Hotel project at Joe Louis Arena site secures $90M-plus in tax incentives

With public funding now secured, developers are expected to start construction this year on a nearly $400 million 25-story, convention-style hotel on the Detroit riverfront. 

The Hotel at Water Square project on the former site of the Joe Louis Arena will receive a 30-year, $130.6-million Renaissance Zone tax break and an $11.6 million Public Act 210 Commercial Rehabilitation Act property tax break over 10 years. Approvals at the local and state level were granted last week.

Although the total Renaissance Zone package is $130.6 million, there is a state reimbursement of $48.5 million for local school and library taxes, bringing the net value of the tax break to $82.1 million, a Detroit Economic Growth Corp. executive said earlier this year. The total package between the Renaissance Zone and the PA 210 abatement is valued at $93.7 million. 

As proposed, the Hotel at Water Square will offer 600 rooms in a building attached to the Huntington Place convention center and is intended to help the city attract more convention and event business. The project is expected to start construction this year and finish in 2027. 

 

The Sterling Group is developing the project through an affiliate, Atwater & Second Associates LLC, which is registered to the company’s general counsel, Eli Halpern. The company is run by the adult children of Gary Torgow, who started the firm and is now chairman of the board of Huntington National Bank.

Renaissance zones allow for waivers of Detroit’s income and utility users tax, city and county property taxes plus state income tax.

The DEGC said earlier this year during the Community Benefits Ordinance process for the $396.5 million project that the economic benefits outweigh the value of the incentive package. Economic benefits are anticipated to be close to $2.6 billion — the vast majority of which would come from spending by Detroit visitors attending conventions and events. The organization also says that without the incentives, the project could not be built. If it is not built, the incentives are not awarded. 

The hotel would have five podium floors with restaurants, a lobby bar, a pair of ballrooms and 50,000 square feet of meeting rooms. A pedestrian bridge would connect it to Huntington Place. The tourism industry and broader business community have argued for years that the city needs more hotel rooms overall, but in particular such a hotel connected to its convention center. 

“Seventeen million visitors came to southeast Michigan in 2023, but even more meetings, conventions, and events want to be in Detroit,” Claude Molinari, president and CEO of Visit Detroit, said in a press release last week. “Building a connected hotel to Huntington Place will increase the number of events and visitors we can host, which will mean more businesses thrive, more Detroiters go to work, and we will all benefit from a more dynamic community.” 

Danny Samson, chief development officer at Sterling Group, said in a press release last week that the project “will make a significant impact towards solving the need for more hotel rooms in Detroit.”

On the same site, the company built the 25-story The Residences at Water Square, a nearly 500-unit luxury apartment tower which opened this winter. 

Neumann/Smith Architecture is the project architect for both towers. Macomb Township-based Colasanti Construction Services Inc. is the general contractor on the apartment building. It’s not known whether a general contractor has been picked for the hotel. 

A message was left with Sterling Group seeking comment on Monday.

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