Saturday, March 5, 2011

Snyder's Farewell to Tax Credits = Buh-bye Detroit Development

"taxes are the price we pay to live in a civil society"

 - Oliver Wendell Holmes Jr, Supreme Court Justice 1902 - 1932

 

As details of Gov. Rick Snyder's budget plan begin to become clear, the ramifications of his proposed changes are becoming apparent. The cash strapped City of Detroit may be a big loser. The City said yesterday that the proposed changes could scrap 5 large developments in Detroit. The City claims the developments could generate more than $300 million in new investment.

March 5 The Detroit Free Press

George Jackson, head of the Detroit Economic Growth Corp., traveled to Lansing late this week to lobby Snyder's aides on the need to retain the existing tax incentives for redevelopment efforts.
 "There never has been a level playing field for the older urban cities," Jackson said this week. "We're already at a competitive disadvantage, and then to take away some of the tools and incentives that allow us to approach being competitive really sets us back."


The developments in danger are the old Redford High School site in Northwest Detroit, the vacant David Whitney building and Capitol Park downtown, the former Uni-Royal site next to the entrance to Belle Isle and the Gateway Shopping center to be built on a portion of the State Fair grounds near 8 Mile and Woodward. Each area is in desperate need of development. The potential loss could arguably propel Detroit into an economic free-fall just when the City is finally tackling its budget in realistic ways.

It's not that Snyder's proposed changes are necessarily wrong. Michigan must balance its budget by law. The question is how do you do it without throwing a pipe into the works. The developments in question may fall through not because of taxes, but because of the loss of tax incentives. The Detroit Economic Growth Corporation maintains the incentives must remain in place to bring development to Detroit. Business-wise, it is almost always cheaper to build fresh as compared re-habing or refurbishing an existing property. Unfortunately, Detroit does not have any fresh, virgin land available for development.
A simple solution to this specific problem could be a moratorium on these type of tax incentives for future developments. This means any existing developments that have already applied for incentives could continue. New projects would not be eligible.

Another answer to Michigan's budget woes is simple but blasphemy to some. Raise revenue. Yes taxes. It does not have to be painful. Michigan's current bottle deposit law covers only beverages with carbonation. It could be easily expanded to cover all bottles. The result would be increased revenue and a cleaner Michigan. The infrastructure for bottle returns is already in place. It's a no-brainer. 

Or perhaps Michigan or Detroit could follow up on one of disgraced former Mayor Kwame Kilpatrick's good ideas. A tax on fast food. The health cost put upon the state by this nutritional deficient food industry is reason enough. Keeping developments going is another great reason. Perhaps a 1 cent tax would be painless. It is not likely someone is going to stop eating a $1 burger because the state or city put an extra cent on the price tag.

It is the 21st century. Americans, Michiganians and Detroiters have to realize civilization costs money and it is a price worth paying.


2 comments:

  1. I like these ideas Blank, I am not for more taxes(income/property/sales). However I am completely for an expansion of the bottle deposit to not carbonated beverages. Why not 'tin' cans, or even computers, which contain many toxic but useful metals that can be recycled.

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  2. interesting. I argue for a simple expansion because, like I mentioned above, the infrastructure is already in place. I'm checking some sources but I believe the state has spent millions over the last two decades studying the idea. Usually a consultant gets paid big bucks, the legislature looks at the report, argues and then does not take a vote.

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