Whole Foods no longer a rumor

[mwilbert]

I'm not angry, but the incentives seem very high for a 20.000 square foot store. That probably isn't going to be enough room for a full-service grocery store as I will be surprised if there isn't a substantial amount of space dedicated to prepared foods and other non-food items. I'm not saying it isn't a nice thing to have [[for other people) and no doubt it will offer a good selection of perishables.

Think about this. 4.2 million for 20000 sq ft is over 200/sq ft. And that is just the incentives.

Compare that to this estimate from RS Means:

http://www.reedconstructiondata.com/...s/supermarket/

It seems like an awful lot of money.

[noise]

Simply having a Whole Foods in the city will encourage certain people to relocate to the city. Name recognition goes a long way. Educated & wealthy people demand certain amenities.

[noise]

Given the location, they'd probably sell more prepared foods which would not necessitate a full grocery store.

[GUSHI]

they gonna accept bridge cards? lol

[Crumbled_pavement]

For $4.2 million, we can get a hell of a lot more than one frigging grocery store.

I share your outrage, only because the incentives will probably be doled out but no store will ever be built [[ala Shoppes at Gateway).

[DetroiterOnTheWestCoast]

Form over function in the Supermarket game doesn't work. Lack of parking and the new policy by the Municipal Parking Department of ticketing vehicles until 10:00 pm is going to end this store faster than the F & M store that was located right across the street from Fishbones back in the day.

I doubt there will be a lack of parking. The urban WF here in Oakland has rooftop parking. Maybe one of the reasons for the high price tag has to do with incorporating parking?

[agrahlma]

$4.2 Million, over and over and over.

Why does it really matter how much?? We're not going to see a new line item on our paycheck with a "Whole Food" deduction. I must be the odd man out, because the dollar amount didn’t phase me one bit. It’s not my money, I have nothing to loose - I'm just happy that we are getting one - and I've never even been to a WF. This is bigger than just a grocery store. Start thinking of the bigger picture!

[Bham1982]

Again, I ask, how else would you like the feds, the state, and the City to utilize its economic development programs? Seems like a pretty minimal investment for the City, with a potentially huge payoff.

Well, for starters, I don't agree with the premise. There is no "huge economic payoff". At best, existing dollars spent at Honeybee, Eastern Market or in the burbs will be reallocated to Whole Foods. There is no net economic benefit.

And, given that Detroit can't keep the streetlights on, and has no money for police, I wouldn't spend a penny on "economic development", whatever that means.

If I had no choice but to spend this $4.2 million on this type of "economic development", I wouldn't spend it on a wealthy Texas based company, I would make strict wage requirements, and I would require full repayment if the business closes within X amount of years.

If it's true that Whole Foods is applying for brownfield credits, then they will receive far more than $4.2 million. Try millions more. Michigan has one of the most generous brownfield credit programs in the nation.

[Huggybear]

Let's see. This creates up to 75 jobs at a cost of $4.2 million.

That works out to $56,000 per job "created." I don't expect much out of politicians, but this is simply insane.

Quite sane, in fact.

1. By your logic, the city should have imploded the Book-Cadillac, since that cost about $1 million per full-time-equivalent permanent job, correct?

2. Even accepting that your $56,000 figure is properly viewed as a subsidy solely to job creation [[as opposed to making up the gap from building on top of a brownfield), it's a small amount compared to what southern states pay for auto jobs at plants built on greenfields [[unskilled at about $14/hour). Their average subsidy was [[and likely still is) about $165,000 per job.

3. If you consider the city income taxes generated, even a small lift to property values, attraction of additional high-income people to an area with more "normal" retail, and increased throughput to local vendors, it is very easy to get $56,000 worth of value from each of those positions.

[Crumbled_pavement]

$4.2 Million, over and over and over.

Why does it really matter how much?? We're not going to see a new line item on our paycheck with a "Whole Food" deduction. I must be the odd man out, because the dollar amount didn’t phase me one bit. It’s not my money, I have nothing to loose - I'm just happy that we are getting one - and I've never even been to a WF. This is bigger than just a grocery store. Start thinking of the bigger picture!

The dollar amount doesn't phase me, I just doubt the store ever gets built. Remember the Shoppes at Gateway that was supposed to be open in 2010? There are so many projects that are supposed to be built in this city and all I ever see is more gutted housing and buildings all over the city everyday. I can't muster up enthusiasm for this one.

Well, for starters, I don't agree with the premise. There is no "huge economic payoff". At best, existing dollars spent at Honeybee, Eastern Market or in the burbs will be reallocated to Whole Foods. There is no net economic benefit.

And, given that Detroit can't keep the streetlights on, and has no money for police, I wouldn't spend a penny on "economic development", whatever that means.

