J.C. Reindl and John Gallagher

Detroit Free Press

Construction of new building to happen by April 1, 2017

Building to be substantially finished no later than April 1, 2020

Would contain 225,000 square-feet of office and retail space

Clarification: An earlier version of this story was changed to clarify the 20% rule on affordable housing at the downtown Detroit Hudson’s site planned for redevelopment. The 250 apartments may or may not include “affordable” units for lower middle-income residents. Dan Gilbert’s Bedrock Detroit real estate firm could choose instead to set aside the equivalent number of units at other Bedrock developments in a wider downtown and Brush Park zone.

Billionaire businessman Dan Gilbert received preliminary go-ahead Wednesday to construct a highly anticipated new building on the site of the old J.L. Hudson department store that would fill a decades-long physical and emotional vacancy in downtown Detroit.

The Detroit Downtown Development Authority approved a tentative deal to sell the underground, city-owned parking garage on the Hudson’s site to an affiliate of Gilbert's real estate arm for $15 million. That agreement clears the way for Gilbert to redevelop the vacant surface of the Woodward Avenue property with a new, architecturally significant building.

The 2-acre land transfer, however, is still subject to approval by Detroit City Council and the Financial Review Commission set up to monitor the city's finances after bankruptcy.

Gilbert's firm currently enjoys a Renaissance Zone designation at the Hudson's site that runs through 2026. Renaissance zones are generally free of almost all state and local taxes for businesses located within their boundaries to help foster redevelopment.

The proposed building -- whose cost, scale, height and name have yet to be determined -- would include 225,000 square feet of commercial, retail and community gathering space as well as 250 apartments, some of which could be set aside as "affordable." Construction could start in April 2017 and finish by spring 2020.

"For all of us who are longtime Detroiters, this is pretty emotional," said Mayor Mike Duggan, who chaired the DDA meeting.

Duggan also praised Gilbert's development firm for a new proposed affordable housing agreement with the city that would commit the firm to reserving 20% of the next 1,350 rental units it develops in greater downtown and Brush Park as "affordable" units for people making below certain income thresholds. However, the apartments planned for the Hudson's site project would not necessarily have to include affordable units.

The Duggan administration views set-aside requirements as one strategy for helping to ensure that a broad section of residents benefit from the economic revitalization occurring in Detroit's greater downtown.

In addition, at least 51% of the construction work at the Hudson's site must be done by Detroit residents and 30% of the contractors must be based in Detroit.

Gilbert has long held the rights to redevelop the Hudson's site, and last year released a striking architectural image of a potential building designed by New York-based SHoP architects. But the building's ultimate design is still being finalized, said Matt Cullen, president and CEO of Gilbert's Rock Ventures.

"It was such an iconic site in the history of the city," Cullen said. “We really want the Hudson’s site to feel like it did before, where the entire community came together and had things to do and enjoy.”

Cullen said the project's consultants have even sat down and presented details of the project with members of the Hudson family. "We're really excited about the legacy of Hudson's there and I'm sure that will be celebrated in an appropriate way," he said.

Hudson’s red brick flagship opened in 1911 and grew to 25 stories and encompassed an entire city block. It was considered the second-largest department store in the world. But unable to stem 30 years of falling sales, the store closed in January 1983 in what was felt as a devastating blow to downtown Detroit.

The building still housed Hudson's corporate offices until 1990. The entire structure was then spectacularly imploded in 1998 after a number of failed attempts to redevelop it, including ideas for a casino. Since then, a variety of suggested projects have come and gone, with the four-level underground parking garage the only new construction on the site.

The garage's outer walls once were part of the foundation of the landmark department store and its roof was designed to be a pad for any future office and retail building. The garage opened in 2001 with over 900 parking spaces and cost the city a reported $39 million to construct.

City officials said Wednesday that the garage was recently appraised for $16.5 million, and the $15 million sale price reflects $1.5 million in deferred maintenance and needed repairs. Gilbert's Bedrock Detroit intends to renovate the garage and reduce its capacity to about 700 spaces.

The Hudson's project will rank among Gilbert's largest redevelopment undertakings. The founder of Detroit-based Quicken Loans and owner of Greektown Casino-Hotel, Gilbert and his real estate partners own or control more than 80 buildings and retail sites in downtown Detroit.

While most of his properties are existing buildings, Gilbert's development team built the "The Z" garage and mixed-use complex on Library Street that houses popular Punch Bowl Social and last month started work on an all-new residential building around Capitol Park that could contain micro living spaces for young adults.

Gilbert gained development rights to the Hudson's site in 2007, when he was looking at locations to build a new headquarters in the city for Quicken Loans, then based in Livonia. The mortgage lender ultimately decided to move into existing buildings in downtown.

Detroit officials said they intend to use the $15 million in proceeds from the pending sale of the Hudson's site garage to pay down city debt.

Contact JC Reindl: 313-222-6631 or jcreindl@freepress.com. Follow him on Twitter@JCReindl.

Hudson's redevelopment facts: