Are tax breaks for development ‘the best deal’ for Detroiters?

May 8, 2024

Bridge Detroit: Are tax breaks for development ‘the best deal’ for Detroiters?

Blockbuster deals involving corporations extracting hundreds of millions of dollars from Detroit residents are becoming increasingly controversial, often failing to live up to jobs promises, hitting investment targets and helping ordinary people. BridgeDetroit took a closer look at the recent Hudson Detroit project, which has led to jobs moving from one part of the city to another, despite receiving over $60 million in subsidies.

City officials claim the project has been beneficial, adding tax revenue and creating jobs.

From the article:

But the city’s argument rests on an often untrue assumption – the development would not have happened without the tax incentives, said Jacob Whiton, a research analyst with Good Jobs First and a former Detroit Economic Growth Corporation strategy and operations analyst who worked on tax incentives for Detroit. That assumes the choice “is binary – either the development happens or doesn’t,” Whiton added. The Hudson was half built by the time Bedrock came back for more incentives, so Gilbert would not have abandoned it, but it would likely have been more “modest,” he said.

There is also a “gold plating effect” in which developers know they can get an incentive so they create plans that include amenities or a size that is not necessary, Whiton said.

“There may very well have been a profitable way to redevelop the Hudson site without this extent of public financial support – it just might not have been as tall or had as many hotel rooms,” Whiton said. “If we collected the tax revenue on that more modest project, then reinvested the money we saved, would the net economic impact have been greater?”

Read the full story at Bridge Detroit.