If I had no choice but to spend this $4.2 million on this type of "economic development", I wouldn't spend it on a wealthy Texas based company, I would make strict wage requirements, and I would require full repayment if the business closes within X amount of years.

If it's true that Whole Foods is applying for brownfield credits, then they will receive far more than $4.2 million. Try millions more. Michigan has one of the most generous brownfield credit programs in the nation.

I hate to agree with anything Bham1982 says, but people are breaking their neck to get out of this city in droves, leaving behind nothing but stripped and boarded up carcasses and burnt up shell of homes. I can't see this as the big news that is going to help bring Detroit back. Maybe, if this store gets built, it'll help out Midtown, but there's nothing worthwhile for most Detroiters in this deal at all.

[Bham1982]

Quite sane, in fact.

1. By your logic, the city should have imploded the Book-Cadillac, since that cost about $1 million per full-time-equivalent permanent job, correct?

A condo/hotel project isn't a job intensive use, and has a strong economic multiplier effect. A grocery store IS job intensive and doesn't have any regional economic multiplier effect.

2. Even accepting that your $56,000 figure is properly viewed as a subsidy solely to job creation [[as opposed to making up the gap from building on top of a brownfield), it's a small amount compared to what southern states pay for auto jobs at plants built on greenfields [[unskilled at about $14/hour). Their average subsidy was [[and likely still is) about $165,000 per job.

An auto plant is a HUGE economic multiplier. Those Southern states have profited handsomely from the massive number of growing and relocated suppliers and supporting businesses. In contrast, Whole Foods will not cause folks to eat more food, nor will it attract additional dollars to the region.

3. If you consider the city income taxes generated, even a small lift to property values, attraction of additional high-income people to an area with more "normal" retail, and increased throughput to local vendors, it is very easy to get $56,000 worth of value from each of those positions.

I would like to see this "very easy" economic calculation. Feel free to calculate this for us!

And I have never heard of someone who choose their home primarily based on proximity to a single grocery store. Even if they did, there would be zero net economic gain for the region.

[agrahlma]

Well, for starters, I don't agree with the premise. There is no "huge economic payoff". At best, existing dollars spent at Honeybee, Eastern Market or in the burbs will be reallocated to Whole Foods. There is no net economic benefit.

And, given that Detroit can't keep the streetlights on, and has no money for police, I wouldn't spend a penny on "economic development", whatever that means.

If I had no choice but to spend this $4.2 million on this type of "economic development", I wouldn't spend it on a wealthy Texas based company, I would make strict wage requirements, and I would require full repayment if the business closes within X amount of years.

If it's true that Whole Foods is applying for brownfield credits, then they will receive far more than $4.2 million. Try millions more. Michigan has one of the most generous brownfield credit programs in the nation.

So what should we have done? Tell them to pack it up and get lost?

[BigD]

Well, for starters, I don't agree with the premise. There is no "huge economic payoff". At best, existing dollars spent at Honeybee, Eastern Market or in the burbs will be reallocated to Whole Foods. There is no net economic benefit.

And, given that Detroit can't keep the streetlights on, and has no money for police, I wouldn't spend a penny on "economic development", whatever that means.

If I had no choice but to spend this $4.2 million on this type of "economic development", I wouldn't spend it on a wealthy Texas based company, I would make strict wage requirements, and I would require full repayment if the business closes within X amount of years.

If it's true that Whole Foods is applying for brownfield credits, then they will receive far more than $4.2 million. Try millions more. Michigan has one of the most generous brownfield credit programs in the nation.

Michigan USED to have one of the most generous brownfield credit programs in the nation. Remember, brownfield credits were eliminated in the most recent state budget. They are working on formulating the replacement program - legislation was recently introduced, but won't be acted on until the fall. It appears there will be a pot of $50 million to be used for both brownfield and historic preservation grants/loans. No more credits. In previous years, around $150 million per year was doled out in credits for brownfield and historic. The brownfield program will be MUCH leaner now, and more focused on urban areas. Also, let's not give the papers too much credit. It could be that the $1.5 million from the state is the brownfield money. Let's wait til the details come out.

[BigD]

Well, for starters, I don't agree with the premise. There is no "huge economic payoff". At best, existing dollars spent at Honeybee, Eastern Market or in the burbs will be reallocated to Whole Foods. There is no net economic benefit.

And, given that Detroit can't keep the streetlights on, and has no money for police, I wouldn't spend a penny on "economic development", whatever that means.

If I had no choice but to spend this $4.2 million on this type of "economic development", I wouldn't spend it on a wealthy Texas based company, I would make strict wage requirements, and I would require full repayment if the business closes within X amount of years.

