Delay, decay, repeat. How Develop Detroit's Hive project turned into a rat's nest

The Hive sure looks good in artist's renderings, where a century-old industrial site known for street art and the former Busy Bee Hardware warehouse is transformed into an urban oasis full of color and life — a veritable beacon welcoming residents and shoppers to a triangular hunk of heaven across from Detroit's Eastern Market.

But real life in the Big City rarely lives up to the prospectus. It wasn't until bricks rained down from the top of a warehouse in Eastern Market last month that anyone other than Eric Grosinger and city inspectors had paid much attention to the decrepit buildings along nearby Gratiot Avenue.

Now, Develop Detroit, a nonprofit with an otherwise admirable track record of building affordable housing, is the target of two lawsuits seeking to finish the work that time, nature and neglect started.

Grosinger's company, Kap's Wholesale Food Services, sued in July asserting that one of Develop Detroit's buildings was "structurally unsound, lacks a functional roof and harbors rodents and other likely vermin." Grosinger wants the buildings razed.

The city sued a month later, branding the site a public nuisance and asking a judge to appoint a receiver to oversee the properties or hand them over to the city for cleanup or demolition. A city lawyer wrote that "not only have defendants failed to cure or remediate the blight at the subject properties, but defendants have taken the remarkable position that they will do nothing to remediate the blight or tear down the dangerous structures, but will merely pay the blight tickets as they accrue."

The city lawyer's use of bold, italic and underline in the lawsuit is one measure of the city's ire. Another may have been including Develop Detroit CEO Sonya Mays as a defendant in the lawsuit. If Mays' name sounds familiar, it could be because she has twice been elected to the Detroit Public Schools Community District school board.

Despite the legal rancor and falling roofs ... and walls ... and floors ... and bricks, Mays says Develop Detroit is still committed to turning its two-dimensional dreamscape into a 3D reality.

So far, after striking a deal with the city to avoid losing control of the site, it has only erected some scaffolding and fencing to protect pedestrians and keep people off the property.

All abuzz about The Hive

Develop Detroit started about eight years ago with the noble mission to create affordable housing and commercial developments to help stabilize neighborhoods and combat the racial and economic disparities in a city whose revival often seems reserved for people who can afford craft cocktails.

It has done pretty well. Completed projects include Marwood + Marston in Detroit's North End, where Develop Detroit built townhouses and renovated a century-old apartment building just east of Woodward that is on the National Register of Historic Places. Three dozen of the units are for Detroiters earning 50% or less of the area median income. At Garfield and John R in Midtown, Develop Detroit helped create The Freelon at Sugar Hill. Apartments, retail space and a parking garage replaced a vacant lot across from the John D. Dingell VA Medical Center. Some of the apartments are for homeless veterans.

Other projects Develop Detroit announced included The Hive, a welcome splash of color and affordable housing at the corner of Gratiot and Russell just east of downtown. The goal was — and is — to create residences, workshops, galleries, shops and a food court in a prime location for folks priced out of tony condos and pricey rehabs. Signature elements of the project included preserving century-old warehouses (or at least their facades) and the murals that have adorned them long after their occupants split.

The project embodies the essence of Develop Detroit.

"We were created specifically to address whether there were going to be two Detroits," Mays told the Michigan Chronicle in 2017. "What we do is use real estate and housing and commercial developments for longtime Detroiters, so they can stay in their homes and neighborhoods and feel they are a part of Detroit, and not feel that they are being pushed out."

Then, in early 2020, the COVID-19 pandemic hit. Mays told me financing for what was already a complicated deal became virtually impossible.

Grosinger, who owns commercial buildings and runs a wholesale meat distributor located just behind land set aside for The Hive, told me he initially supported the project — with reservations.

His concerns included adding people and foot traffic to an area where delivery trucks regulary rumble to and from his Kap's Wholesale Food Services and nearby businesses, including Germack nuts, the Detroit City Distillery and Detroit Vineyards.

Grosinger said business along Maple Street has increased since The Hive was announced, but it's the lack of progress that turned him from tepid ally to rabid foe.

"Things change, and that’s fine," he said. "Except they’ve made zero progress.”

One thing that has changed is the condition of the buildings. Roofs and walls and floors have collapsed over the last several years, leaving the buildings open to trespass, creating a haven for vermin and allowing whatever hazardous materials were left inside to blow throughout the neighborhood.

“It’s hard to have a food court in a building that’s collapsed and contaminated, don’t you think?” Grosinger opined.

