MEGA mistake?

A study released last month reveals that Michigan's Economic Growth Authority is virtually ignoring the city of Detroit, providing tax credits that help companies to build or expand operations in more affluent suburbs, contributing to urban sprawl and failing to promote recovery where it is most needed.

But a spokesman for the Michigan Economic Development Corp., the state entity that oversees the MEGA program, says the report is too narrowly focused, and fails to grasp the economic realities facing the state.

It's an interesting debate.

First the report: Produced by the Washington, D.C.-based nonprofit group Good Jobs First and funded by a grant from the Stewart Mott Foundation, the study examined three statewide programs and one involving "local" incentives granted by municipalities from 2001 through 2004. Looking at nearly 4,000 economic development incentives handed out during that four-year period, the group determined that the incentives "contributed to inefficient and unsustainable land use patterns by thinning jobs out in the state's largest metro areas."

"Job subsidies," researchers claimed, "have fueled a mismatch, fostering job creation and retention where it is needed least — short-changing the central cities while favoring more affluent outlying areas."

Most egregious was MEGA, "a single business tax and income tax credit program targeted at large-scale investment and job creation, as well as attraction of technology-intensive business concerns program."

Of the 81 MEGA incentives handed out in the metro Detroit area during the period researchers looked at, only one of the businesses receiving the tax credits was actually located in Detroit.

Greg LeRoy, executive director of Good Jobs First (, points out to News Hits that the blue-ribbon, bipartisan Michigan Land Use Leadership Council reported in 2003 that in southeast Michigan what used to be agriculture land is being turned into housing subdivisions and strip malls at an alarming rate, especially when you consider the area's population growth has remained stagnant. Economic development programs such as MEGA need to take their exacerbating effect on this kind of detrimental land use into consideration, argues LeRoy. He says job growth has to be directed where it's needed most — in urban areas where unemployment is highest and idled industrial sites can be put back into service, bringing jobs to where the people who need them are and sparing precious ag land from development.

MEGC spokesman Mike Shore says the Good Jobs First report is unfair, in part because it looks at only a few of the many economic development programs used by the state. LeRoy counters that the programs chosen for evaluation were picked because they were fluid — unlike, say, brownfield redevelopment incentives or Renaissance Zones, which specifically target mostly urban areas. LeRoy's group wanted to find out where the untargeted tax breaks were going.

Shore also said that MEGA wasn't selecting the locales getting breaks. Businesses come to it with proposals. "MEGA's not like an Uzi we can put to somebody's head and say you're going to put this plant in Detroit and not Dundee," is the way he explains it. And with the state hemorrhaging jobs, anything that can be done to attract new business or keep existing companies here is vital, so it doesn't matter all that much where its occurring, as long as it is in Michigan. It's not about Detroit versus the suburbs or exurbs, explains Shore; it's about Michigan versus Alabama and Mexico and China.

In other words, desperate times require desperate measures. But, the way LeRoy sees it, even if such an approach were successful at attracting new business — something he's very skeptical of given the wage advantages foreign corporations have — the growth it produces will be unsustainable in the long run, with increased infrastructure costs such as new roads, along with pollution and other transportation-related problems continuing to grow as workers are forced to commute ever longer distances to outlying jobs.

"I don't think efficient land use is a luxury," says LeRoy. "It's a necessity. If this state keeps thinning out, it will never have the tax base necessary to sustain all of its infrastructure."

News Hits is edited by Curt Guyette. Contact him at 313-202-8004 or [email protected]
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