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Credit: Kirk Pinho/Crain’s Detroit Business
The former Plaza Hotel & Conference Center at 16400 J.L. Hudson Dr. in Southfield. .
The city of Southfield hopes its long-running nightmare with the owner of a blighted mid-rise hotel has come to an end.
The former Plaza Hotel & Conference Center sold March 21 to the Southfield Nonprofit Neighborhood Corp. for $3.1 million in a bankruptcy sale.
The transaction effectively starts a new chapter in the vacant building’s history after its previous owner spent more than a decade and a half battling the city over everything ranging from unpaid utility bills and taxes to the property’s conditions.
That new chapter includes redeveloping the dilapidated hotel into Hope Apartments, which will offer units to young adults aging out of foster care in what is being called the “largest investment” of its kind targeting that underserved population.
The sale is a complicated balancing act.
Southfield Mayor Ken Siver, who is president of the Southfield Nonprofit Neighborhood Corp. board, said that organization “is sort of holding the property” for The New Foster Care and, in that time, is working on things like building stabilization and asbestos removal.
“We stepped in because the hotel was in receivership and the receiver was saying they couldn’t hold onto it forever. They were paying for fencing, grass cutting and the receiver became quite impatient. We didn’t want New Foster Care to default on the purchase because then it could have reverted back to the slumlord who owned it or it could have gone out for bid,” Siver said.
Credit: Courtesy of The New Foster Care Inc.
A rendering of a two-bedroom unit’s living, kitchen and dining area in the proposed Hope Apartments in Southfield. The $105 million Hope Apartments plan would convert the former Plaza Hotel & Conference Center into 275 units for young adults transitioning out of the foster care system.
The 14-story tower at 16400 J.L. Hudson Drive sits across from the former Northland Center mall that’s being redeveloped and next to Henry Ford Providence Southfield Hospital.
Chris Yatooma, board president for The New Foster Care, said Friday morning that the project is expected to cost about $105 million with a multi-layered financing structure that could include 9% Low-Income Housing Tax Credits capped at $16.5 million; 4% LIHTC funding with an uncapped value; a state appropriation totaling $8 million that’s been requested by state lawmakers; and a federal appropriation between $5 million and $15 million that has been requested of U.S. Rep. Rashida Tlaib and U.S. Sen. Gary Peters, both Democrats.
“Our goal is to have no debt on the project, which is certainly an ambitious goal,” Yatooma said.
The first floor would include a community center with amenities such as a pool, gym, fitness center, theater, food service, atrium and community garden, and supportive services like medical, mental, dental, nutritional and maternal care. There would also be education services, a learning center, vocational training, a hair salon/barber and an art program, among other wraparound services.
The project would start construction next year and take several years to complete as the hotel, which the city condemned in 2010 due to lack of utilities following nonpayment, is essentially stripped to just its concrete and steel structure and completely gutted.
Credit: Courtesy of The New Foster Care Inc.
A rendering of a studio unit at the proposed Hope Apartments in the former Plaza Hotel & Conference Center in Southfield. The units are planned to house young adults transitioning out of foster care.
Yatooma said young adults aging out of foster care face a difficult transition from the system once they age out of services, which typically occurs at age 18. That happens for approximately 600 people in Michigan each year.
“They have the trauma of abuse or neglect, being removed from their parents and the trauma of a broken system,” Yatooma said. “As a result, you see these horrific statistical outcomes. One in three end up homeless and one in four end up incarcerated. What we’ve found is that when you bring some resources, attention, love and support, we found you really can change the trajectory of their lives, and help them change the trajectory of their lives.”
Yatooma said he hopes others “will copy this model and we’ll see these throughout Michigan and the country.”
The Hope Apartments project certainly isn’t the only effort to provide supportive housing for people transitioning out of the foster care system.
As of April 2022, Redford Township-based nonprofit MCHS Family of Services (formerly the Methodist Children’s Home Society) had been planning to spend $4 million to $5 million to turn the former Salvation Army Denby Center near Eight Mile and Lahser roads into a transitional living campus for people aging out of its foster care programs. The status of that project is not known.
In addition, Bingham Farms-based affordable housing developer MHT Housing Inc. plans to turn the site of the former Brewster Wheeler Recreation Center in Detroit’s Brush Park neighborhood into a multi-building development that includes 52 units of supportive housing for former foster care youth, plus more than 150 rental units across three other buildings. As part of the project, the recreation center would be restored, and wraparound services like counseling, and training in life and job skills, financial literacy and conflict resolution, would be provided by Greater Grace Temple and Detroit Wayne Integrated Health Network.
Credit: Courtesy of The New Foster Care Inc.
A rendering of the kitchen and dining area in a one-bedroom unit at the proposed Hope Apartments in the former Plaza Hotel & Conference Center in Southfield. The units are planned to house young adults transitioning out of foster care.
The previous owner of the former Plaza Hotel & Conference Center, Shefa LLC, registered to Montreal resident Sidney Elhadad, had long fought the city and twice filed for federal bankruptcy protection on the eve of tax foreclosures and potential receiverships on the building.
The property has been the site of a fire, various code violation citations and other issues that generally make the city consider it dangerous. Court documents have also cited more recent incidents at the property including someone throwing items from the building’s roof, damaging a vehicle. In less than a year between March 2022 and January 2023, just prior to the most recent bankruptcy filing, the city says police were called to the building nearly 30 times, primarily to stop trespassers. Shefa disputed that the property was not secure and that there were trespassers.
Siver said the property’s long history factored into the Southfield Nonprofit Neighborhood Corp.’s decision to purchase the hotel.
“We knew that if everything failed, the city would probably be stuck with a $10 million demolition bill sitting on 10 acres and the city would never get its money back at $1 million per acre,” Siver said.
Southfield Nonprofit Neighborhood Corp.’s purchase also included proration of summer and winter city property taxes, as well as rent, totaling about $11,000. After paying broker commissions to KJ Commercial Real Estate Advisors and CBRE Inc., $2.1 million to the city of Southfield for promised improvements under the previous Chapter 11 bankruptcy case and other expenses, the bankruptcy estate netted $236,000 or so from the sale, according to title documents filed with the bankruptcy court.
In February 2023, when Shefa LLC filed for its second bankruptcy tied to the hotel, the entity’s attorney said the filing was a result not only of an impending Oakland County Circuit Court hearing on a receivership but also whether his client wanted to continue spending money in a protracted legal battle that had been litigated in several courts over many years.
The city had repeatedly sought a receiver for the property. It has said Elhadad has not met promises made in his previous bankruptcy settlement and that the property has fallen even further into disrepair in the years since, including in a 2019 fire. Several dozen code violations have been issued over the years, the city says.
In court filings, Elhadad has claimed that the city and Downtown Development Authority were embarking on a land grab and suggested that antisemitism was at play.
Shefa paid about $10.4 million for the hotel in the November 2009 foreclosure auction, according to Southfield land records.
The hotel closed in 2010 when water and utility service was shut off due to nonpayment.
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