Whole Foods no longer a rumor

[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.

[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.

[Bham1982]

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.

I just think that the folks you hang around aren't representative of the general Metro Detroit demographic.

Again, I have never heard someone claim that they wanted to buy in Detroit, but it was just so much more expensive than the suburbs. Not once.

And I have never heard that someone bought a home because of a grocery store. Not even once.

[iheartthed]

I just think that the folks you hang around aren't representative of the general Metro Detroit demographic.

Again, I have never heard someone claim that they wanted to buy in Detroit, but it was just so much more expensive than the suburbs. Not once.

And I have never heard that someone bought a home because of a grocery store. Not even once.

You're arguing something different from what we were talking about. We're talking about the sample of people who would consider living in Detroit but don't. From our anecdotal experiences, we've found that many of those people choose not to live there because of higher living costs compared to the suburbs.

Most people in suburban Detroit would not consider living in Detroit under pretty much any circumstance, so these people do not count for the purposes of the discussion.

[Novine]

"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."

People have made this claim before. I don't know anyone who does grocery shopping this way. Grab a bottle of wine or a specialty item for the wife's birthday before heading home? Maybe. But the idea that people are going to get out of work, go shopping at WF and then drive 30 - 45 minutes home to the suburbs isn't going to happen.

[hamtown mike]

But the idea that people are going to get out of work, go shopping at WF and then drive 30 - 45 minutes home to the suburbs isn't going to happen.

A trip to Whole Foods sounds like a great way to let rush hour traffic die down.

I hope they hire Kim and name their produce section Kim's Produce.

[iheartthed]

At least it's not unprecedented for a government to subsidize WF: http://dcmetrocentric.com/2011/05/02...al-in-trouble/

Last year everyone was getting excited about plans to bring a Whole Foods to 800 New Jersey Ave SE as part of a larger residential and retail complex [[rendering pictured), but the Post is now reporting that the developer William Smith & Co is no longer trying to secure a $8 million tax abatement and the prospects aren’t looking that good.

[Zozo]

People have made this claim before. I don't know anyone who does grocery shopping this way. Grab a bottle of wine or a specialty item for the wife's birthday before heading home? Maybe. But the idea that people are going to get out of work, go shopping at WF and then drive 30 - 45 minutes home to the suburbs isn't going to happen.

People do this at WF all over the country. Why wouldn't they do it in Detroit?

[Bham1982]

People do this at WF all over the country. Why wouldn't they do it in Detroit?

Where exactly do they do this? I don't think it's very common to shop for groceries where you work.

Take the GM Tech Center. Tons of highly paid engineers. Far, far better workplace demographics than Midtown.

Why isn't there a Whole Foods near GM Tech? Why are there basically no upscale stores in North Warren?

[noise]

I just think that the folks you hang around aren't representative of the general Metro Detroit demographic.

Again, I have never heard someone claim that they wanted to buy in Detroit, but it was just so much more expensive than the suburbs. Not once.

And I have never heard that someone bought a home because of a grocery store. Not even once.

And I have. That makes you wrong.

[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.