Michigan lawmakers consider do-over of state's defanged economic development rules

Dec 3, 2016

Donald Trump descended on Indiana this week to praise Carrier Corporation’s decision to partly reverse its plan to ship 2,000 jobs to Mexico.

The president-elect and his running mate, Mike Pence, credit Trump’s deal-making prowess, of course. But the real prowess belongs to Indiana’s use of the almighty dollar. It’s the fungible asset that drives where business invests to create jobs and build communities. Or doesn’t.

Michigan’s Legislature — and its critics — should keep that in mind as lawmakers consider bills aiming to reinstate key economic development incentives. The goal is to attract large business investments, and to encourage “brownfield” development in the state’s urban centers -- especially Detroit.

That’s why mortgage mogul Dan Gilbert’s Bedrock real estate unit this week said it plans to “go vertical” with two high-rise buildings on the so-called Monroe Block.

They’re offering a peek at the next step in his downtown vision -- provided the Legislature delivers the financial levers Gilbert’s people and urban economic development pros want.

"... if you want it to get built, you're going to have to help bridge the cost gap."

Matt Cullen of Gilbert’s Rock Ventures says, "[It's] not like we’re going to go to Indianapolis instead of do the Monroe Block. But if you want it to get built, you’re going to have to help bridge the cost gap."

Yes, it’s all so unseemly and transactional.

But it’s how markets work, people, a reality too often misinterpreted as a threat.

Capital is mobile.

Capital goes where it’s invited.

Capital stays where it’s welcomed.

And investors have choices, lots of them. Those include choosing to do nothing.

State governments can, too. If rival states stand willing to dangle incentives to woo business, guess what: they’ll win more battles than they’ll lose.

And urban eyesores in places like Detroit and Flint, Saginaw and Grand Rapids, will endure.

And urban eyesores in places like Detroit and Flint, Saginaw and Grand Rapids, will endure.

Projects that cost as much to build as similar ones in Chicago still don’t fetch rents high enough to make the numbers work in Michigan cities. Would you borrow money at 5% if your project only promised a 2% return?

If you’re looking for a reason this legislation is working its way through the Legislature, that’s it.

Less ideological factions of the GOP majority are pushing a package its predecessors basically repealed --confirming that the over-correction of Governor Rick Snyder’s early years was just that: mistaken over-correction.

In a sale, business cuts prices to attract customers. Then shouldn’t states be empowered to reduce taxes and offer incentives to attract business investment and create tax-paying jobs?

A reason to do it is the world we live in. It’s called the market place, and it produces winners and losers.

Michigan’s ability to hunt big economic game is largely hamstrung by an ideologically-driven, case-by-case approach that makes the state less competitive than it otherwise could be. The risk is that the state’s manufacturing rebound gives lawmakers a false sense of economic security -- and produces a dreaded evil twin named complacency.

It’s another reminder of how competition between states, even countries, is played — and how Michigan could stay on the outside looking in if it doesn’t step up its game.

Daniel Howes is a columnist at The Detroit News. Views expressed in his essays are his own and do not necessarily reflect those of Michigan Radio, its management or the station licensee, The University of Michigan.