DWCPA: $43 Million Mixed-Use Facility
Project Plan Summary

**Read Free Press Article on Asian Village being developed for this site

Summary of Project and Involvement

The Detroit/Wayne County Port Authority (DWCPA), led by its mission to promote economic development along the waterfront, within its jurisdictional boundaries of Wayne County, is proud to announce its first financing project ever.  Partnering with General Motors Corporation's, RHI Holdings (a real estate subsidiary), the DWCPA will issue $43 million in revenue bonds for the construction and development of a mixed-use facility along the eastern Detroit riverfront.  By doing so, multiple goals are accomplished.

Predominately a parking facility, the project, located adjacent to General Motors' World Headquarters on an existing surface lot, will provide 1,174 parking spaces and have 18,000 square feet of retail space.  The project will serve as a primary parking facility for GM's Renaissance Center employees, including OnStar Corporation and users of the DWCPA's Public Dock and Terminal facility and Riverfront Conservancy district during evening and weekend events.

For the DWCPA, issuing revenue bonds is one way to become more financially self-sufficient from its constituent units, which includes the City of Detroit, Wayne County and State of Michigan.  In trying economic times for all local units of government, creative ways to generate revenue is imperative to ensuring fiscal stability.  Further, this helps the DWCPA showcase itself as a complementary financing and economic development partner for waterfront redevelopment projects.

Each constituent unit, by allowing the DWCPA to provide this financing, preserves its own credit rating and debt capacity, for future use on respective projects.  In other words, each can save its bonds for other projects.  General Motors, OnStar, EDS, the Detroit Riverfront Conservancy, and all other stakeholders within the eastern riverfront will benefit from a portion of the parking demand being met with this development.  More parking is needed in the future, and this project's financing scenario will serve as a great example.

The DWCPA has structured a lease arrangement with RHI Holdings (General Motors) to use the facility.  The DWCPA will, synthetically, own the structure, as GM will be responsible for all construction and operation.  GM is committed contractually to annual lease payments with renewable options following the initial five-year base term.  Some of the benefits of this structure for the client include:

• The lease structure is off the balance sheet of General Motors and Riverfront Holdings (real estate subsidiary).  This allows them to preserve their credit rating and capacities for other projects.
• The debt issue via the DWCPA enabled the transaction to be 100% debt financed.  The DWCPA is a public, rather than private, conduit for financing in this project.  Thus, 100% of the debt can be financed.
• GM/Riverfront Holdings can capture depreciation in the asset through the structure of the financing.
• The lease payments are tied directly to the lease revenue debt issued.
• GM/Riverfront Holdings retain control of the asset, including all construction and operation activities.

Conclusions 

Several goals are accomplished by having the DWCPA involved in this economic development project.  First, and most importantly, by financing this project the DWCPA is able to realize an annual fee that will allow for improved self-sufficiency in the future.  Further, a new model of low-cost, fixed-rate financing is introduced to the waterfront that previously hadn't been contemplated.  This could lead to additional interest by investors and other prospective businesses looking to locate to the area.  Further, by using the DWCPA, the City of Detroit can maintain its own debt capacity and preserve its own credit rating, to be used on other projects around Detroit that may require a heightened focus. 

Future possibilities include using the DWCPA to finance public infrastructure, site improvements and preparation activities and utility improvements within the eastern waterfront district.  Additional parking facilities will be needed as additional residential units are added, as called for through local planning studies.  These are all costs typically passed along to the private sector, and can often hinder, and sometimes block, good economic development from happening.  The DWCPA offers itself as a partner in economic development, investing in public infrastructure and utility improvements, reimbursed through private, revenue generating projects, for enhanced economic vitality along the riverfront and the greater Detroit area.