Community organizers challenged Bedrock’s latest Hudson’s site tax break in Detroit — and nearly won

Making Goliath stumble

click to enlarge Construction at Bedrock’s Hudson’s site project in Detroit. - Steve Neavling
Steve Neavling
Construction at Bedrock’s Hudson’s site project in Detroit.

When Theo Pride, a community organizer with Detroit People’s Platform, got word that a proposed $60 million tax abatement for billionaire Dan Gilbert’s real estate firm Bedrock was being pulled from City Council’s consideration on June 28, he had two interlocking thoughts.

The first was satisfaction at the small victory a band of skeptical everyday Detroiters had achieved over the city’s most powerful corporate goliath.

“We were able to defeat a lot of the propaganda,” Pride tells Metro Times. “This thing was stopped because of community voices.”

The second was another dose of skepticism.

Organizers had seen city and corporate leaders outmaneuver the community with hand tricks and stalling tactics before.

“The powers that be see all of the political opposition from the community to this thing. And not only that — we’re organized, and we’re focused. So the other part of me thought this is a tactic to buy time to wear the community down,” he says, only to reintroduce “this thing in a different form so Gilbert can still get what he wants.”

And in a sense, that’s what happened. On July 26, council finally approved the abatement on a narrow 5-4 vote. But zoom out a little and you can see the fingerprints of organizers on the outcome, from the razor-thin vote to the set of activist-fueled benefits for the community.

Pride calls it “an example of what community power can do.”

Public outcry, long-term organizing, and new ways of thinking about development braided together with Detroit City Council President Mary Sheffield’s community benefits proposal “to create the conditions and leverage needed to get those benefits added.”

Pride also points out that nearly having a majority of council members stand up to the “tax incentive-industrial complex is grounds to be optimistic that development and policy in general can look much different than it has in the past, that it can be community-centered, more equitable, and more just.”

The basics

click to enlarge Theo Pride of Detroit People's Platform. - Courtesy photo
Courtesy photo
Theo Pride of Detroit People's Platform.

Going head-to-head with Gilbert and his vast web of lobbyists and boosters was hard to imagine back in June, when Bedrock hit up the council for an extra $60 million tax break for the project, a mixed-use development that includes a mid-rise and skyscraper on the site of Detroit’s former J. L. Hudson Department Store. The real estate giant claims that the ten-year abatement is necessary to bring the two downtown buildings to life, which will feature a hotel, luxury condos, and commercial retail space.

But after several residents spoke out against another round of corporate handouts (Bedrock received $618 million worth of tax breaks for the project from the state in 2018), the council postponed the initial vote twice. On June 28, Bedrock withdrew its request, acknowledging that “it is clear more time is needed for this matter to work through the process.”

Organizers had caught Bedrock off guard, and the Goliath stumbled.

Behind the weeks-long spectacle is a much longer chain of events.

Beginning in the late 1970s, political and business elites promised that we’d all eat good once we deregulated the economy and slashed taxes on the wealthy. Then came a 40-year cycle of corporate giveaways and sharp public spending cuts that ended with cities like Detroit fighting for their lives by giving corporations whatever they asked for to entice them to move in. And finally, after decades of fabulous profits for those corporations and pitiful to imaginary benefits for ordinary people, organized public pressure is now growing and challenging the status quo with public spending schemes that put human prosperity above corporate wealth.

Talking like Milton Friedman or Thomas Sowell

The basic argument for corporate handouts like Bedrock’s is that by cutting taxes on the rich, they’ll invest and innovate more. Once you do this, productivity will increase and the economy will grow, which benefits everyone. Bedrock’s basic logic is similar: feed us tax dollars and jobs and tax revenue will flow.

But it doesn’t hold up under scrutiny.

