New York developer misses deadline to give back Herman Kiefer site

Yahoo

05-06-2025

It's been 10 years since a New York developer first unveiled an ambitious plan to buy and redevelop the sprawling Herman Kiefer campus in Detroit.
Today, the 38-acre hospital campus is still boarded-up — and still one of the last big, high-profile vacant sites in Detroit in need of a savior.
The city says the New York developer fell out of compliance with a development agreement and missed a deadline this week to hand back title to the property.
Detroit officials also want the developer, Ron Castellano, to return title to two abandoned former Detroit public schools buildings that are near the campus — the old Hutchins and Crosman schools.
Castellano's firm, Herman Kiefer Development LLC, acquired the Herman Kiefer campus and those school buildings for $925,000 in 2018. As part of the deal, his firm also gained control over about 115 vacant houses in the surrounding Virginia Park neighborhood at the discount price of $500 to $1,000 apiece, plus another 375 vacant lots.
The city contends that Castellano's firm has been out of compliance with the agreement since last year, and June 4 was the deadline to hand over the properties.
Although the agreement calls for a refund of the purchase price to the developer in the event of such a "reconveyance," city officials claim that the site's unpaid property, water and sewerage bills exceed $925,000, so no money will be returned.
On Thursday morning, June 5, the old hospital and its surrounding campus of red brick buildings appeared completely empty. The Free Press found a security guard and the property's manager outside, and the manager confirmed they have no tenants so far for the buildings.
Luke Polcyn, the city's senior executive for development and economic transformation, said the developer's firm indeed missed this week's deadline to hand over the properties.
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'That is not what the city bargained for when we did this development agreement,' Polcyn said. 'The expectation was we would have more progress by now.'
Polcyn said he was reluctant to share what the city's next steps will be.
"We're pressing our remedies and intend to enforce the development agreement,' he said.
Castellano didn't return a message seeking comment Thursday that was left with the property manager.
The developer has also struggled to meet the city's deadlines for rehabbing all of the vacant houses that were a part of the deal.
Last year, 44 of the 115 or so houses had to be reconveyed to the Detroit Land Bank Authority, Polcyn said, and over 50 additional houses were transferred over to third-party developers to fix up. Polcyn said Castellano has been credited with rehabbing about 15 of the houses in the deal.
The inclusion of so many houses in the deal was once a point of controversy in the neighborhood, as some residents felt frustrated by the initial pace of the rehab work and how at the time the houses were unavailable for others to buy and fix up.
The controversy eased up as Castellano began working with local partners and community groups to get the houses done.
As for the Herman Kiefer campus, Polcyn said the developer fell out of compliance on two counts of the development agreement:
Failure to invest at least $20 million or activate at least 35% of the property by last year.
Failure to make required annual investments of $2 million per year starting in 2023.
'We demanded reconveyance title to the hospital and schools, because of the defaults," he said.
The Herman Kiefer campus has been vacant since Detroit's Health Department moved out in 2013.
Castellano tried marketing the site as the Creative Commerce Campus Detroit, or C3D, but found Detroit's post-pandemic office space market to be challenging.
Around springtime last year, Detroit Mayor Mike Duggan was said to be spotted giving a tour of the site to Detroit Lions President Rod Wood. Crain's Detroit reported that the Herman Kiefer campus was one option under consideration if the NFL team were to relocate its Allen Park training center to a new location.
However, Wood said earlier this year that the team is now in the process of renovating the Allen Park center and has no plans to move.
Contact JC Reindl: 313-378-5460 or [e-mail]. Follow him on X @jcreindl
This article originally appeared on Detroit Free Press: Developer misses deadline to give back Herman Kiefer site