To all the skeptics who think Detroit doesn’t need to hand out tax incentives and other public help to generate new economic development, Kevin Johnson has a simple message.

Not today.

Johnson, president and CEO of the Detroit Economic Growth Corp., the city’s main development arm, told the Free Press in a wide-ranging interview in late June that this is no time to think the city’s fledgling recovery is strong enough to fly on its own.

“How does a city that’s come out of what this city has come out of right-size the tools that we have to keep whatever momentum that this city has moving forward?” Johnson said during the interview in his office in the Guardian Building.

“One thing I know about economic development is that the tools required for us to be competitive, when you become competitive, it doesn’t mean you don’t use the tools anymore,” he said. “In my business, in economic development, pullback is poison.”

True, he said, the assistance rendered may vary from deal to deal. Sometimes a project needs a tax break, other times land assembled by the city, or at times a pipeline to talent. Johnson’s DEGC, best known for encouraging downtown development, actually works across all those efforts and more.

And it's working hard to encourage retail development along the city's older commercial corridors like Livernois and East Jefferson in the neighborhoods. It was also part of the city's effort to conclude the recent successful deal for a new Jeep assembly plant on Detroit's east side.

“We may be able to adjust and modify” the incentives used, Johnson said, “but we can’t cancel. That’s the warning that I have to keep in front of influences.”

Critics grow louder

Johnson offered to discuss DEGC’s approach because of:

A rising chorus of criticism from academics who say that tax breaks for development deals aren’t needed.

Intense grumbling over deals that don’t produce all the benefits promised in advance.

Back, say, 10 years ago, not many people questioned that Detroit would offer free land or tax breaks to bring new development projects to town. The city’s population had dropped under 700,000 from its 1950s-era peak of nearly 2 million; more than 90% of the industrial jobs once found in the city had vanished; and large swaths of both downtown and the neighborhoods were vacant and abandoned.

A lot has turned around in these past 10 years, and the DEGC has been involved in a great deal of it. Downtown has filled up again, thanks to businessman Dan Gilbert moving his Quicken Loans headquarters there and going on his buying spree for old skyscrapers.

The office vacancy rate downtown is at about 12%, down from more than 30% a decade ago. Dozens of shops, restaurants, and other new venues have opened, and young people have filled up multiple new residential buildings.

Then, too, Little Caesars Arena is doing great business, although that hasn’t stopped the grumbling over the unfulfilled vision for the surrounding District Detroit.

The Amazon debate

With so much good stuff having happened, a question that naturally arises now is whether the city and its DEGC arm need to keep a foot on the gas pedal of incentives. That question came up last year when Detroit, working with the Michigan Economic Development Corp., offered Amazon an incentive package worth an astonishing $4 billion to locate its second headquarters in Detroit.

Amazon didn’t bite. And the size of the incentives seemed over the top to many critics, who said Amazon would make its location decision based on other factors like talent and access to markets. Incentives, the critics said, would just reward Amazon for a decision it would be making anyway.

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The debate over incentives remains fierce. Academics typically find in their studies that tax breaks seldom “tip” a deal from not happening to happening. Yet practitioners like Johnson at DEGC find that unrealistic. Their experience is that most deals, even in a revitalizing market like Detroit, still need a lot of help to get across the finish line.

Rents are rising rapidly in parts of Detroit, meaning that investors and developers can see a better return, encouraging them to do a deal even without incentives. But the cost of construction seems to be rising almost as fast, which may offset somewhat the higher returns.

Full speed ahead

Rejecting the criticism, Johnson said companies and developers looking at Detroit need to know that the city will continue to play an active role in helping them.

“Utilizing our tools in our toolbox has to be consistent,” he said. “One thing you know about business: Businesses want certainty. They only make investments in places where they feel it is safe.”

So despite the debate growing louder, Johnson and his team at DEGC are not putting away the toolbox they’ve used to get Detroit moving again. Don’t expect to see tax incentives disappear from the development scene anytime soon.

Contact John Gallagher:313-222-5173 or gallagher@freepress.com.Follow him on Twitter@jgallagherfreep. Read more on business and sign up for our business newsletter.