um in our presentation is the uh scenario in which the property values uncap upon a sale or foreclosure and then eventually values uh tax the tax uh collections increase as the NEZ burns off, presumes that the value of the property in the assessment continues to go up.

And based on the fact that the abatement burns off, there's no scenario realistically in the practical world where the value goes up, it only goes down once the taxes uh fully are applied against the property because the in the impact of paying full taxes reduces the collections on the property and therefore reduces the value.

So that that fact pattern isn't a real fact pattern.

It does show what in theory is the uncapped, fully burned off tax.

But then if that was to be realistic and happened, some the owner at that time would walk in and make an appeal and say my property is not worth that much money because my income is significantly less than what you had anticipated because the property taxes are so significant.

So I'm not sure that that is a real apples to apples comparison.

Um I obviously the consideration of what does the city receive to pay for city services is crucial.

And obviously, in the seat that you sit in is at the forefront of your mind, and we certainly respect that.

The other consideration I do just want to make note of too, is that in the event that the proposed path isn't a path uh that the council considers, um in the in the foreclosure scenario, and this is true really for any property that has an expiring abatement, as values decrease because the taxes increase, every owner at that time will have the option to eliminate all of the affordable units within their property.

And so the city of Detroit had obviously a significant amount of new supply that was delivered at you know, over the last few years.

And a lot of those apartments with expiring abatements will have that choice.

And we sitting in the seat we sit, not being uh uh burdened by the history of sorts of this property, but having a fresh look at it, are approaching it completely through a completely different lens and saying, let's income restrict most of this property for the foreseeable future and create not only 80% units, but 120% units, so that for the broader base of Detroiters, we can provide housing options for all of them that uh at this property.

a significant amount of new supply that was delivered at you know over the last few years and a lot of those apartments with expiring abatements will have that choice and we sitting in the seat we sit not being uh uh burdened by the history of sorts of this property but having a fresh look at it are approaching a complete through a completely different lens and saying let's income restrict most of this property for the foreseeable future and create not only 80 percent units but 120 percent units so that for the broader base of Detroiters we can provide housing options for all of them um that uh at this property of course there's more Detroiters that are looking for housing every single day than just this property provides um and we can't solve every property's uh problem but we're looking to provide a solution that hopefully you know you and your uh co-council members uh believe can be uh and of course HRD as well uh a solution or a a possible solution for uh for others as well um and so we're happy to to spearhead the effort we hope um your consideration uh we we appreciate your consideration and um I did just want to leave you with those thoughts as well all right thank you so much um I think I noted that we have something coming before PED tomorrow as well um that I chair so we'll have another conversation tomorrow about this um but it looks like we have some outstanding questions relative to this particular line item so member waters is there a motion to bring line item 6.23 back in two weeks well I have something to say folks member waters so um well first of all I want to make a motion for a um cost benefit analysis I'll make sure that that's reflected as part of the record there's a motion to request HRD is that who you're asking that's um to do a cost benefit analysis of this project hearing no objections that action shall be taken um the other thing and that I will want HRD to respond to when we ask our submit our list of questions because I I'm deeply concerned about about this not just because of this particular project but others that might be coming and and the situation that it could place us in you know so and the callers you know our residents who call in I mean they have legitimate concerns and um I mean we just can't continue to afford that um not being able to collect on our property taxes and so forth is it's a slippery slope and you know possibility of a rabbit hole then you said there are no guarantees so I I've got to tell you I don't know I'm I'm certainly not ready um to vote on this um yet and so I am going to make the motion to bring it back you say two weeks motion there's a motion to bring line item 6.23 back in two weeks hearing no objections that action shall be taken thank you all so much for joining us we appreciate it is there a motion to suspend member reports hearing no objections that action shall be taken if there is nothing further to come before us this meeting shall stand adjourned