If it's true that Whole Foods is applying for brownfield credits, then they will receive far more than $4.2 million. Try millions more. Michigan has one of the most generous brownfield credit programs in the nation.

I just completely disagree. A Whole Foods means more people living in the city, more people shopping at nearby stores, and likely increased retail filling in the gaps in the area. It means more jobs in the City. It means money for suppliers [[Avalon, McClure's, etc.) It may mean increased property values. That means income for the city and for businesses in the City. It's certainly worth $1 million of City money. No question in my mind.

The state money WILL be conditioned upon the project happening and operating for several years, with the requisite job creation. They always are - these agreements are quite stringent.

Further, this is not re-allocating the money already spent at independent grocers in the city. My wife, for instance, does her shopping at Eastern Market and the Ann Arbor Whole Foods [[where she works). She's one of those organic/natural fans. When the Whole Foods arrives, ALL of our groceries will be purchased in the City. There are others like us. Further, I guarantee you that many people who work in Midtown and elsewhere in the City, yet live in the suburbs, will do significant business at the Detroit Whole Foods. They can swing by the Whole Foods right next to their employer [[the hospitals, Wayne State, etc.) after work.

[agrahlma]

You can throw the typical CBA out the window on this one. IMO there are so many soft benefits to this deal that you'll never be able to connect the financial dots. Someone had to pull the trigger first, it just happened to be WF. Half of the companies out there want to be first to market, the other half want to be fast to market. We’ll we got our first to market - the fast to market folks will follow soon – and that’s when we’ll see the hard benefits.

My friend from LA [[originally from Detroit) just sent me a text, he just heard about WF moving. For the past year he’s been telling me that I’m full of $hit regarding the future of the Midtown area. He believes me now.

[jsmyers]

I'm not sure what I think of this yet....but for comparison, the AA WF @ Washtenaw and Huron Parkway is ~45,000 SF. The WH that I shop at on occasion in Greenville is also about the same size.

The site is roughly rectangular 345'x210' or around 72,000 sf. [[That calculates out to 1.66 acres, so they must be including some land that is currently parking for the ellington or the walkway as well.) This means the store's footprint will be between 1/4 and 1/3 of the site according to what we've read. [[Unless there will be other retail spaces in the development.)

If I remember the AA store right, these are pretty spacious stores. I would actually expect that prepared foods would be a smaller part of a Detroit Whole Foods, saving a fair amount of space. The one in Greenville also has a huge cosmetics section that takes a huge chunk out of the middle of the store.

I believe getting this store is important for central Detroit's long term prospects, but at the same time, I don't like public incentive-based economic development. That said, we've seen the state waste waste in the vacinity of 50 million dollars gold-plating the I-96 interchanges at Wixom and Beck roads for the private benefit of a number of developers and landholders out there. Compared to that, a couple of million isn't really that much money.

[noise]

And I have never heard of someone who choose their home primarily based on proximity to a single grocery store. Even if they did, there would be zero net economic gain for the region.

I believe you're the same person who never heard of people moving out of Detroit due to cost of living. No offense, but you haven't been listening.

[Fnemecek]

Let me get this straight...

A bunch of folks think that people will actually move here because a Whole Foods opened up???

We have taxes that are roughly double national averages, one of the highest murder rates in the nation [[which keeps going up, by the way), high insurance rates, and high poverty rates.

And folks will be willing deal with all of this, just to live near a Whole Foods?

As opposed to living in any of the other places that also have a Whole Foods, but don't have any of those other draw backs?

Yeah, call me crazy but I just don't believe it for a minute. This is a bad deal for Detroit and a bad deal for Michigan.

It's a spectacular deal for the shareholders of Whole Foods, but it's bad for everyone else.

[noise]

Young, educated, upwardly-mobile folks love living in cities with "upscale" or refined shopping options, yes. These people regularly cite Whole Foods as a perk of their chosen cities. I've heard it often in the various places I've lived or traveled.

[Fnemecek]

You'll always find someone who says that - right up until the moment when they get shot at for the first time. Then their priorities change and they leave fast.

[agrahlma]

Let me get this straight...

A bunch of folks think that people will actually move here because a Whole Foods opened up???

We have taxes that are roughly double national averages, one of the highest murder rates in the nation [[which keeps going up, by the way), high insurance rates, and high poverty rates.

And folks will be willing deal with all of this, just to live near a Whole Foods?

As opposed to living in any of the other places that also have a Whole Foods, but don't have any of those other draw backs?

Yeah, call me crazy but I just don't believe it for a minute. This is a bad deal for Detroit and a bad deal for Michigan.

It's a spectacular deal for the shareholders of Whole Foods, but it's bad for everyone else.

Should tell them to get lost??? Should we tell every new business to forget about Detroit? If you feel that way maybe you should start a group called DetroitNo.

