City Council Wants Developers to Deliver Jobs

**Kevgoblue** · July-10-14, 10:03 AM

Can I get a standing ovation for the city coucil? Brenda Jones is leading the charge to hold developers accountable for the jobs they promised for residents in exchange for substantial tax breaks.
How in the world is Detroit ever going to get back on its feet if it cannot re-establish some type of tax base in the city.

http://www.freep.com/article/2014071...ncil-ordinance

**401don** · July-10-14, 10:21 AM

Ideally it would be better if these agreements were on a case-by-case basis. It's not about Marathon or new arena agreements. It's about scaring off a new developer who is considering the city over a suburban or out-of-state location for a new factory, etc. You don't want the company to be scared off by the thought of a years delay just to meet some burdensome local regulations.
On the other hand Marathon should have been required to lay out exactly what efforts were to be made in local hiring, training, etc. when they accepted the tax breaks.

**Scottathew** · July-10-14, 10:22 AM

Originally Posted by 401don

Ideally it would be better if these agreements were on a case-by-case basis. It's not about Marathon or new arena agreements. It's about scaring off a new developer who is considering the city over a suburban or out-of-state location for a new factory, etc. You don't want the company to be scared off by the thought of a years delay just to meet some burdensome local regulations.
On the other hand Marathon should have been required to lay out exactly what efforts were to be made in local hiring, training, etc. when they accepted the tax breaks.

I think developers won't be scared off, but they'll be scared off from making empty promises.

**stinkytofu** · July-10-14, 10:42 AM

In a similar thought...regarding the Wings proposal they should have been to required to have announced and signed off on specific neighborhood developments that they have promised to the tune of...what...$200 million or so? I'm very suspicious very little of that development will occur and they'll use a ton of the public money for the arena itself. Even if the money is used, it might just go to some structures...they should be required to announce the specific uses of the public money before that money is authorized.

**animatedmartian** · July-10-14, 10:48 AM

Originally Posted by Kevgoblue

Can I get a standing ovation for the city coucil? Brenda Jones is leading the charge to hold developers accountable for the jobs they promised for residents in exchange for substantial tax breaks.
How in the world is Detroit ever going to get back on its feet if it cannot re-establish some type of tax base in the city.

http://www.freep.com/article/2014071...ncil-ordinance

And requiring to use Detroit residents is going to help? What about when there aren't enough qualified Detroit residents? And what would be stopping them from leaving the city once they get a decent paycheck?

**313rd** · July-10-14, 11:49 AM

There are not enough qualified Detroit Residents for these projects. End of story. As a contractor who has worked on numerous projects with these requirements, I run into this issue all the time. When you bid on a project you expect to get an average of 100 widgets per day installed with your current experienced workforce. Then when you are required for Detroit Residents to get the same production of 100 widgets...it doesn't happen. You then will lose money. If you try to adjust your bid to reflect the average, your bid will be to high and not competitive.

Executive Order No. 2007-1

This Executive Order directs City departments and agencies to implement utilization of Detoit City residents on all construction projects funded, in whole or in part, by the City. [[This Executive Order supersedes Executive Order No. 22).
The goal is 51% of the workforce and hours performed on the project shall be bona-fide Detroit residents.

**Chicago48** · July-10-14, 12:14 PM

Originally Posted by 401don

Ideally it would be better if these agreements were on a case-by-case basis. It's not about Marathon or new arena agreements. It's about scaring off a new developer who is considering the city over a suburban or out-of-state location for a new factory, etc. You don't want the company to be scared off by the thought of a years delay just to meet some burdensome local regulations.
On the other hand Marathon should have been required to lay out exactly what efforts were to be made in local hiring, training, etc. when they accepted the tax breaks.

Developers know what they're doing. If they don't want to do business with the city on the city's terms, go elsewhere.

**mwilbert** · July-10-14, 12:37 PM

Originally Posted by 313rd

There are not enough qualified Detroit Residents for these projects. End of story. As a contractor who has worked on numerous projects with these requirements, I run into this issue all the time. When you bid on a project you expect to get an average of 100 widgets per day installed with your current experienced workforce. Then when you are required for Detroit Residents to get the same production of 100 widgets...it doesn't happen. You then will lose money. If you try to adjust your bid to reflect the average, your bid will be to high and not competitive.

Executive Order No. 2007-1

This Executive Order directs City departments and agencies to implement utilization of Detoit City residents on all construction projects funded, in whole or in part, by the City. [[This Executive Order supersedes Executive Order No. 22).
The goal is 51% of the workforce and hours performed on the project shall be bona-fide Detroit residents.

A goal like this only makes sense if you assume there are adequate skilled people available.

If not, you can only make it work with strict enforcement, because there is too big an incentive not to hire unproductive workers; if you don't police it you are only going to be rewarding the non-compliant contractors. My experience with the enforcement of contract compliance does not make me optimistic that this is likely, and probably less so when it comes to these goals being effectively monitored by the City. And of course, even if you are able to hire compliant contractors it isn't obvious that it is worth it for the city to pay more for projects just to employ more Detroit residents--that approach leads in fiscally dangerous directions.

I don't know whether there is actually a shortage of appropriately skilled Detroiters, although I have no reason to doubt 313rd. If there is, it seems to me that might make more sense for the city to require some number of Detroit-resident apprentices on jobs instead.

**Detroitnerd** · July-10-14, 12:41 PM

George Jackson is against it.

So, judging by his record, I'm going to have to say I'm for it.

Good job, city council.

**motz** · July-10-14, 01:15 PM

Originally Posted by 313rd

There are not enough qualified Detroit Residents for these projects. End of story. As a contractor who has worked on numerous projects with these requirements, I run into this issue all the time. When you bid on a project you expect to get an average of 100 widgets per day installed with your current experienced workforce. Then when you are required for Detroit Residents to get the same production of 100 widgets...it doesn't happen. You then will lose money. If you try to adjust your bid to reflect the average, your bid will be to high and not competitive.

Executive Order No. 2007-1

This Executive Order directs City departments and agencies to implement utilization of Detoit City residents on all construction projects funded, in whole or in part, by the City. [[This Executive Order supersedes Executive Order No. 22).
The goal is 51% of the workforce and hours performed on the project shall be bona-fide Detroit residents.

http://www.freep.com/article/2014060...ing-detroiters
It's almost as though Marathon wanted the tax breaks, but didn't want to actually employ people. Huh, imagine that.

**Jimaz** · July-10-14, 01:22 PM

Would it be possible to somehow put the jobs in escrow up front before tax breaks are given?

Just trying to think out of the box.

**bailey** · July-10-14, 01:49 PM

Originally Posted by 313rd

There are not enough qualified Detroit Residents for these projects. End of story. As a contractor who has worked on numerous projects with these requirements, I run into this issue all the time. When you bid on a project you expect to get an average of 100 widgets per day installed with your current experienced workforce. Then when you are required for Detroit Residents to get the same production of 100 widgets...it doesn't happen. You then will lose money. If you try to adjust your bid to reflect the average, your bid will be to high and not competitive.

Executive Order No. 2007-1

This Executive Order directs City departments and agencies to implement utilization of Detoit City residents on all construction projects funded, in whole or in part, by the City. [[This Executive Order supersedes Executive Order No. 22).
The goal is 51% of the workforce and hours performed on the project shall be bona-fide Detroit residents.

Valid point, but isn't part of the issue here that Marathon promised it'd hire folks that completed the requisite training...and then didn't hire any of them?

**313rd** · July-10-14, 02:09 PM

"Qualified" may have been the wrong description. Someone can go through the job training, schooling and become a journeyman and no longer be an apprentice. This then makes them "qualified" but it doesn't necessary mean that they are the correct people for the job.

**313rd** · July-10-14, 02:12 PM

It also depends on the job, with the extent of compliance coordination. Some are very strict and other are very lax.

**Honky Tonk** · July-10-14, 02:12 PM

Originally Posted by 313rd

"Qualified" may have been the wrong description. Someone can go through the job training, schooling and become a journeyman and no longer be an apprentice. This then makes them "qualified" but it doesn't necessary mean that they are the correct people for the job.

A lot of kids "graduate" these days, but can't read or write, or else they do it @ a grade school level.

**Wesley Mouch** · July-10-14, 02:35 PM

It is never a good strategy to add secondary requirements. What Detroit needs is investment. Investment brings jobs for the area. Jobs for the area helps increase jobs for Detroiters. That works.

Adding unrelated needs and brining additional agendas to the table only hurts development. Hurting development hurts Detroit residents.

We need jobs. But getting jobs by fiat never works in the long-run.

**MikeyinBrooklyn** · July-10-14, 03:34 PM

Wesley is correct. the council should focus on making detroit an attractive place to do business. dependably low and uncomplicated taxes makes a business confident in a city, and acts like fertilizer for the businesses alteady there. fthere should not be special breaks or the strings they would come. with.
@

**MikeyinBrooklyn** · July-10-14, 03:36 PM

Typed by my chubby fingerd on my phonr. sorry for any typos.

**motz** · July-10-14, 03:41 PM

Originally Posted by 313rd

"Qualified" may have been the wrong description. Someone can go through the job training, schooling and become a journeyman and no longer be an apprentice. This then makes them "qualified" but it doesn't necessary mean that they are the correct people for the job.

Ah yes, the correct people for the Marathon jobs was "No One". "No One" is a very qualified candidate with large amounts of experience in pilfering money from the tax payers and not contributing to stabilizing an ailing city!

**Hypestyles** · July-10-14, 03:49 PM

stop all the tax breaks, period. Fire George Jackson, from everywhere.