The research is clear on each of these points. First, investment and growth often thrive in high-tax environments. Second, the public sector has always been a vital driver of innovation, resulting in the development of technologies ranging from the internet to cell phones to drug manufacturing. Third, labor productivity, juiced by what’s often nauseatingly called “human capital development,” is a vital piece of economic growth that we could easily finance through higher taxation. Lastly, without altering the distribution of where all that new wealth goes, it will inevitably flow into the hands of the already rich. This is what’s happened over the last 50 years; worker productivity has steadily increased, while employers have frozen their wages. In Michigan and everywhere else, the gains have all gone to the wealthy few.

But it isn’t just that living standards have stood still for so many while the wealthiest have made a killing. Many poor and working-class people actually did worse over the last 40 years. While corporate welfare flowed generously, Republicans and Democrats dismantled spending on basic human needs like housing, education, health care, and food at every level, including in cities like Detroit. Wages and upward social mobility for ordinary people have flatlined. Life expectancy is slipping. Inequality is in the stars.

These were all choices. They were all avoidable.

The facts are clear here as well. A mountain of research shows that public welfare spending on ordinary people is far more effective at growing the economy and improving people’s well-being than the relentless stream of welfare that flows to corporate suites. That’s because corporate welfare only succeeds at making the rich richer. On creating wide prosperity, it is a pathetic failure compared to public spending.

While most city leaders no longer openly call for slashing public spending, some still echo the demands of corporate hostage takers.

“Have they come out and said outright, ‘We’re going to lay these [7,500] people off?’ No,” Councilman Coleman Young II, a strong supporter of the Bedrock abatement, recently told WDET. “But have I heard things like, ‘This project is not doable… This is something we’re going to have to reevaluate.’ They’ve made strong suggestions that this is a possibility...”

Corporate welfare only succeeds at making the rich richer. On creating wide prosperity, it is a pathetic failure compared to public spending.

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“They’re talking about these things in a very theoretical way,” Pride says. “The same way Milton Friedman or Thomas Sowell would talk about laissez-faire capitalism, and how it benefits everybody.”

As Deadline Detroit recently detailed, economists are deeply skeptical of Bedrock’s claim that the tax break will create new jobs and revenue for the city. Massive, taxpayer-supported private developments are notoriously bad at keeping promises. Instead of creating new jobs, they often draw existing ones away from nearby regions, draining the word “development” of any real meaning and at an enormous cost to taxpayers. And the supposed $71 million tax benefit during the project’s first decade depends on the creation “of 1,948 new, full-time jobs in Detroit, and not just hosting existing jobs that relocated from older city buildings,” the Detroit Free Press reports.

For argument’s sake, let’s assume Young’s assertion is correct and that Bedrock is sincere when it essentially says, “Look at all those great jobs we’re creating. It’d be a shame if something happened to them.” The scenario should only frighten you if the choice is between coughing up millions to a giant corporation and doing absolutely nothing.

But not “if you start asking very fundamental questions about what development is for,” Peter Hammer, Wayne State University Professor of Law and Director of the Damon J. Keith Center for Civil Rights, tells Metro Times. “How else could those public funds have been spent?”

click to enlarge A rendering of Bedrock’s Hudson’s site project in Detroit. - Courtesy of Bedrock
Courtesy of Bedrock
A rendering of Bedrock’s Hudson’s site project in Detroit.

We’ve got options

The problem, as Pride puts it, is that boosters for corporate handouts “naturalize” this bleak set of options as if “there is no alternative” and that we can’t possibly do things differently.

Hammer agrees. He points out that the U.S. approach to growth, which chases after shiny new buildings and corporate expansion at all costs, is “an aberration” internationally.

“We fetishize the idea that this actually works,” he says. But “Detroit is really ground zero for the failure of global capitalism” as a whole.

This failure can’t be laid at the doorstep of ordinary Detroiters, he stresses, but at the architects of a system that places corporate stock prices and market share above actual human lives.

You only need to look to the auto industry, which “took decades to respond to a changing global market” before running away to the suburbs, then the South, then Mexico, and then overseas in search of cheap labor and the ability to pollute and plunder poor communities as they pleased. And of course there’s the housing industry, which has turned Detroit into a majority renter city and thrown hundreds of thousands of people out of their homes.

