Something is Going Right in Detroit

The Detroit City Council is passing a law requiring recipients of public benefits for development sign binding contracts as to their benefits:

When Marathon Petroleum received a $175 million tax break from the city of Detroit in 2007, they promised jobs for Detroiters. And, as of last January, the $2.2 billion expansion of Marathon's refinery on the city's southwest side had, in fact, created new jobs for tax-paying residents —all of 15 of them.

Now, members of the Detroit City Council want to pass an ordinance that will hold developers seeking public money accountable: They'll have to work out a community benefits agreement (CBA) with community leaders. A CBA is a legally binding pact covering everything from local hiring requirements and environmental concerns to redevelopment of public space and infrastructure. It's a way to assuage the fears of current residents wary of displacement and change and ensure the public's money is put to good use. It would be the first law of its kind in the country.

"We are allowing these large corporations—companies that could build a hockey arena without our money—to get in the corporate welfare line and take resources away from us," Rashida Tlaib, a Michigan state representative who serves Detroit, told me. "In exchange for what?"

The hockey arena Tlaib mentioned is for the city's beloved Red Wings, owned by pizza baron Mike Ilitch. The Ilitch family, whose net worth is estimated at $3.2 billion thanks in part to their Little Caesars pizza empire, received $284.5 million in public money to build a new, $450 million arena in the city's Cass Corridor neighborhood. (They are desperately and vapidly rebranding it as the "arena and entertainment district.")

While the Ilitch family was finishing up its honeypot stadium welfare deal last year—not to mention a wildly below-market rate $1 land transfer for 39 vacant parcels—they refused to sign a CBA that would ensure a certain percentage of permanent, non-construction jobs at the arena went to Detroiters. A group of locals formed the Corridors Alliance in an attempt to engage with the Ilitches, but their efforts were futile. The Ilitches did, however, agree to a mayoral executive order that demanded 51 percent of construction jobs go to residents and 30 percent of construction contracts go to local businesses. (The mayoral order, like Marathon's hollow promise, is not legally binding.)

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The proposed ordinance in Detroit would take what Los Angeles and Pittsburgh have done a step further. It would require developers to engage in a CBA. Under the most recent draft of the ordinance, any project totaling more than $15 million in investment (or $3 million in renovation or expansion) seeking at least $300,000 in public tax dollars—from tax abatements to land transfers—will have to enter into a community benefits agreement. Developments between $3 million and $15 million are encouraged, but not required, to execute a CBA. Developments funded entirely by private money are exempt.

Business leaders—no surprise!—are pissed. It's another hurdle, they say. Just more red tape, they scream! In October, Rodrick Miller, president and CEO of the Detroit Economic Growth Corporation (DEGC), wrote an irritated and bullying letter to City Council expressing his true feelings.

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The opposition made it all the way to the state capitol in Lansing during December's lame duck session, where Republican State Representative Earl Poleski introduced House Bill 5977, which would "prohibit local units of government from creating a 'community benefits ordinance.'" The bill, which died in December and was reintroduced in January, would ban Detroit's proposed ordinance outright.

"House Bill 5977 sets up the state as a dictatorship telling local units of government that they cannot do what is best for their community, workers and residents when it comes to wages and benefits tied to economic development in that community," Tlaib said in a statement.

Of course the klepto-capitalists pretty much all of the Republicans, and quite a few of the Democrats in Lansing, hate the idea, but this should be seen as an endorsement of an insanely good idea.

It's kind of like being condemned by ISIS.  It means that you are doing it right.