The New York developer who attempted to redevelop Detroit’s vacant Herman Kiefer hospital campus is now suing the city and its land bank authority, accusing them of obstructing and undermining the project.
Corporate entities tied to developer and architect Ron Castellano filed the lawsuit last week in U.S. Bankruptcy Court. Castellano’s limited liability corporations for the project have been in Chapter 11 since June 2025, having declared bankruptcy a few days after the city demanded they hand back title to the boarded-up 38-acre campus — including two nearby abandoned former Detroit public schools, Hutchins and Crosman schools — for noncompliance with a 2018 development agreement.
The city at the time said Castellano was out of compliance for having failed to invest at least $20 million or reactivate at least 35% of the sprawling campus by a 2024 deadline.
On Monday, June 15, the two abandoned schools and most, if not all, of the Herman Kiefer campus still appeared empty and undeveloped. However, there was a video crew present shooting a Nike Air Jordan commercial on the campus’s basketball courts.
The lawsuit, filed June 11, accuses the city and the Detroit Land Bank Authority of obstructing development progress by, among other things, withholding necessary site approvals, encouraging community opposition, bombarding the project with an “onslaught” of code violations for minor things, and “ultimately shifting their posture from collaborative partner to adversary.”
The lawsuit seeks a declaration that it was the city — and not the project’s development entities — that breached the development agreement and that there are no more obligations for Castellano’s entities to fulfill. It also seeks an unspecific amount of damages from the city.
A city of Detroit spokesman had no comment for this story.
“There were prospective tenants and opportunities to fulfill on this vision,” a spokesperson for the development said in a statement. “And while downtown and Midtown were heavily prioritized, Herman Keifer (sic) got zero attention and, if anything, the city did everything in its power to undermine its success so it could take back the property.
“If there had been a sincere effort on the city’s part to adhere to the terms and intent of the agreements we entered, Herman Keifer (sic) would be a thriving mixed-use community.”
Castellano’s firm, Herman Kiefer Development LLC, acquired the old city hospital campus and the two empty school buildings for $925,000 in 2018. As part of the development 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 numerous vacant lots.
The city has previously said that 44 of those 115 or so houses were reconveyed back to the Detroit Land Bank Authority in 2024, and more than 50 additional houses were transferred over to third-party developers to fix up. The city credited Castellano with rehabbing about 15 of the houses in the deal, a city official previously said.
The inclusion of so many houses in the original deal was once a point of controversy in the Virginia Park neighborhood, as some residents felt frustrated by the initial pace of the rehab work and how the houses at the time were unavailable for others to buy and fix up.
The controversy eased up once Castellano began working with local partners and community groups to get more of the houses done.
The lawsuit claims that the administration of former Detroit Mayor Mike Duggan went from being a friend of the redevelopment project to a foe in 2021 for political reasons by withholding necessary approvals, encouraging community opposition and quietly advancing other development concepts.
For instance, the city initially didn’t disclose to Castellano’s crew how the property was under consideration in 2023 as a possible site for a Detroit Lions training facility, if the NFL team had opted to relocate from its Allen Park training center, according to the lawsuit.
The Herman Kiefer campus has been vacant since Detroit’s Health Department moved out in 2013. The main seven-story hospital building, designed by Albert Kahn, opened in 1928 and was later expanded.
Contact JC Reindl: 313-378-5460 or jcreindl@freepress.com. Follow him on X @jcreindl
This article originally appeared on Detroit Free Press: Unfulfilled plan for Detroit’s Herman Kiefer hospital focus of lawsuit
Reporting by JC Reindl, Detroit Free Press / Detroit Free Press
USA TODAY Network via Reuters Connect
By JC Reindl, Detroit Free Press | USA TODAY Network
