Corporations seeking out lucrative tax subsidies for development projects isn’t a particularly new phenomenon, something captured by the recent maniacal effort from cities across the U.S. to throw public money at Amazon to subsidize its new headquarters. Detroit is about to experience a smaller-scale version of that scenario: Ford has $16.8 billion of cash, but the automaker said on Tuesday that it needs $250 million in tax subsidies to rehab a dilapidated train station near the city’s downtown.
Ford said on Tuesday that it plans to spend $740 million to redevelop Michigan Grand Central, a former train station in Detroit, as the centerpiece of a new campus for its electric and autonomous car efforts. But the automaker confirmed that effort will indeed come at a cost to the public to make it work—an estimated $250 million of federal, state, and local tax incentives in total, spread out over the course of 34 years.
The question of whether government bodies should provide lucrative tax subsidies to large corporations has received a lot of attention in Detroit, which has doled out millions of dollars worth of incentives in recent years for development projects even as it endured the largest municipal bankruptcy in U.S. history. Proponents tout tax incentives as a way to compete with other cities in an endless battle to produce new jobs—but the process usually leads to tortured cost-benefit analyses that may take years to scrutinize whether they’ve produced a net-benefit. Critics of the incentives are more concise: either corporations can pay the costs themselves, or at the very least provide some substantive benefits to the community in return.
The redevelopment of the train station, which fell into disrepair after shuttering in the 1980s, is the latest project that’ll hinge on garnering support from the city’s coffers. This time, however, the ask is coming from an automaker that, as of last month, reported having gobs of cash on hand—$16.8 billion to be exact, or about 68 times more than than the amount of tax breaks it said is required for the endeavor.
Ford wouldn’t tell Jalopnik if it’ll still move ahead with the rehabilitation of the train station if the necessary government bodies decide not to sign off on tax incentives for the project. But in a statement to Jalopnik, the company’s real estate unit said it remains “excited by the opportunities” the investment will bring to the city and the carmaker.
“Given Ford’s investment in the Corktown projects, we are actively working with federal, state and local officials for tax and other incentives to support the development,” the statement said.
A separate spokesperson told Jalopnik that Ford is working with the city for a renaissance zone, which includes a waiver of income and most city property taxes, as well as various other incentives.
“We’ve been very satisfied with the ongoing conversations and planning that have been underway with both the local and state government teams and organizations, as well as the community,” the spokesperson said by email. “So while the Corktown project would not be financially feasible without the support of incentives, based on the work we’ve already been doing with these groups we’re encouraged that we’ll secure the appropriate support for the significant investment we’re making in the future of Corktown neighborhood, the city of Detroit and the SE Michigan region.”
Most of the headlines Ford grabbed when the project was announced in June centered on the automaker’s potential to attract talent away from Silicon Valley. Ford reiterated that priority in its statement, and said that by attracting “world-class talent,” it’ll help them lead “the development for the next generation of the automotive industry.”
Detroit has indeed witnessed a resurgence in the city’s downtown, after the city succumbed to bankruptcy in 2013. But the talent Ford hopes to attract may have serious second thoughts about moving there: For one thing, the city’s school district continues to face immense struggles, and Michigan’s network of roads inarguably remains some of the worst in the U.S.
“Any time a wealthy corporation asks for hundreds of millions in public money—while our schools are underfunded and our roads crumble—the public has a right to demand to know what it’s getting in return,” said Rashida Tlaib, in a statement to Jalopnik.
Tlaib is a former state representative who made national headlines in recent days for her primary election victory last week. The victory puts her in position to become the first Muslim woman and Palestinian-American elected to Congress, as the district is a largely Democratic Party stronghold that represents the area of Detroit encompassing the train station.
Tlaib has long been a fiery presence in the city and helped lead the effort to pass a ballot initiative in 2016 that would require corporations to commit to legally-binding agreements to provide benefits in return for public tax incentives.
A milder version of the ordinance Tlaib helped try to pass was ultimately approved by voters in 2016, and requires community benefits agreements for developments of $75 million or more and receiving $1 million or more in public incentives. It’s almost certain there’ll be a push for Ford to enact a so-called community benefits agreement.
To be sure, a rehab of the train station has long been a desire of many officials and preservationists in the city, even as former administrations nearly moved to have it torn down. But Ford’s massive real estate play could dramatically reshape the face of the encompassing area, a historically working class neighborhood called Corktown, and rapidly accelerate the gentrification of Detroit’s greater downtown.
The scope of the project is why Tlaib thinks a community benefits agreement is necessary. She said an agreement with Ford should spell out specific requirements for hiring local Detroiters, for example.
“Not vague, speculative promises about economic growth and jobs, but specific, contractually-enforceable commitments to local hiring and community investment,” Tlaib said. “Enforceable community benefits agreements are a critical tool for making sure Detroit’s redevelopment is equitable and just.”
Detroit activists previously pushed for the owners of the Detroit Red Wings, who constructed a new publicly-subsidized hockey rink in downtown, to enact a community benefits agreements, before the ordinance was approved. An agreement wasn’t enacted, in part because the city said it already had a rule that required locals to comprise at least 51 percent of the workforce for such a project. It fell well short that target.
“The Ford family must understand that Detroiters have been let down by big broken promises from developers before, and that they have a chance to be different here,” Tlaib said.
John Roach, a spokesperson for Detroit Mayor Mike Duggan told Jalopnik by email that his office can’t comment on what incentives may end up being approved until the city receives a formal request from Ford.
“You’d have to ask Ford if they want to share more details of what specifically they plan to request,” Roach said. “As with any project requesting incentives, applications will go through the standard process, which includes final approval from the Detroit City Council, as required by state law.”
When that happens, the city and Ford will work directly with an established neighborhood advisory board, a process that “culminates with a Community Benefits Report that lists the specific benefits that have been agreed upon.”
“Those benefits are then included into a legally-binding development agreement, which must be approved by City Council,” Roach said. “The ordinance clearly spells out the enforcement processes if a developer fails to live up to the specific benefits outlined in the development agreement.”
Tlaib plans to be involved in the negotiations. She said she looks forward to meeting with the automaker and locals to “move this process forward.”
“Ford has an opportunity to engage in a meaningful community benefits process led by members of the community, and to enter into a binding community benefits agreement that shows the families living in the shadow of the train station that Ford is committed to sustainable, positive investment in the community hosting their new development,” she said.