  Lowell Board Administrator Username: Lowell Post Number: 4326 Registered: 10-2003 |
And he makes a good point. While I am pleased that Gilbert will move and build downtown, the deeper issue of why governmental bodies are forced into bidding contests, with tax payer dollars, to lure businesses is worth reconsideration. Crain says there should be a federal law against it. quote:While I think there should be some exception for truly disadvantaged areas, I generally agree. How about you? | ||
Quinn Member Username: Quinn Post Number: 1545 Registered: 01-2005 |
Well after some thought I disagree. Keith Crain has been in Detroit since 1971 when things we're looking good (Renaissance center plans, pre-gas shortage, Detroit Auto still #1). Sure he could have left the city when they moved over to Gratiot, but they didn't because it must have made good business sense. Now Detroit is in much worse economic shape. It's going to take a lot extra to get business down here. I see this argument compared to ones I've heard from people who are missing out on the NEZ breaks. We've got a neighbor who bought before 1997 and is upset she doesn't get the break. Sure she paid 25% of what we paid...she doesn't see it that way. | ||
Quinn Member Username: Quinn Post Number: 1546 Registered: 01-2005 |
On further reflection...I can't imagine the phone lines NOT burning up back in 2000 (think it was then) before Crains moved into Stroh's old diggs. I can't imagine Keith not using the power of pulling out hundreds of workers to get some sort of break from the city or state. If he didn't, then he must not have needed to. Good for him. Anyone remember the specifics of the move? Was Strohs vacant? Did Crain's get it for a song? Were there any civic-fund-related incentives offered for Crain's to stay in Detroit? | ||
Toolbox Member Username: Toolbox Post Number: 1117 Registered: 10-2003 |
Crain Communications did not move into Stroh's "old digs". It was a vacant piece of land after the brewery was demolished. | ||
Novine Member Username: Novine Post Number: 281 Registered: 07-2007 |
A recent study out of Wayne State showed, as other studies have shown, that tax abatements have little positive impact on the overall economy of a community. There's no doubt that a Quicken project can have a positive impact. But that almost never translates into a community-wide impact. By the way, Detroit's only one of the offenders when it comes to offering generous tax abatements. Cities like Grand Rapids and Holland give out tax abatements to almost anyone who asks as compared to other cities that grant them rarely, if ever. | ||
Drm Member Username: Drm Post Number: 1157 Registered: 10-2003 |
Crain's moved into Brewery Park, Phase I of which was developed on the former brewery site in the late '80s and touted at the time as the first "suburban" office park in Detroit. There was press coverage at the time, so someone who cared to learn more could search the News or Free Press archives. | ||
Quinn Member Username: Quinn Post Number: 1547 Registered: 01-2005 |
Hmmm...I know it's called brewery park...and it wasn't a vacant piece of land. I thought Stroh had moved it's headquarters there before it was bought in 99 or 2000. | ||
Quinn Member Username: Quinn Post Number: 1548 Registered: 01-2005 |
Crain's didn't move there until 2000 though. They used to have different office space throughout downtown...one on the corner of 375 and Jefferson, another on Woodbridge. | ||
Spacemonkey Member Username: Spacemonkey Post Number: 268 Registered: 03-2006 |
Well, you have to give companies SOME kind of incentive to want to move to Detroit. What other incentive is there to relocate a business to Detroit City, besides money? Name one. If you think a company should move to Detroit out of good will, or for a love for the city, get real. Companies are all about profits and the bottom line. They have zero 'good will' obligations. Sadly. But factually. | ||
Iheartthed Member Username: Iheartthed Post Number: 2236 Registered: 04-2006 |
Any such legislation to limit tax incentives to lure companies has an ice cube's chance in Hell of surviving in DC. My opinion is that the state needs to do everything it possibly can to make Detroit proper an attractive place for businesses to locate and operate. If this means that Michigan needs to steer some companies to the city then do it and be honest about exactly what it is that you're doing. I'm not necessarily convinced that tax cuts are the only thing that needs to be done to fix the Metro... but let's face it, Detroit was not competing against the suburbs for Quicken. It was Michigan who was competing against other states that were attempting to lure them away, and those other cities were using their respective major city as a bargaining tool. | ||
Bearinabox Member Username: Bearinabox Post Number: 399 Registered: 04-2006 |
quote:True enough, but if Detroit can throw down incentives, so can every other city in America, and most have deeper pockets than Detroit. If one city does it, then every other city that wants a fighting chance at luring/keeping businesses is forced into doing it as well. Cities whoring themselves out to corporations like this inevitably leads to the cities growing poorer and poorer while corporations play cities off each other and laugh all the way to the bank. All a corporation has to do anymore if they want a taxpayer-subsidized influx of cash is threaten to relocate. Keith Crain's jealousy is hardly the point here. | ||
Fnemecek Member Username: Fnemecek Post Number: 2622 Registered: 12-2004 |
quote: Right now, we don't have a lot of other incentives because we've spent so much trying to lure businesses here from elsewhere. However, if we were to instead use those millions and millions of dollars to build up our city services then that wouldn't be the case any longer. | ||
Iheartthed Member Username: Iheartthed Post Number: 2240 Registered: 04-2006 |
quote: Start with the money they will want to pour into building a new hockey arena. | ||
Thejesus Member Username: Thejesus Post Number: 2826 Registered: 06-2006 |
There aren't too many things I'll give Kwame props for, but at least he understands the importance of using tax breaks to build downtown Detroit's entertainment district... If IHD were mayor, the Lions would playing at a new state-of-the-art facility in Pontiac, the Wings would move down river someplace, and Comerica Park would be located at the former Ladbrooke DRC site in Livonia... | ||
Johnlodge Member Username: Johnlodge Post Number: 3812 Registered: 10-2003 |
I'm not sure about the "fairness" of it, or how good it is overall for the country, but if Detroit wasn't doing it, you could forget about all the development you've seen over the last 10+ years. | ||
Iheartthed Member Username: Iheartthed Post Number: 2242 Registered: 04-2006 |
quote: Ahh yes, you speaking my name... It must be Monday. Did you have a nice holiday? I think Comerica Park and Ford Field are very nice buildings. I think the area looks good. I do not think that Detroit will see much benefit in pouring money into more stadiums for another pro sports team. That's not an "entertainment" district, it's a stadium district. When those sports teams aren't playing, that area is as lifeless as the abandoned buildings surrounding it. It wasn't even Kwame Kilpatrick's idea in the first place! There is a laundry list of things that Detroit can spend money on that will make it a much more attractive place than what another stadium will do. | ||
401don Member Username: 401don Post Number: 74 Registered: 11-2007 |
A new arena hasn't even been announced and there is griping over subsidies? It's my understanding that aside from infrastructure Ilitch is financing 100% of Comerica Park. Name another MLB owner paying as much. In Toronto, taxpayers spent over 600 million to build skydome. It was purchased by Ted Rogers, owner of the Jays, for 25 million. Now that's something to gripe about. | ||
Professorscott Member Username: Professorscott Post Number: 916 Registered: 12-2006 |
This form of subsidy is just another form. When millions of people and companies moved from cities to suburbs from 1955 to 1985, they were taking advantage of the freeways, water and sewer lines and new schools, built mostly with federal money, paid out mostly by the people who were or had been living in the cities and who had no say in how that money was spent. Livonia (just for one example) in its present form could not exist if it had to pay for all of its infrastructure while it was growing from a rural township into a large bedroom suburb. So using taxpayer money to benefit developers and others has been around for quite a long time. This use of it is a big yawn as far as I'm concerned. | ||
Johnlodge Member Username: Johnlodge Post Number: 3814 Registered: 10-2003 |
Good post Prof. That makes a lot of sense. Anyway, I still believe the redevelopment of Detroit benefits the entire region and State, so it is not a one-sided investment. | ||
Alan55 Member Username: Alan55 Post Number: 780 Registered: 09-2005 |
Why focus on large cities when talking about tax incentives? Every city, and every manufacturer, uses tax incentives to lure, and maintain it's tax base. Go to some city council meetings in Royal Oak or Romeo. Every few months there will be an item on the agenda like "Superb Industries seeking $1.2 million tax abatement on new plastic moulding machines." During the meeting, a company exec will stand up and say with a straight face, "Yes, we have to decide whether we want to install these new moulding machines here locally, or in our Aardvark, Nebraska plant, and the presence of a tax abatement will be critical in that decision." So the council caves in and grants a 12-year tax abatement. Often, as in the case of the GM Willow Run plant, the manufacturer closes the plant and moves the jobs 6 or 7 years later anyway. | ||
Digitalvision Member Username: Digitalvision Post Number: 455 Registered: 11-2003 |
The subsidies are sick but it's the game that must be played. In business, there are many things that aren't quite right but you have to do it because otherwise you can't compete. I do believe, however, that if Detroit focused on core services, there would be less need for these incentives. I also believe the suburbs have and still get a free ride. Developers in undeveloped areas should be forced to pay for any utility and infrastructure improvements themselves, instead of the state and counties handing out freebies that we can't afford as a state and frankly the local population usually doesn't want. The local populations of those areas live in the stix for a reason - they like the stix. I think it is utterly stupid to move out to 29 thousand mile road, and then expect to have all of the conveniences of when you lived on 10 mile. Instead of running, how about sticking around, improving your property and raising up the level of your area? | ||
401don Member Username: 401don Post Number: 77 Registered: 11-2007 |