You've got mail ... somewhere

City inspectors also took notice of the deterioration along Gratiot. They repeatedly wrote blight tickets to Develop Detroit that went unanswered. In June, the city sent Develop Detroit warnings that some of its buildings on The Hive site were dangerous and that the city might knock them down and send the nonprofit a bill.

Mays said Develop Detroit didn't respond to these warnings because the city sent them to an address the nonprofit had vacated several years before.

“I really don’t have an explanation for that,” Mays told me.

When I asked whether Develop Detroit gave the post office a forwarding address, spokesman Luke Londo said they "established a forwarding address immediately after their move while they updated their address with every relevant source. ... As Develop Detroit had been receiving other correspondence from the city, I can't speak to why mail from different departments went to different addresses."

While mail piled up at its old digs downtown, Develop Detroit settled into a new HQ in Harmonie Park that is less than a mile from The Hive site. Nevertheless, Mays says Develop Detroit officials didn't see blight notices posted on the buildings. She said some were found on the ground.

It doesn't require a building inspector's keen eye to see the toll time and the elements were taking on warehouses Develop Detroit was counting on to give its project some historic flavor.

There was also a nosy, noisy neighbor raising the alarm.

Forewarned

Emails between Grosinger and Develop Detroit officials leave no doubt Mays and her team were aware of concerns about The Hive long before the city took action.

In a November 2021 email, Grosinger told Mays roofs had collapsed, trees were growing out of buildings and construction debris littered lots along Maple. He offered to buy some of the property. Grosinger had been corresponding with Develop Detroit officials about the site since at least the summer of 2020. Occasionally, he sent pictures illustrating the decay.

In April 2022, Mays wrote back to Grosinger that Develop Detroit was reviewing the project and could not respond to his offers yet. A couple months later, she wrote to him that Develop Detroit was still committed to building The Hive and asked him to send a list of problems he identified with the property to the nonprofit's lawyer.

A year later, approvals Develop Detroit received for the project were expiring. At a chaotic meeting of the City Planning Commission this summer, commissioners agreed to give Develop Detroit time to settle its blight violations despite city code that says "a person is ineligible to apply for a rezoning, site plan approval, special land use approval, planned unit development approval, variance, or other zoning authorization where the person is delinquent in paying a civil fine, costs, or a justice system assessment imposed by the Blight Administrative Hearings Bureau."

Develop Detroit officials said they invested $8 million in the project and couldn't do anything until they received additional financing.

"The blight is going to continue to be blighted until we can redevelop the site," a Develop Detroit officials told commissioners.

Grosinger, who attended the meeting and urged commissioners to let the project's approvals lapse, later told me: "I think the City Planning Commission tried to give life to Frankenstein. Something’s dead but they wanted to give a little life to it because it was sexy … instead of realizing after five years or six years that it was a dead deal.”

Mays disagrees. She said the deals Develop Detroit tackles are more complicated than most real estate projects. That frustrates her, too. But she predicted that, in a few months, The Hive will secure the crucial funding it needs to move forward.

Fences make good neighbors

City lawyers were just as mad as Grosinger to hear Develop Detroit had no plans to address the blight at The Hive site until it got some honey.

Yet, two weeks after suing Develop Detroit, the city and the nonprofit reached an agreement calling for Develop Detroit to pull weeds, remove trash and kill any rats. Both sides agreed the nonprofit would put up fences to close off access to the site, and demolish some buildings before December.

Grosinger isn't satisfied, and is scheduled to argue his case before a judge next month.

“I wish the developers were more responsible. Had they been more responsible and more communicative, I think a lot of this could have been avoided," he told me. "The adage is, 'You make your bed, you sleep in it.' ”

Mays says Grosinger is entitled to his opinion, but she said The Hive will rise — albeit without some signature elements, like the now-crumbling facade of the Busy Bee Hardware warehouse.

"We take on tough projects and we see them to the end," she said, adding, "Sometimes, the naysayers and the NIMBYs, their voices can rise to the top … but I’m confident that we have a tremendous amount of support for this project."

NIMBY stands for "Not In My Backyard." It's a term used to dismiss opponents to development projects. In this case, The Hive is in Grosinger's front yard.

Now that Develop Detroit has installed some fences to secure its property, it may want to mend fences with its next-door neighbor.

That effort might save the nonprofit a fortune, without costing a dime.

M.L. Elrick is a Pulitzer Prize- and Emmy Award-winning investigative reporter and host of the ML's Soul of Detroit podcast. Contact him at mlelrick@freepress.com or follow him on Twitter at @elrick, Facebook at ML Elrick and Instagram at ml_elrick.

This article originally appeared on Detroit Free Press: How Develop Detroit's Hive became a rat's nest