All of this “should make us more skeptical of markets, not less,” Hammer adds.

You can extend that skepticism to political and corporate elites who sell us fantasies about tax breaks. “They invoke the same rituals and rites,” he says, and expect that miracles “will suddenly fall from heaven.”

As Pride puts it, “Development becomes a very hollow word to invoke the idea of prosperity.” But it’s done “in a way that improves a place without improving people’s lives,” he says. You can make an area more vibrant, for instance. “But did the people who used to live there benefit from this?” he says. “A lot of times development is occurring but people aren’t benefiting.”

“Detroit is really ground zero for the failure of global capitalism.”

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This “hollow” form of development has very real human consequences in Detroit. A third of people here live in poverty, at least 11% of Black residents remain unemployed, and 48% of Detroit’s families don’t have access to enough food. And residents in some Detroit neighborhoods can expect to live 20 years less, on average, than residents 20 miles northwest in posh West Bloomfield ones, 67.8 years compared to 87.

This is where it’s helpful to remember that there’s an entire world out there, where people have tried different things to achieve better results.

Hammer prefers “the human capabilities theory.” The idea is that the “purpose of development is to enable each individual to reach their full human capabilities,” he says. “And so it inverts the whole notion of what development is.” Instead of being about fancy property development, “it’s all about investing in people.”

Examples are everywhere. Pride suggests a community benefits ordinance with real guarantees for the communities where developments take place by “letting actual residents in on the decision-making process.”

“I’ll just go all the way,” he adds. “Hand over political control to the community in ways that give them ownership over community processes,” including “water, housing, childcare, and so forth.”

Hammer suggests “a community land trust and different ways of owning property” that recognize housing as a human right instead of a way for private equity corporations to get rich, as well as “a real water affordability plan.”

Molly Sweeney, executive director of education justice organizing group 482 Forward, made the simple connection between the tax abatement and the education funding streams they directly cannibalize.

What struck 482 was that “schools are still completely underfunded,” Sweeney says, “and this money was also being taken from libraries and communities in a moment where we need as much money as possible for schools.”

We can line these proposals up against Bedrock’s claim that another round of tax breaks was our only option. Their lobbyists argued the $60 million incentive shouldn’t even be up for debate, since an earlier tax package approved in 2017 was also “a commitment to approve [this] tax incentive,” Bridge Detroit reports. It’s unclear where the earlier deal required the city to mindlessly approve future multi-million dollar tax deals without comment or alteration.

The distortions continue. As Bedrock lobbyist Jared Fleisher told the Detroit Free Press, “the proposed tax abatement doesn’t take any revenue from city services, schools, or the library… just the [Downtown Development Authority] and other downtown projects.”

But as Sweeney points out, this ignores how the DDA came to be in the first place.

Since it was formed in 1978, the DDA has captured tax dollars that would have otherwise gone to schools and other services in order to finance projects downtown. Bedrock’s tax break would indeed exempt them from the DDA’s tax collection. But if the DDA were dismantled, or restructured, the funding could flow to its original source — schools and city services.

Organizers knew this was an opportunity to break through the cloud of distortions with the voices and aspirations of ordinary people.

click to enlarge Detroit City Council President Mary Sheffield. - City of Detroit, Flickr Creative Commons
City of Detroit, Flickr Creative Commons
Detroit City Council President Mary Sheffield.

Using people power

Organizers like Pride and Sweeney knew that if institutions like the DDA were pulled into the sunlight, many ordinary people would be furious at its bizarre taxing power and demand more funding for their own communities.

And that’s exactly what they did. When the abatement came up, 482 Forward teamed up with Detroit People’s Platform to flood the council’s phone lines. By their count, about 500 people hit the phones of “every single councilmember to say we need to have more thoughtful tax policy,” Sweeney says. They also tapped people “to make individual phone calls to council members they had relationships with, especially people with a little bit more power in the city.”

Says Sweeney, “It seemed like it jarred them enough” to make them postpone the first vote on June 14.

