Caption: A collection of informational packets distributed at a Thursday, June 30 city meeting about tax incentives at the Farwell Recreation Center in Detroit, Mich. (BridgeDetroit Photo by Malachi Barrett)

Detroiters on the northeast side on Thursday heard the first in a series of informational city presentations on developer tax incentives amid ongoing City Council conversations about the tradeoffs of such financial deals.

District 3 Council Member Scott Benson said a Thursday presentation at the Farwell Recreation Center was not a response to controversy surrounding Bedrock’s request for a $60 million tax abatement to help secure loans for its project at the former Hudson’s site downtown.

Benson, who began his third, four-year term on the council in January, said he’s been seeking an educational series on tax incentives for years. He told the crowd Thursday that he wanted to dispel myths and make tax incentives more accessible for the public to understand.

“There’s so much misinformation surrounding tax incentives and recent development,” Benson said. “Municipal finance is complex, and we try to distill it at the (City Council) table but we’ve done a terrible job. It’s important that residents have good information and facts.”

Representatives with the Detroit Economic Growth Corp. and Brownfield Redevelopment Authority provided a one-hour presentation on how tax breaks promote development, reduce blight and offset the cost of environmental cleanup on contaminated sites. Emphasis was placed on the burden Detroit’s high property taxes and income tax creates for developers trying to find financing for their projects.

Kaci Jackson, senior real estate manager for DEGC, told attendees that the incentives help Detroit compete with other cities and ultimately provide a boon to the tax base and create new units of affordable housing.

Audible gasps spread through the room of around 50 Detroiters when a slide showed how the city’s millage rate compares to other Michigan municipalities. In 2021, Detroit’s residential rate was 69.6 mills and 86.4 mills for business. In comparison, Southfield’s non-homestead millage rate for business is 71 mills, compared to 73 mills in Dearborn, and 81 mills in Ferndale.

Not all who attended the meeting viewed developer tax incentives as a benefit. Members of the Detroit People’s Platform, a community activist group that strives to center the concerns of Black residents, handed out literature to attendees characterizing tax incentives as a “grab for public assets.”

“These tax policies directly impact the displacement of Black Detroiters,” said Eden Bloom, an organizer with the group. “It’s a direct line from the way the tax laws work, the moving of funds into luxury housing, the effect of luxury housing on a neighborhood, and it moves people out because they can’t afford to live here.”

Tax abatements have specific qualifying requirements, but they largely operate the same way. Developers seek them to forgo a portion of taxes over a period of time to help bring down the cost of their projects. The incentive proposals must receive approval from the City Council after undergoing a review by DEGC and the council’s Legislative Policy Division.

In one example, Jackson explained that housing developments commonly agree to set aside a percentage of affordable units for people making less than the average wage in Wayne County. Jackson said it’s a priority for those reviewing the plans to determine whether the project would not be able to secure financing if not for the abatement.

The presentation ended with DEGC CEO Kevin Johnson telling the crowd the fiscal benefits of tax credits are sound.

“This is not theory. These are numbers,” he said. “One thing my grandmother taught me, yours probably taught you as well, numbers don’t lie. People do.”

Other attendees, like Russ Bellant, a member of the group and a Detroit Library commissioner, also argued against tax captures by entities like the Downtown Development Authority. In these cases, tax revenue in certain zones are redirected to organizations that use the funds to invest in projects within the area. Bellant said tax captures grab vital funding for cash-strapped entities, like the library.

Bellant and Benson have sparred in City Council meetings over Benson’s proposal to put the city in charge of appointing members of the Detroit Public Library commission. Bellant also ran on the ballot against Benson in two past City Council elections.

“Scott Benson is getting shut down in City Council for this issue, like his attempt to take over the library,” Bellant said. “He’s trying to build a constituency to support the tax capture phenomenon downtown. They want the discussion to go just like it was here. We’ll tell you what we think, what we have to say and we’ll appreciate it when you leave the building.”

Benson, who said he had experience in nonprofit development since joining the council in 2014, said he’s heard “misconceptions” frame the conversation around tax incentives for years.

“If we want to make sure our libraries stay open, we make sure schools have enough money to be served, so our city can pay to cut (the grass at) the parks, that we can pay our police, we have to grow our revenue,” Benson said. “Development and new residents are really the only ways that we can do that.”

Meanwhile, conversations around how and whether changes could be made to Detroit’s tax structure continue among members of the council and community organizations.

Council President Mary Sheffield, whose district includes downtown, told BridgeDetroit this week that she believes Bedrock’s request for a $60 million tax abatement for its $1.4 billion mixed-use development is sparking needed conversations.

“Millage rates are too high, property taxes are just extremely high compared to other cities,” Sheffield said. “It’s something we have to address. It’s a longer-term fix.”

Sheffield introduced a resolution in April urging a change in state law to exclude Detroit Public Schools and the Detroit Public Library from tax abatements and tax captures. The resolution notes similar exemptions were provided to the Detroit Institute of Arts and the Detroit Zoo.

Sheffield said she’s undecided on whether to grant the Hudson’s site abatement but wants to see commitments from Bedrock, the company owned by billionaire Dan Gilbert behind the project, to support affordable housing and local entrepreneurs. Sheffield said the discussion could help spur the legislative changes needed to reform the city’s tax code.

“We’ve talked with him (Gilbert) about it,” Sheffield said.

Benson said he’s ready to vote yes on the Bedrock deal, but Bedrock sought to have the measure removed from Tuesday’s formal agenda after the council had twice delayed it prior.

“As officials have emphasized, the abatement under review only freezes taxes that would otherwise go to the Downtown Development Authority — and could only be used for downtown development purposes,” read a statement from Bedrock provided Tuesday. “Nonetheless, it is clear more time is needed for this matter to work through the process.”

City officials say more educational sessions about tax incentives are planned for each council district. The date of the next meeting was not announced.

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