The Metro: New report analyzes Detroit’s economic development strategies

The Citizens Research Council of Michigan report is the first of two that addresses Detroit’s economic condition and assesses the city’s use of tax incentives.

Detroit skyline

FILE - Downtown Detroit skyline.

The Detroit City Council recently tasked the Citizens Research Council of Michigan with analyzing Detroit’s economic development policies. They’ve released one of two reports on their findings.  

CRC President Eric Lupher joined The Metro on Wednesday to talk about the body’s recommendations. He says there were many questions that the CRC looked into regarding the ways in which the city attracts development projects, including tax incentives.

“Do they need to continue providing these tax abatements? Can businesses come in and foot this bill on their own? Why are these tax abatements necessary?” Lupher said. “And also for the [Downtown Development Authority], they have what’s called a tax capture with new growth. Is that necessary? Have they built up downtown enough that we can just let that good momentum go forward and don’t need to continue the DDA and everything it’s been doing?”

Lupher said the report has two primary takeaways regarding city tax abatements and the DDA.

Tax abatements

New businesses coming to the city are asking for tax abatements because costs to construct and operate in Detroit are higher than projected revenues.  

“Part of that is just the simple cost of being in the city. It’s common across all cities, but Detroit’s a bit unique,” Lupher said. “It has very high property tax rates, not the highest in the state, but very high property tax rates.”

Costs for new businesses continue to rise when taxes are levied by other jurisdictions, community benefit agreements are attached to development, local hiring agreements set and more. 

Detroit DDA

Detroit’s Downtown Development Authority was established 40 years ago to spur economic development. 

One way the DDA achieves this is through an established tax capture zone, where a portion of taxes in the area are set aside for new development. 

“Clearly you can make a case that after 40 some years the DDA has served its purpose and we can move on,” Lupher said. “But it’s not that easy.” 

The DDA has taken on debt and pledged it will be paid off through future tax captures, he said.

More headlines from The Metro on Feb. 21, 2024: 

  • Actor Hill Harper is running for senate in Michigan. He spoke about important issues he’s championing with hosts Donna Givens Davidson and Orlando Bailey on the Authentically Detroit podcast.  
  • Interlochen Public Radio’s Izzy Ross spoke with Michigan businesses on how they’re adapting to climate change
  • Detroit-Windsor Dance Academy is celebrating its 40th anniversary. Co-founder and Artistic Director Debra White-Hunt joined the show to talk about the Academy’s upcoming Black History Month concert
  • Malcolm X was assassinated 59 years ago today. The Metro Co-hosts Nick Austin and Tia Graham reflect on his life and connection to Michigan. 
  • Ford City Funnies Comedy Show is taking place this weekend. Organizer Mark Olejniczak and featured comedian Bella Hugley gave listeners a preview of the show. A portion of the proceeds raised from the event will be donated to the Amherstburg Freedom Museum in Ontario, Canada. 

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