As surely as Bedrock was regrouping after the first delay, so were organizers. After gathering again, 482 and DPP crafted a memo for council members on “the truth about tax abatements” that highlighted the pitiful record of corporate giveaways in the city. They also attended a series of public meetings held by the council, where they were able, as Sweeney puts it, to argue for a policy to “tax billionaires, not give abatements to billionaires.”

Another delay followed on June 21. All together, Sweeney explains, “public pressure on Bedrock, plus all the articles that came out of it, plus pressure on the city council” forced Bedrock to pull the abatement from consideration on June 28.

Sweeney and Pride both stress that this wasn’t just a spontaneous burst of outrage. It was the product of patient, long-term organizing in communities across the city. “We’ve been doing a lot of work with our members around taxes and school policy,” Sweeney adds. “So I know people really feel it. If there’s money going to a billionaire and not going to kids, they’re going to take action.”

It also occurred at a time of “raised consciousness” in the “local and national environment” where “really wealthy folks have gained so much and regular Detroiters have lost so much,” Sweeney says.

During the COVID-19 pandemic, for instance, thousands of working-class Detroiters died and struggled to scrape by — and they wouldn’t have had to in a more equal country. Meanwhile, Gilbert, the city’s wealthiest oligarch, saw his net worth grow by more than $40 billion — the same oligarch who just won a $60 million tax break. For many average Detroiters, this crystallized that the problem isn’t that there’s too little to go around, but that a small few are capturing all the rewards while the vast majority carry all the risks of keeping the economy going.

Council heard the public outcry and responded. Sheffield laid out conditions for approving the abatement, including affordable housing guarantees, small business commitments for the site, and neighborhood improvement funding.

These were all included in the approved abatement. And as Pride explains, that was the result of “a longer community struggle and organizing effort led by majority Black Detroit.”

He adds that public pressure “also put those in power on notice” so that in the future, it will be much harder for “Bedrock lobbyists, DEGC spokesmen, and land-developer-aligned public officials to sell” these sorts of projects “as is.”

Pride stops short of declaring total victory, though.

“There is still a long way to go to carve out a truly progressive political space in our city government,” he says. The Bedrock vote may signal growing progressive power on city council, but DPP has also tracked “a total of $132 million in [tax breaks] over a span of 30 days” approved by city council.

“We need to go further to truly address the housing crisis, poverty, joblessness, inequity and injustice,” Pride says.

Meanwhile, Councilman Scott Benson’s office is essentially on a propaganda run to reeducate voters on the miracles of tax breaks. He’s teamed up with the Detroit Economic Growth Corporation and Brownfield Redevelopment Authority for a series of community meetings where they give “a one-hour presentation on how tax breaks promote development, reduce blight and offset the cost of environmental cleanup on contaminated sites,” Bridge Detroit reports. At their first and only meeting so far, Detroit People’s Platform was in the room, offering details about the pitfalls of corporate giveaways that the glossy presentation never mentioned.

“It’s important that residents have good information and facts,” Bridge quotes Benson saying. Those “facts?” If residents want robust public services, “Development and new residents are really the only ways that we can do that.”

It’s either a shockingly naive or dishonest admission in light of the countless alternatives offered by residents, organizers, and scholars.

But Benson’s revealing statement is helpful in one way. It draws a clear line between what organizers consider the cramped worldview of local elites on one side, and the enormous imagination of ordinary people on the other.

Elites, as Pride puts it, tell us that “There is no alternative,” even as alternatives blanket the entire globe. That’s where the second group comes in with a parade of ideas, showing us how easy it would be to improve people’s lives “when residents are included in the process” and “the community [is able] to make political decisions themselves.”

This story was made possible through a partnership with the Race and Justice Reporting Initiative and the Detroit Equity Action Lab at the Damon J. Keith Center for Civil Rights.

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About The Author

Eli Day

Eli Day is a Detroit native. He writes about politics, history, and racial and economic justice. His work has been featured in The American Prospect, New Republic, In These Times, Current Affairs, Mother Jones, and Vox, among others.
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