I remember when Ross Perot ran for president. He was a little off the wall but two things he was right about - he said all corporations should pay a heavy tax to develop virgin land and free trade would kill American manufacturing. | ||
Bearinabox Member Username: Bearinabox Post Number: 400 Registered: 04-2006 |
quote:Which is why Keith Crain is proposing a ban on this sort of thing at the national level. Maybe it wouldn't level the playing field, but it would at least bring said field back down to earth. | ||
Detroitplanner Member Username: Detroitplanner Post Number: 1462 Registered: 04-2006 |
Crain ended up where he is because he took the Casino buyout when they were all going to be grouped together S of Jefferson. He got some money from the City, but keep in mind he doesn't have as many employees either. He should not expect the same kind of deal. (Message edited by Detroitplanner on November 26, 2007) | ||
Llyn Member Username: Llyn Post Number: 1878 Registered: 06-2004 |
FYI on the Crain's/Brewery Park comments: 1) Stroh's tore down the brewery and then built office buildings on the site. There were to be 3 phases, but only 1 and 2 were ever built. The vacant land is still there for phase 3. 2) I don't believe Stroh's ever had their headqtrs there. They just owned the site and developed it. 3) They sold the site to a developer (Etkin?). I think someone may have bought out the smaller building (which I believe is considered phase 1). 4) Crain's decided to move and purchased and occupied half of the larger (phase 2) building. They had an option to purchase the other half... I assume the option is still available. (Message edited by llyn on November 26, 2007) | ||
Mind_field Member Username: Mind_field Post Number: 823 Registered: 10-2003 |
United Airlines, currently located in suburban Chicago, is moving to downtown Chicago, and they are getting a lot of tax breaks, local and state, for relocating. My point is, subsidies are just a part of the game everywhere, even in Chicago with a vibrant, highly developed downtown with excellent services and ammenities. | ||
Taj920 Member Username: Taj920 Post Number: 269 Registered: 01-2004 |
Keith Crain actually moved the corporate headquarters from Chicago to Detroit without much fanfare, so he dserves kudos for that. Crain's was always bigger in Chicago with Crain's Chicago Business and Advertising Age. | ||
3rdworldcity Member Username: 3rdworldcity Post Number: 982 Registered: 01-2005 |
Subsidies may be how the game is played but I agree with Lowell that steps should be taken to prevent this type of corporate welfare. Cities should run themselves prudently and with reasonable tax structures, good schools, and good governance, and the corporations will come. My guess is that Quicken will never move downtown. The alleged move was announced because the mayor needed some good publicity for a change, and Gilbert wanted people to stop hounding him about a move. You have to read between he lines. Those of us on this forum who have substantial real estate backgrounds, while we'd love to see them move here, know it's a very long shot. Q has arguably been thinking about a move for at least a couple of years. Yet, Q has ONE YEAR to select a site, and ONE AND A HALF YEARS thereafter to do "due diligence." Nonsense. That means that in 2 1/2 years, if Q can come up with the money, it may decide to move, and start construction. That is, unless something turns up during due diligence to change their minds. Like Cleveland offering them a better deal. This is just not how major real estate deals are done. (And what happens if Toyota should want to build a HQ on one of the sites starting next year, '08? Q has the hammer because it controls the sites [the portion the city owns] for 2 1/2 years.) A worse giveaway is the several hundred million in tax breaks the city and state have pledged to Marathon in connection with its refinery expansion to handle Canadian heavy crude. If our elected idiot officials had done an ounce of their own due diligence they'd have learned that Marathon several months ago bought a small Canadian company with oil sands leases for over $6.5 billion U.S. and assumed several hundred million of debt. It announced at the time it would expand its Detroit refinery because by doing so it could obtain the additional refining capacity at one third the cost of doing it in Canada. Like the tax breaks were a deal maker/breaker. Yeah. Give Crain's credit for staying in Detroit, especially when the bulk of its business is in Chi and NY. I don't know what they paid for their building but Brewery Park was in financial distress from the day it opened. Met Life (the lender) was offering the buildings to anyone who would come up with a $500 down payment (joke, but not by much.) | ||
Detroit_stylin Member Username: Detroit_stylin Post Number: 5345 Registered: 10-2003 |
quote: He also called a certain segment of the population "you people".... | ||
Jerome81 Member Username: Jerome81 Post Number: 1657 Registered: 11-2003 |
