January 10, 1996


Honorable City Council:

RE: Demolition of Hudson's

On December 4, 1996, the issue of the Downtown Development Authority's request for authorization for funds to demolish Hudson's was referred to us for review. This staff has consulted with the DDA, Greater Downtown Partnership, and Detroit Heritage and Community Development Forum in the preparation of this report.

The J.L. Hudson Building is a massive consolidation of independent structures and additions built between 1911 and 1946 totaling 2.2 million square feet of floor space. Although built over a 35 year period, all of its components were designed by one firm—Smith, Hinchman & Grylls—and form a single entity. The J.L. Hudson Company, for which the Hudson Building was the flagship store, has been strongly associated with the history and growth of the City of Detroit. In addition, the very bulk of the building assures it landmark status in the Central Business District.

By 1979, the City had developed plans to raze the building and use its site, the Kern Block, and the Crowley site, as well as additional areas for the Cadillac Center Project. The Hudson Building had officially been determined to be eligible for the National Register of Historic Places by the Keeper of the National Register; thus, the Cadillac Center project was subject to Section 106 review because of the involvement of federal funds. Hudson's went through the Section 106 Review in 1979/80. Although it has often been asserted that the requirements of Section 106 prevented the construction of Cadillac Center, the fact is that the Section 106 process granted every request made by the city, incluing permisslon to demolish Hudson's. The terms and conditions agreed upon by the parties were contained in a Memorandum of Understanding between the Advisory Council for Historic Preservation, the City of Detroit and the Michigan State Historic Preservation Officer. Because the Advisory Council's decision was dependant on the project then proposed, and because the City did not adhere to the conditions of the Memorandum of Understanding after the proiect fell through, the Memorandum is no longer in force.

The Cadillac Center Project did not materialize because of failure to sign a second anchor, and the Hudson Building has been vacant since 1983, when Dayton-Hudson Co. closed thc store. Since then, there has been a steady stream of interest in redeveloping the building. Of that interest, there were four proposals that could be characterized as "serious" even in the past economic climate: Continental Development, c. 1984 (developer Jerome Schostak); U.S. Dept. Of Defense, 1992; City Center Building, 1994 (developed by Albert Kahn Collaborative and with Hines interests); and the Detroit Hudson Casino & Entertainment Center, 1995 (associated with Lee Iacocca). The earliest proposal, as characterized in a review by GDPI, "stalled in bureaucracy" at the city level. The latter two proposals assumed casino gambling as an economic element, and died when Gov. Engler denied approval of off-reservation gaming.

Until recently any serious proposal for the building has been stalled at an early stage by the controversy over the ownership of the property as well as the perception of a lack of market in that portion of the CBD.

Present Situation
The Greater Downtown Partnership (GDPI) is a private, non-profit corporation formed in early 1996 to accelerate physical revitalization and economic development in greater downtown Detroit. The Partnership has been asked to prepare a comprehensive reinvestment strategy for the greater downtown area utilizing professional consultants and community resources. DDA, working closery with GDPI, has requested the use of DDA Land Assemblage Program funds for the demolition of the Hudson Building.

The Detroit Heritage and Community Development Forum ("Forum") was created in January, 1994 as a coalition of preservation entities including nonprofits, governmental agencies and individuals. The Forum's self-defined mission is "to serve as the collective voice for historic preservation in the decision making process of civic and corporate leadership in Detroit; to integrate historic preservation as a tool for community development in the City of Detroit; and to increase the participation of African Americans and other people of color toward this end."

The Forum and GDPI have been engaged in dialog about preservation issues since the Spring of 1996 In terms of Hudson's, the Forum, through its participating organizations, has brought redevelopment interests to the table.

Demolition Proposal and Costs
The DDA Resolution Authorizing the Demolition/Clearance Costs as presented to Council on Dec. 4, 1992 does not elaborate on the extent of the demolition and site clearance/preparation or its cost. It authorizes demolition and clearing, "together with all related costs thereof" without specifying, all amount. Since the Land Assemblage Program has $30 million for demo/clearance, it could be assumed that approval of the Resolution as written will authorize the DDA to spend any amount up to the unspent amount in that program.

At the present time, according to GDPI, actual remediation/demolition costs do not exist. An RFP is in the process of being written. However, DDA's Dec. 2, 1996 Memo to Council estimates a cost of $9.0 to $ 11.0 million for Demolition/Site Clearance Contingencies and other soft costs. We have learned that this represents demolition only down to grade. The proposed demolition would leave the foundations in place and would use selective demolition to open basement areas for backfill. The integrity of foundations would be preserved for potential reuse/support of future development, while the cavity would be filled with the debris of the above-ground portions of the building. We believe that there are serious questions involving this plan, possibly including drainage of the filled cavity, the likelihood of further expense in the future, and the limitations which might be imposed on prospective developers.

