John Gallagher

Detroit Free Press

Businessman Dan Gilbert has an answer for critics who say he shouldn’t get state tax incentives to build major new projects in downtown Detroit. And his answer lies in a map that Gilbert is proud to share.

That map shows where Gilbert’s Quicken Loans employees live in Detroit. Before he moved Quicken downtown in 2010, only about 75 of his employees lived within Detroit’s borders. Today, about 3,500 live in the city, Gilbert says.

According to a map released by Quicken, a big cluster of its employees live in the downtown and Midtown districts. But many others live in northwest Detroit, on the far east side, in the Villages district near Belle Isle, and indeed almost everywhere except for those blank spots on the map near the former City Airport or in Delray in southwest Detroit where demolition and abandonment has left widespread urban prairie.

“They’re spread out all over the city in every neighborhood,” Gilbert told me. “I’m talking about the very fact that you build a building in downtown Detroit that employs X amount of people, a big chunk of them, if not the majority being Detroiters, creates demand for other residential in Detroit, creates spending in Detroit, creates hope in Detroit.”

Last week, I wrote that we need a “theory of everything” in Detroit, a conceptual link between the rapid redevelopment of downtown and the city’s distressed neighborhoods, where residents often feel left out of the narrative of revitalization.

Gilbert called me to make his case that the link is there, in the jobs he has created by moving downtown and in the demand for new housing his employees are creating in the city at large. He estimates that Quicken and its various spin-off enterprises have created 12,000 jobs downtown.

“So, yes, there is a theory of everything,” Gilbert told me, saying that the tax incentives he seeks will more than be paid for by increased housing values, jobs, and tax base fostered by his projects.

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Gilbert called last week after a proposal with widespread support to create tax incentives for urban redevelopment failed to get out of committee in the state House. Gilbert noted that the state Senate has already approved the tax incentives, which also had the support of Gov. Rick Snyder, mayors of many cities including Detroit’s Mike Duggan, unions, and business and civic leaders.

The failure of the proposals led to a nasty spat between Gilbert and House Speak Kevin Cotter, with Gilbert chiding Cotter for bottling up a proposal with widespread support — and Cotter responding that if Gilbert couldn’t do his deals at market rates then they weren’t worth doing.

“Dan Gilbert has done great things for Detroit, and he has shown that he is a competitor and a winner," Cotter said then. "If he can’t make a deal work without state aid, then it is not a deal worth doing, and Michigan taxpayers should not be forced to invest.”

And in a statement, Cotter explained further that “over the past six years, we have made great strides improving Michigan’s economy and creating a system where the best businesses can compete and win on a level playing field, instead of relying on the state to pick winners and losers. And it worked. This new way of doing business has resulted in hundreds of thousands of new jobs, higher incomes, and unemployment that is now better than the nation as a whole."

The package that would have provided $250 million overall in tax incentives for certain major projects was tabled in the House Local Government committee Tuesday, which means it will have to wait until another legislative session. Another bill that would provide $50 million a year in new brownfield incentives died in the same committee Wednesday. The packages ran into skepticism from Republican House members wary of tax incentives used as a means of economic development.

The bills passed the Senate. Majority Leader Arlan Meekhof, R-West Olive, who supported them, said he would try again.

“It’s unfortunate, and I hope to take that up again," Meekhof said last week. "I think there are opportunities for us to magnify what we’re doing in Michigan, but we need more tools in the toolbox to do that, and I want to be the most competitive state we can be.”

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Beyond that immediate battle of words lies the deeper issue of how downtown development benefits the rest of the city and its neighborhoods. We’ve debated this question for decades in Detroit, and indeed it’s the same issue seen in many cities in many lands. It arises wherever big-money deals create arenas, casinos, office towers and other downtown projects while neighborhoods feel left out.

Gilbert insisted that it’s dangerous to pit downtown against the neighborhoods in a rhetorical battle. The two are one, he said, linked by the concept of new jobs, most of which will be concentrated in the city’s core business district. For example, thousands of people work in the three casinos downtown, and many of those employees live in the city's neighborhoods.

“The best thing that can happen in Detroit is that there’s a job for everybody who wants to work and the vast majority of those jobs are going to be in downtown or Midtown. It’s about jobs, and it’s about employing Detroiters,” Gilbert said.

“We have, I believe, the largest African-American employment in Detroit, certainly of any private company,” he said, adding that “35% or 40% of the new jobs that we’ve created since we’ve been down here been filled by minorities.”

The lack of room downtown as Gilbert has filled up most of the vacant office space has led him to consider parking some workers in the suburbs until he can build more office space downtown.

And that’s why he needs the tax incentives, he said. Office rents in downtown Detroit remain well below the national average, which depresses the rates of return developers can get for building new projects. Without some help in the form of tax incentives to make projects more financially feasible, the projects won’t get built.

And Gilbert noted that the stalled proposal for incentives includes tax breaks not just for big “transformational” downtown projects but for neighborhood projects, too, in cities throughout the state. That could help districts such as Detroit’s Livernois-McNichols area with revitalization efforts.

He noted that some critics oppose the incentives for ideological reasons, or say the government shouldn't try to pick winners and losers.

“That all to me is legitimate and I get that,” Gilbert said, “but there’s a lot more to this than, ‘Hey, rich guys are getting this and neighborhoods are not getting anything.’” That characterization he finds unfair, saying it ignores what he believes is his “mission” to help the city grow.

The city “functions as one organism that has to work together, and to me it’s driven by jobs,” Gilbert said. Neighborhood residents “benefit from the overall healthy city that will have more taxes to drive more services and to drive better education,” he said. “I’m going to just keep pounding on this stuff because it’s just so massive and critical.”

Contact John Gallagher: 313-222-5173 or gallagher@freepress.com. Follow him on Twitter @jgallagherfreep.