I think I might agree with Crain. It isn't a level/fair playing field. Detroit wants Quicken. So do a lot of other places. Lets say they all have the exact same tax/cost structure. The only choice is where the company wants to be located. Now, if even ONE of those locations has the ability to start throwing around money, EVERY SINGLE OTHER CITY must also start throwing around the money just to stay in the game. Seems rather ridiculous, especially because tax money isn't spread evenly either, giving some places deeper coffers than others (say a state like New Mexico getting $3 for every $1 paid in taxes while Michigan gets like $0.70 for every dollar paid, guess which state can "afford" to play the game a whole lot deeper?). As to the "fairness" issue, Crain has a point. He's been around through thick and thin. Staying when he could have left. He gets nothing. Or the southern states that end up spending something like $100,000 per job created per year for the next 20 years to lure a Toyota plant, while very little is given to keep a plant, say Wixom, from closing its doors. Why should I have to pay taxes so the state can give it to certain companies they feel deserve it, while my company gets nothing? Why is a Toyota factory job worth that $100,000 per year while my engineering job is worth essentially nothing? Who is it to determine which jobs/companies get the money and which don't? Like your cell phone company. Ever notice how the new customers always get the free phones and the cut-rate plans, while you've been with your company 10 years, they give you some money for a phone upgrade every 2 years, and you can't get access to the best plans because "they're for new customers only". Meanwhile in the time you've been with them you've spent tens of thousands of dollars, but Joe Blow who has never spent a dime with them has access to the better stuff...?? Exact same crap. On the other hand, governments/municipalities can spend their money however they believe it best serves them. If they choose not to spend it trying to lure companies, then maybe they can lower the overall tax burden, which in turn makes the city more attractive to said businesses. Maybe it is a zero sum game in the long run? I don't know. I just suppose the fairness doesn't seem right. Just lower the tax burden for everyone, spread it out, instead of picking which companies get the good rates and which don't. But I know this stuff works. Our company is based near Chicago. We needed to open a new plant. Our other facilities are all within about 90 miles of the headquarters. Then we got an offer for free land, and something like $100/year in property taxes for 10 years to build our new plant in the middle of BFN (or BFE...) in a Southern State. It takes 2.5 hours to get there from the nearest decent sized airport. It is a huge PITA for anyone having to travel to the plant. Plus its located in a tiny-assed little town, which makes it nearly impossible to get good people who are qualified and actually want to live there. But my company was seduced hook/line/sinker at the free land and essentially free taxes. Again, their choice as to where to spend the money. The city and the company must have thought it worth it or it wouldn't have happened. But I often think most places only see $ on the surface. How much wasted time (thus money) will be spent at airports, in rental cars, on fuel, for employees having to travel between HQ and the plant? Is that ever considered? Is it ever considered by cities such as Detroit that if they were to not offer huge incentives to Quicken, and instead lowered the burden for all companies doing business in the city that they might be able to have a bigger net effect than 1 company, 1 new building, and 4000 jobs for the same amount of money? Me thinks not.... I suppose thats why I always find corporate loyalty so wonderful. They could go someplace else. They could threaten to pack up and leave. They coudl play the game. But instead they believe it is the right thing to do to maybe make a little less in profit, but do something good for the community and the people who live and work there. I understand companies have to make money, I just really appreciate places like Crain who maybe bring in a bit less, but give so much more back. Those companies are truly gems. | ||
Jerome81 Member Username: Jerome81 Post Number: 1658 Registered: 11-2003 |
Thirdworld, I really like your Marathon example. What it does is allow companies like Marathon to go out almost looking for "suckers" who don't know enough to not give them millions of dollars in subsidies. Great example of why it should be illegal. Governments are not in a position to understand the business (be it oil, autos, computer chips, etc), and are in a way taken advantage of (I hate using "taken advantage of" because generally I am of the "do your research or you might get burned" mindset). The companies know this, they exploit it, and inevitably some sucker government somewhere gives them the money. It really forces the government to make business decisions, instead of providing basic services. Governments really aren't businesses. Why should they be spending their time researching tax incentives and oil industry nitty-gritty while thousands of other businesses and residents who rely (and pay taxes) on the government to provide services have little attention paid to that side of things. Essentially making one company and its jobs worth far more than the other jobs and residents already there.... This post may be a little sloppy....sorry i gotta run. | ||
Lefty2 Member Username: Lefty2 Post Number: 697 Registered: 07-2007 |
Good point made on subsidizing private business with public funds. Much was made when Iacocca pleaded with the Feds to refinance Chrysler until things turned around. Luckily it turned out good. The question remains is how should our elected officials spend our tax money to drive economic incentives that may drive their agenda or to benefit their constituents. I say it should be done,,,,, BUT I do not think that a careful cost benefit analysis was provided to the citizens to make a justified go ahead. Even though I am 100% for giving incentives to attract good business. |
