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Dan Gilbert's jail play to be a deal Wayne County can't refuse

Feb 11, 2017

Who would ever think there could be so much riding on a county jail?

Mortgage mogul Dan Gilbert is ready to spend $420 million to build a new criminal justice complex for Wayne County. And he only wants $300 million to do it.

That’s how he plans to persuade County Executive Warren Evans and the county commission this will turn out to be a deal they can't refuse.

When the due diligence is done, and it will be, before too long the county won’t just take the deal. They’ll take it and run.

Gilbert’s Rock Ventures will build the complex assume the risk for inevitable cost overruns and squire the county’s consultants around the country to see first-hand the handiwork the propose to build in the east side of I-75.

Why else take it?

Because they get a $420 million package for a $300 million price tag. Because they’ll get a billion-dollar redevelopment of the abandoned jail site on Gratiot Avenue in downtown Detroit and maybe even a Major League Soccer stadium. Because all that promises to generate a whole lot more tax revenue that any jail or criminal court or juvenile detention center ever would.

Wayne County would get the best of both: a new criminal justice complex and another new development on the eastern edge of downtown. It also would be relieved of a particularly heavy burden for a county just starting to recover financially.

That’s responsibility for the kind of cost overruns that stopped the Gratiot jail project dead and left county taxpayers paying $1.2 million a month on the debt.

A vital lesson learned in meltdown and revival is that it seldom pays to try to do everything.

Managing that risk ain’t nothing.

It’s huge, as County Executive Warren Evans conceded in an interview this week. And the county has a dismal record doing it.

A vital lesson learned in meltdown and revival is that it seldom pays to try to do everything. Do what you do best, and leave the rest to experts or people with the dough to hire them.

This is an inflection point for Wayne County. When Evans took office two years ago, the state’s most populous county looked headed for Chapter 9 bankruptcy, an emergency manager or both.

But Evans recruited a financially savvy team. He used harsh lessons of Detroit’s bankruptcy to wrest concessions from unions. He began to shore up county pension funds. And he schooled commissioners on financial reality and the cost of denial.

The half-finished jail project is a symbol of that denial. It’s a memorial to the financial cluelessness of the last county administration, forever marred by $150 million wasted there. That dough is what real estate pros call “sunk cost,” which means taxpayers will never realize any value for it.

It’s gone.

Detroit’s downtown empire builder wants this jail deal, badly. Why else would Gilbert propose taking $120 million less for the project?

Because he’s right on the merits: a gateway to the east of downtown Detroit should look like one and this new plan is the best chance, so far, to get there.

Daniel Howes is a columnist at The Detroit News. Views expressed in his essays are his own and do not necessarily reflect those of Michigan Radio, its management or the station licensee, The University of Michigan.