**ABetterDetroit** · July-10-14, 07:33 PM

Originally Posted by 401don

Ideally it would be better if these agreements were on a case-by-case basis. It's not about Marathon or new arena agreements. It's about scaring off a new developer who is considering the city over a suburban or out-of-state location for a new factory, etc. You don't want the company to be scared off by the thought of a years delay just to meet some burdensome local regulations.
On the other hand Marathon should have been required to lay out exactly what efforts were to be made in local hiring, training, etc. when they accepted the tax breaks.

Exactly, "case-by-case basis" just because marathon didn't hold up there end of the deal you can't just put the screws to everyone who wants to do something in the city. That would just be cutting off your nose to spite your face. It's been tried before in Detroit it didn't work. Hopefully Duggan will be a voice of reason on this issue.

**erikd** · July-10-14, 11:47 PM

Originally Posted by Wesley Mouch

It is never a good strategy to add secondary requirements. What Detroit needs is investment. Investment brings jobs for the area. Jobs for the area helps increase jobs for Detroiters. That works.

Adding unrelated needs and brining additional agendas to the table only hurts development. Hurting development hurts Detroit residents.

We need jobs. But getting jobs by fiat never works in the long-run.

I agree with the points made by Wesley, and I will take it one step further...

The role of city government is not to provide jobs. The role of city government is to provide SERVICES.

I fail to see how a promise to hire 50%, or even 100%, of city residents to fill fewer than 200 job openings is worth a $175 million tax break. We are focusing on the wrong thing here.

Even if Marathon hired 100% Detroiters to fill these 175-200 new jobs at the refinery, it still works out to around a million dollar tax subsidy per job.We would be better off if the city didn't give out the tax break, and used that $175 million to provide better services. Hell, we would be better off if the city spent $75 million on improving services, and spent the other $100 million on a lottery drawing that gave away a $500,000 check to 200 Detroiters.

Spending hundreds of millions to hopefully get a handful of jobs is poor public policy. Responsible use of city tax dollars in order to provide quality services is what the city council should be focusing on, instead of trading that away for a handful of promised job opportunities that may or may not come to fruition.

**motz** · July-11-14, 10:39 AM

Originally Posted by erikd

Spending hundreds of millions to hopefully get a handful of jobs is poor public policy. Responsible use of city tax dollars in order to provide quality services is what the city council should be focusing on, instead of trading that away for a handful of promised job opportunities that may or may not come to fruition.

The problem is that as long as a handful of cities/states/counties/etc are taking part in the incentives wars, incentives need to be offered in order to retain or attract companies to your locale. Whenever you hear Texas squawk about their amazing economy, or hear about the South touting Right to Work as anything more than something most people don't take into consideration when locating, remember that they have thrown larger and larger tax credits at companies and then cited their legislative decisions as the reasons.

The incentives wars is one of the worst uses of public money that has been perpetuated by the corporate hierarchy that I can think of. Jobs or no jobs, if you want a company to come to you, you need to offer tax breaks. Very, very few companies relocate or open new locations in places just because it's cool or edgy or whatever.

**Hermod** · July-11-14, 12:44 PM

Originally Posted by motz

The problem is that as long as a handful of cities/states/counties/etc are taking part in the incentives wars, incentives need to be offered in order to retain or attract companies to your locale. Whenever you hear Texas squawk about their amazing economy, or hear about the South touting Right to Work as anything more than something most people don't take into consideration when locating, remember that they have thrown larger and larger tax credits at companies and then cited their legislative decisions as the reasons.

The incentives wars is one of the worst uses of public money that has been perpetuated by the corporate hierarchy that I can think of. Jobs or no jobs, if you want a company to come to you, you need to offer tax breaks. Very, very few companies relocate or open new locations in places just because it's cool or edgy or whatever.

While I agree that tax incentives are a truly unwise undertaking for government entities, look at the difference. If Beauregard County in some southern state gives incentives to Totowatomasaki Motors to locate a plant on free land in Beauregard County, most of the workers will come from the area. If Detroit gives out incentives, the business which takes them has easy access to people in the metro area who might be more qualified or have a stronger work ethic.

**motz** · July-11-14, 01:17 PM

Originally Posted by Hermod

While I agree that tax incentives are a truly unwise undertaking for government entities, look at the difference. If Beauregard County in some southern state gives incentives to Totowatomasaki Motors to locate a plant on free land in Beauregard County, most of the workers will come from the area. If Detroit gives out incentives, the business which takes them has easy access to people in the metro area who might be more qualified or have a stronger work ethic.

My bigger issue is that we're so focused on job numbers that many people, especially the media and politicians, don't realize that if they added up all of the "promised job" numbers from companies that received tax breaks, we'd probably have 50k jobs that needed to be filled. Every promise is pie-in-the-sky bullstuff if you ask me. Stop focusing on how many jobs someone will bring, and focus on attracting and developing an infrastructure for different industries. The jobs will come eventually.