[Fnemecek]

If it takes $4.2 million to bring 75 jobs to Detroit then, yes, walked away from the deal and concentrated on other - far more important - matters.

As for starting another group, if anything if would DetroitRealism - but I digress.

[DetroiterOnTheWestCoast]

I am always amazed by the number of people on this forum who bitch about every new project, complaining that its insignificant, its not gonna do enough, its not going to help the neighborhoods, the new jobs won't pay enough, blah blah blah. News flash, there are no silver bullets.

Of course a new, small WF won't a start a stampede of new residents to Midtown and magically start huge new housing developments. Like every new development, its just a piece of the puzzle. Every new restaurant, coffee shop, retail store, etc etc gradually makes the area more attractive and successful. Its the sum of all of the redevelopment that counts. I think having WF in the Midtown area will be a big plus, and will definitely improve the image of the area.

I think the new group should be Grumpy Naysayers.

[Huggybear]

Bham1982,

1. Frank's metric is jobs created per dollar, not the intensity of a use. And let's see the numbers on what type of spinoff you think the Book-Cadillac has. Further, hotel occupancy is actually counted as a spinoff of other things like conventions - it's not an independent economic generator. Hotels in downtown Detroit largely have business due to Cobo [[oft-cited as a subsidy hog).

2. The southern states went through years of getting virtually nothing for what they paid to incentivize auto plants - in fact, they were mostly building knockdown kits for years [[the same way that Western companies built in China for years). We went through these business cases in grad school. I don't recall whether it was a "payoff" on a straight line or not, but I do recall that from local government's [[city, county, and state) standpoint, it was taking about 10 years to break even, if not more.

3. Numbers? Ok. Let me give you some concrete examples.

Take $60,000 per job [[round up to $4.5 million divided by 75). Assume that the city is directly paying 1/3 of that, or about $20,000 in cash, on a one-time basis, as an incentive. There is no indication this is actually happening, but since you and other seem to suggest that the city has better things to do with its money, let's assume it.

A. The Whole Foods site owner would pay property taxes again as an improved property [[and on a very high denominator). The city gets 81 mills of that. If the improved property ends up being worth even as little as $2 million [[a worst case), it's $162,000 per year or $2,160 per worker per year.

B. The workers themselves, assuming they live in Detroit and make $25K [[just picking a low number), end up paying $625 a year apiece.

So right here, going no further and assuming zero spinoff, this pays off for the city in 7 years [[assuming the "city" money really came from the city - and discounting the cost of capital, which may make it slightly longer). But go on to the indirect [[but still unit-quantifiable) impacts:

C. Adding one work/live Midtown median family income [[from a suburban location) provides more than $2,800 in city taxes/year.

D. Getting one midtown house repaired and back on the tax rolls can mean $3,000-4,000/year in property taxes.

E. Every added commuter job paying median income adds $ 500 per year in city taxes.

F. The parking deck behind the Ellington would be sucking up a lot of additional cars. The city gets 1% of the increased net revenue. A hundred more cars a day paying 5 bucks apiece means $1,825 a year in city taxes [[this computation is easy, since all costs in parking decks are essentially fixed costs). That works out to $24.33 per worker per year.

And then:

G. Local sourcing [[if it happens) creates jobs at local businesses.

H. The studies do show that supermarket availability affects property values [[as if you didn't know this from everyone who asks Detroiters whether they have grocery stores).

I. How much money would the city put on being able to say they have a Whole Foods? You could dump $1.5 million into saying how great Detroit is, but the flag of a mainstream retail chain could be a lot more effective.

And on to your point regarding social consciousness for the region?

A. Unless Whole Foods is announcing that it is closing its suburban stores or reducing their workforces, that this is a zero-sum jobs game is just as much speculation as anything else is.

B. If it is actually poaching from the region, the suburbs have for years called it "job growth" and "job creation," often fueled by highly subsidized road construction and subsidized real estate loans. Sauce for the goose.

C. And even restricting the "region" to Midtown, it's pretty well accepted that local competition actually boosts sales in a given area. This is, after all, the idea behind multiple gas stations at a given intersection or putting multiple middle-class department stores into the same mall.

[agrahlma]

If it take $4.2 million to bring 75 jobs to Detroit then, yes, walked away from the deal and concentrated on other - far more important - matters.

As for starting another group, if anything if would DetroitRealism - but I digress.

OK - I'll flinch -- such as? Remember $1.2 of it is a tax credit, $1.5 is from the State. That leaves you with $1.5 local and community funds to play with [[I'll even allow you to assume you get all of the $1.5). Maybe you could build a school with that, but you won't have the kids to fill it. You could pay 15 cops [[full loaded with benefits for one year). You could knock down a few buildings. Ok – help me out here??