DETROIT – Everyone knows that the city of Detroit needs a lot of things if it is ever to really bounce back. Better schools. Less crime. Lowering what are, by far, the nation’s highest car insurance rates.
But most of all, it needs jobs. Good paying jobs in the city, that employ Detroiters and contribute to the city’s tax base.
Now, FCA, otherwise known as Fiat Chrysler Automobiles, wants to build a vast new plant to produce the next generation of Jeep Cherokees on the impoverished east side of Detroit. Additionally, FCA wants to expand its existing Jefferson North plant.
The company and the city say this will create 5,000 new jobs and mean $2.5 billion would be invested in the city.
Nobody doubts the jobs are badly needed. But is the city giving away too much for promises that may, or may not come true?
The benefits of the deal are easy to see. Nothing this big has come to Detroit in a long, long time, not since Detroit moved heaven and earth to evict thousands of people, their churches and many small businesses and put together a deal to allow General Motors to build its Poletown plant in the early 1980s, and a similar deal led to Chrysler’s Jefferson North plant in 1991.
Detroit badly needs these jobs, especially since GM announced last November that they will no longer be making cars at Poletown, formally known as the Detroit-Hamtramck Assembly plant.
The Chrysler deal and the new Jeep plant sound almost too good to be true. But as with any deal, there’s a catch or two – including a huge windfall for Ambassador Bridge owner Matty Moroun, often seen as the most hated billionaire in Michigan.
Detroit Mayor Mike Duggan has asked city council to approve the deal, which would involve the city and state paying close to $200 million in cash and land to make the deal happen. After a little grumbling and a few dissenting votes on some parts of the deal, they did so Tuesday.
The city, however, is supposed to more than recover that by getting more than $350 million in tax revenue over the next three decades. That is, if the plant, and FCA, thrive that long.
There are also concerns about the amount of money the city is paying for some of the assets needed. Gregg Ward, who operates a ferry service across the Detroit River, addressed Detroit city council last week and asked them to question certain aspects of the deal.
He was particularly angry about an 83-acre site owned by the 91-year-old Moroun’s Crown Enterprises Inc, which was home to the now-defunct Budd Wheel manufacturing plant. The city is proposing to give Moroun $75 million in cash and land for the abandoned industrial site, even though it is officially worth far less.
Last year, the site was valued for property tax purposes at $1,678,000,” Ward told the council. “but somehow the city is telling taxpayers it must pay Crown/Moroun $75 million. “
He supplied documentation showing that the site’s property tax had been mysteriously lowered in 2011, and suggested council look into that too. Nor do his concerns stop there.
Ward, and other neighborhood activists in Southwest Detroit, are also concerned that the deal involves giving Moroun other parcels of land he has long coveted near his bridge.
Opposition to this is fierce, since Moroun has long been regarded as a slumlord, and was once briefly jailed for failing to live up to an agreement to improve roads leading to his property.
Still, the lure of jobs is powerful — and Mayor Duggan has said the council has no choice but to act quickly. FCA announced on Feb. 26 that it was giving Detroit a mere 60 days to assemble the land needed. That deadline expired almost a month ago, but Chrysler has apparently been willing to give the city more time, as long it feels significant progress is being made.
Gregg Ward thinks the 60-day deadline was always phony. “Advance manufacturing decisions to expand are complex and require extensive investigation … you can be sure conversations with the city and the state have been ongoing for a long time.”
He believes that the Duggan administration came up with the deadline to avoid having to engage with the community about the project, and “to give away city treasure to the Moroun family. The fix was in, and the shakedown by the Morouns was a surprise to only the taxpayers who will be forced to fund this crooked deal,” he said, in a letter he sent to a local newspaper.
Many people agreed with him. But, as he expected, the city council was unable to turn down anything that might promise that many jobs and that much money.
The city’s Economic Development Group has voted to approve transferring some of the land. Ward is no stranger to the city council, and has frequently talked with all its members about concerns related to the new Gordie Howe International Bridge.
Most like him. But he said that when he spoke to them about the proposed new Jeep plant, “nobody talked with me before or after. All are usually friendly when we meet, but I was being avoided.”
John Mogk, a law professor who has been deeply involved in city redevelopment efforts for decades, believes the city has no choice but to do the deal, regardless. After all, this would be the first major manufacturing plant built in the city in decades.
He believes it is worthwhile – even though there are no guarantees, and knowing that such projects often don’t produce as many jobs or as much revenue as promised.
Nor does anything last forever. Still, Detroit badly needs jobs, especially high-paying ones. So badly, that those running the city are likely to make whatever deals they need to get them.
