Ford demands millions from taxpayers to rehab icon of Detroit's blight
Automaker’s plans come at a $740m price, of which taxpayers would cover $239m, and insists public assistance is necessary
For three decades, the 18-story, beaux arts Michigan Central Station sat vacant on downtown Detroit’s edge, a hulking, decaying symbol of the economic struggles in the city around it. Today, as greater downtown rebounds, it’s one of the last vestiges of an era the city is trying to put behind it.
But that’s likely to change. In May, the Dearborn-based automaker Fordannounced plans to spend $740m on a new 1.2m sq ft autonomous vehicle campus of which a rehab of the 105-year-old train station is the centerpiece. One problem: it wants taxpayers to cover $239m of the $740m price tag.
The public would do so with a package of tax incentives pulling money from the city, state, county and local schools. On Tuesday, the Detroit city council will consider $103m in incentives that would come from the city, and, ahead of the vote, Ford is insisting the project isn’t financially feasible without public assistance.
However, there’s debate over whether a city that emerged from bankruptcy just three years ago and only has $169m in its unassigned fund balance should approve a lucrative tax deal for a multinational corporation with nearly $17bn on hand. The council president pro tem, Mary Sheffield, called parts of the package “excessive”, while a range of residents and community groups are vocally opposed.
“In a perfect world, we wouldn’t have these incentives at all, but that’s not our political reality in Detroit,” said Linda Campbell of Equitable Detroit, a group pushing for a stronger community benefits agreement for the deal. She called the $10m community benefits agreement Ford is offering “meager”.
Meanwhile, the right-leaning Mackinac Center pointed to studies that show tax incentives often don’t result in the desired economic impact, partly because they divert funding from other city services.
“In this case, that could mean fire and police equipment not purchased or repaired; school books unbought; or even broad-based tax relief for all businesses, not just one,” said Michael LaFaive, the Mackinac Center’s fiscal policy director. “Government ultimately has nothing to give anyone it doesn’t take from someone else.”
Though approval of the deal won’t immediately divert school funds, there’s still concern over the optics of giving Ford school money when the financially struggling Detroit Public Schools Community District can’t afford to address elevated lead levels in its buildings’ water.
In making the case for public assistance, Ford is highlighting the project’s scope. The 500,000 sq ft station would hold offices, condos in its top two floors, and retail and restaurants on the ground floor. It’s targeting a 2022 completion at which time the campus may hold 5,000 employees, most of whom will relocate from Ford’s Dearborn headquarters or its suppliers. In other words, these are largely not new positions, and there are no clawbacks built into the deal if the jobs don’t materialize.
The city and Ford are also touting an estimated $370m net benefit to Detroit over the incentives’ 34-year life.
“The benefits to the city in the form of jobs and income tax revenue are immediate and far outweigh the cost of a property tax incentive,” said Arthur Jemison, the city’s chief of infrastructure and services. Critics, however, have noted these claims are based off city and Ford projections – not those of an independent body – and are full of vague assumptions.
Beyond the benefit claims, there’s symbolism in the city’s and company’s narratives intersecting in the train station’s revival, which makes for excellent PR – Detroit’s charting its comeback, and so is Ford, in a sense, as it embarks on a massive reorganization.
“It’s not just a building,” Ford’s executive chairman, Bill Ford Jr, told the Detroit News in June, it’s “about all the connections to Detroit, to the suburbs, and the vision around developing the next generation of transportation.”
Without the taxpayers’ help, that vision might disappear, the company claims, while regularly raising the idea of demolition as an alternative.
“The building has been shot for three decades and there’s been significant damage over all those years, so the cost to renovate a structure like that is so significant that it would be cost prohibitive [without public assistance],” a Ford spokeswoman, Christina Twelftree, told the the Guardian. “The cost to demolish is far less.”
She also denied there was much opposition to the incentives, but aside from Equitable Detroit and the Mackinac Center, the liberal Detroit Free Press columnist Nancy Kaffer wrote in a September column that officials pushing for such incentive packages are “more concerned with scoring high-profile wins than making sustainable progress toward a healthy city and state”, and urged Detroit “to call Ford’s bluff”.
Indeed, Detroit regularly hands out subsidies to wealthy developers, including $250m – with school money – for Quicken Loans’ founder, Dan Gilbert. That was part of a larger state package worth $618m.
At a city council committee meeting last week, council member Raquel Castañeda López voiced concerns about housing affordability for current residents, the project’s environmental impact, and the need for additional community benefits, several of which Ford declined to commit to addressing.
Equitable Detroit’s Campbell said they were also focusing on securing a stronger community benefits agreement, and will ask city council to demand more benefits before approving the deal.
“The reality is [city council is] going to give them the abatement. Given that reality, we’re asking ‘What is it that Detroiters should reasonably expect in return?’” Campbell said.
She and Equitable Detroit’s Amina Kirk said the Neighborhood Advisory Council that ultimately approved the deal’s community benefits agreement discussed a package worth between $39m and $75m, which they say is in line with similar agreements in other cities.
They charge that Ford did not negotiate when it counter-offered a deal worth $10m, and further questioned the entire process, along with the philosophy driving the conversation over corporate welfare in Detroit.
