'The Week' takes a look at Detroit's 'crony capitalism'

'The Week' takes a look at Detroit's 'crony capitalism'
Photo via Flickr user TechCrunch

This week, the American edition of The Week featured a stimulating piece of journalism by Shikha Dalmia about Detroit’s “comeback” — alleging that it’s nothing so much as politically connected oligarchs feasting on public money.

But the centerpiece of this short article is the misnamed package of bills, sponsored by Dan Gilbert, heading through the state legislature, known as the “transformational brownfield bills.” We’ve had our eyes on those bills here at MT too. Last month, we published a special editorial from former Michigan state Rep. Rashida Tlaib.

Tlaib had argued that the package of bills amounted to “a corporate welfare package for a few very wealthy individuals” notably “Dan Gilbert in Detroit and the Shaheen family in Saginaw.” Unlike tax abatements or below-market-rate land swaps, the package’s “reimbursement” language sets a disturbing precedent for taking money directly out of state and local general funds and giving it to the already-super-wealthy — and locking the deal in for as long as 20 years.

What's more, the legislation would take the EPA’s strict, narrow definition of brownfields and make it much fuzzier, to include foreclosed, dangerous, and "blighted" property. As Tlaib wrote, “This bill's far broader definition opens the door for corporations to get public money to privatize huge chunks of publicly owned land.”

Now, we had thought that Tlaib’s column told it all, but this week, the article in The Week, "The Dark Side of Detroit's Renaissance" tells the story in much stronger terms. That article says the package of legislation, which heads to a final vote in the House this week, would allow ...

five developers in five cities every year to not just capture part of the property taxes from the brownfield (which is a site contaminated or environmentally damaged by previous users) they are redeveloping, but also $40 million worth of income taxes for 20 years. Whose income taxes? Remarkably, as soon as work on the site begins, the developers will be able call dibs on the income taxes paid by their own construction workers. And once the project is completed, a portion of the income taxes of the residents and the sales taxes of the businesses will be handed over to these developers as well.

The real kicker is that the bill would allow only developers who are planning "mixed use" residential and commercial projects to be eligible — and only if they make out-of-pocket investments worth $500 million in cities with a population of over 600,000. This basically means that in Detroit, only Gilbert's Hudson redevelopment project would fit the bill. This bill is custom-built just for him.

This is galling. The bill will change the tax code to deliver a guaranteed revenue stream directly into the pocket of a rich developer without even subjecting it to the normal budgetary process where the needs of ordinary mortals are considered.

Even if you agree with journalist Shikha Dalmia’s grim evaluation of this latest Gilbert grab, you have to admire the sheer audacity of Michigan’s ruling class. In Michigan, under the Snyder administration, our super-rich are approaching new levels of entitlement never seen before.

It’s not enough to be buoyed by subsidies, giveaways, and sweetheart abatements from the poorest big city in the country, now some rich people have amassed enough political power to demanding that the government give them back their employees’ income taxes.

But, hey, when you have a state legislature that has gerrymandered districts in ways that give the Republicans a majority, and when politically connected billionaires cozy up to the state GOP, you can expect the rich to show up with a shopping list of what it wants, and you can expect the poor and politically powerless to be on the hook for it.

Or as one commentator to a comment thread said: “Michigan has elevated enriching the well-connected at the expense of public health & safety to an art form.”

Rashida Tlaib, the Detroit People’s Platform, and other watchdog groups are urging Michigan residents to call their state representatives and demand they vote no on this package of bills, SB 111-115.

About The Author

Michael Jackman

Born in 1969 at Mount Carmel hospital in Detroit, Jackman grew up just 100 yards from the Detroit city line in east Dearborn. Jackman has attended New York University, the School of Visual Arts, Northwestern University and Wayne State University, though he never got a degree. He has worked as a bar back, busboy,...
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