Planning Proeess:
A collaboration of local planning firms was hired by the Greater Downtown Partnership in the summer of 1996 "to undertake an inventory of existing conditions...to serve as a planning tool for the reinvestment strategy:" This inventory, as of Jan. 2, 1997, had been completed and is in draft form. Using the inventory, Berridge Lewinberg Greenberg Dark Gabor Ltd., an urban planning firm from Toronto, has been hired by the Partnership to develop the reinvestment plan for the downtown. Berridge et. al. has an impressive reputation and extensive resume. This planning effort has just gotten underway, and a major action such as the demolition of Hudson's can only limit the options available in the planning process. If this planning process is worth its cost, it should be allowed to see itself through before any buildings are demolished in the name of downtown revitalization. It appears that the area between the Renaissance Center and the Stadium site will be a major focus in this planning process because the GM move, casinos and the stadia will have the most effect on the area lying between those elements. It is possible that in this planning effort historic character will be defined as a major marketing strength of lower Woodward. If historic buildings are demolished at the same time that historic character is identified as useful for the future, then the city will have lost a major element of economic redevelopment. Should a developer step forward to redevelop the Hudson Building, why would such plans not be incorporated into an overall reinvestment strategy? Is it sensible to hire one the best urban design firms in the world and then limit or ignore its options for assisting in developing a new vision for Detroit?

Potential Developers:
The Greater Downtown Partnership states that it does not have a development or use for the cleared Hudson's site; the demolition proposal is intended to assemble cleared parcels for future use. The partnership does note that the image of downtown Detroit as a desirable location for development has greatly improved, and that developers should be easier to attract than in the past. This, of course, applies equally to new development or redevelopment of existing properties.

GDPI reviewed past plans for redevelopment of the Hudson Building but have not solicited or entertained new ones. However, participating preservation organizations of the Forum and the Historic Designation Advisory Board staffwere contacted in early March, 1996 by the Alexander Company, a Madison, Wisconsin - based developer looking for potential historic tax credit projects in Detroit. Alexander was inquiring about expanding into Michigan, looking for buildings suitable for rehabilitation as housing. That firm has been involved in numerous successful adaptive reuse projects throughout the Midwest and South. Its largest project to date is the conversion of a 750,000 square foot warehouse in Cleveland into mixed income residential units. Information supplied by the Alexander Company, Inc. at our request shows it to be a major player in the adaptive use of historic buildings nationwide. The firrn prides itself on its relationships with local communities/governments and the quality of its projects.

This office provided information on possible rehab candidate buildings to Alexander on the telephone. Later, a list of downtown buildings with possible rehab potential was delivered to Mr. Marantette of GDPI by Cityscape Detroit President Kurt Weigle in June, 1996 with the intent of providing Mr. Alexander with assistance. It is our understanding that, on August 1 st, Mr. Alexander gave presentations to Ms. DunComb, Mr. Papapanpos, and Mr. Marantette. Since then, he has sent follow-up letters expressing his interest specifically in the Hudson Building, and has prepared a conceptual proposal for the Adaptive Reuse of the building into approximately 650 residential units with parking and a small amount of commercial. It appears that Mr. Alexander has not received any indication from the DDA, DEGC, or the GDPI that would encourage him to develop the proposal further. Reportedly there is another developer who is unwilling to express a public interest unless the present owners of the building express interest in a proposal.

According to DDA and GDPI, there is no developer waiting in the wings for a cleared site. There is, however, an expression of interest in the present building. In addition, there are questions that need to be asked about the costs and results of the demolition plan presently envisioned. Further, there is common sense in allowing Berridge Lewinberg Greenberg Dark Gabor Ltd. to determine what resources should be conserved for a possible role in the plan which they are preparing. It is true that the Hudson Building has been vacant for almost fourteen years, but the Kern-Crowley site has been vacant significantly longer.

Since there is no new development on the horizon for this property, there seems to be no reason not to take the time for a more measured approach to the problem of the Hudson's building. Whether the building can or cannot be re-used, the present demolition proposal seems ill-advised. In the time necessary for a demolition RFP to be prepared, sent out, and proposals received, answers to questions about demolition procedures, the planning effort, and potential developers of the building can be addressed. In the absence of a new development proposal, Council members will want to consider whether it is worth seeking a bona-fide proposal for the existing building as a better use of limited resources.

Respectfully submitted,

William M. Worden