“There’s a narrative of scarcity that says we have to be grateful for whatever we’re offered because we’re Detroit … and we shouldn’t have standards and requirements of corporations because we need development at all costs,” Kirk said. “That’s a stream of propaganda from developers, and it’s a race to the bottom.”
https://www.theguardian.com/us-news...om-taxpayers-to-rehab-icon-of-detroits-blight
Automaker’s plans come at a $740m price, of which taxpayers would cover $239m, and insists public assistance is necessary
For three decades, the 18-story, beaux arts Michigan Central Station sat vacant on downtown Detroit’s edge, a hulking, decaying symbol of the economic struggles in the city around it. Today, as greater downtown rebounds, it’s one of the last vestiges of an era the city is trying to put behind it.
But that’s likely to change. In May, the Dearborn-based automaker Fordannounced plans to spend $740m on a new 1.2m sq ft autonomous vehicle campus of which a rehab of the 105-year-old train station is the centerpiece. One problem: it wants taxpayers to cover $239m of the $740m price tag.
The public would do so with a package of tax incentives pulling money from the city, state, county and local schools. On Tuesday, the Detroit city council will consider $103m in incentives that would come from the city, and, ahead of the vote, Ford is insisting the project isn’t financially feasible without public assistance.
However, there’s debate over whether a city that emerged from bankruptcy just three years ago and only has $169m in its unassigned fund balance should approve a lucrative tax deal for a multinational corporation with nearly $17bn on hand. The council president pro tem, Mary Sheffield, called parts of the package “excessive”, while a range of residents and community groups are vocally opposed.
“In a perfect world, we wouldn’t have these incentives at all, but that’s not our political reality in Detroit,” said Linda Campbell of Equitable Detroit, a group pushing for a stronger community benefits agreement for the deal. She called the $10m community benefits agreement Ford is offering “meager”.
Meanwhile, the right-leaning Mackinac Center pointed to studies that show tax incentives often don’t result in the desired economic impact, partly because they divert funding from other city services.
“In this case, that could mean fire and police equipment not purchased or repaired; school books unbought; or even broad-based tax relief for all businesses, not just one,” said Michael LaFaive, the Mackinac Center’s fiscal policy director. “Government ultimately has nothing to give anyone it doesn’t take from someone else.”
Though approval of the deal won’t immediately divert school funds, there’s still concern over the optics of giving Ford school money when the financially struggling Detroit Public Schools Community District can’t afford to address elevated lead levels in its buildings’ water.
In making the case for public assistance, Ford is highlighting the project’s scope. The 500,000 sq ft station would hold offices, condos in its top two floors, and retail and restaurants on the ground floor. It’s targeting a 2022 completion at which time the campus may hold 5,000 employees, most of whom will relocate from Ford’s Dearborn headquarters or its suppliers. In other words, these are largely not new positions, and there are no clawbacks built into the deal if the jobs don’t materialize.
The city and Ford are also touting an estimated $370m net benefit to Detroit over the incentives’ 34-year life.
“The benefits to the city in the form of jobs and income tax revenue are immediate and far outweigh the cost of a property tax incentive,” said Arthur Jemison, the city’s chief of infrastructure and services. Critics, however, have noted these claims are based off city and Ford projections – not those of an independent body – and are full of vague assumptions.
Beyond the benefit claims, there’s symbolism in the city’s and company’s narratives intersecting in the train station’s revival, which makes for excellent PR – Detroit’s charting its comeback, and so is Ford, in a sense, as it embarks on a massive reorganization.
“It’s not just a building,” Ford’s executive chairman, Bill Ford Jr, told the Detroit News in June, it’s “about all the connections to Detroit, to the suburbs, and the vision around developing the next generation of transportation.”
Without the taxpayers’ help, that vision might disappear, the company claims, while regularly raising the idea of demolition as an alternative.
“The building has been shot for three decades and there’s been significant damage over all those years, so the cost to renovate a structure like that is so significant that it would be cost prohibitive [without public assistance],” a Ford spokeswoman, Christina Twelftree, told the the Guardian. “The cost to demolish is far less.”
She also denied there was much opposition to the incentives, but aside from Equitable Detroit and the Mackinac Center, the liberal Detroit Free Press columnist Nancy Kaffer wrote in a September column that officials pushing for such incentive packages are “more concerned with scoring high-profile wins than making sustainable progress toward a healthy city and state”, and urged Detroit “to call Ford’s bluff”.
Indeed, Detroit regularly hands out subsidies to wealthy developers, including $250m – with school money – for Quicken Loans’ founder, Dan Gilbert. That was part of a larger state package worth $618m.
At a city council committee meeting last week, council member Raquel Castañeda López voiced concerns about housing affordability for current residents, the project’s environmental impact, and the need for additional community benefits, several of which Ford declined to commit to addressing.
Equitable Detroit’s Campbell said they were also focusing on securing a stronger community benefits agreement, and will ask city council to demand more benefits before approving the deal.
“The reality is [city council is] going to give them the abatement. Given that reality, we’re asking ‘What is it that Detroiters should reasonably expect in return?’” Campbell said.
She and Equitable Detroit’s Amina Kirk said the Neighborhood Advisory Council that ultimately approved the deal’s community benefits agreement discussed a package worth between $39m and $75m, which they say is in line with similar agreements in other cities.
They charge that Ford did not negotiate when it counter-offered a deal worth $10m, and further questioned the entire process, along with the philosophy driving the conversation over corporate welfare in Detroit.
“There’s a narrative of scarcity that says we have to be grateful for whatever we’re offered because we’re Detroit … and we shouldn’t have standards and requirements of corporations because we need development at all costs,” Kirk said. “That’s a stream of propaganda from developers, and it’s a race to the bottom.”
https://www.theguardian.com/us-news...om-taxpayers-to-rehab-icon-of-detroits-blight
