Hidden costs dog business in the D: Higher taxes, extra red tape among issues

[E hemingway]

Interesting tidbit in this story. Commercial taxes on Detroit property is basically 83 mills. However, property taxes only account for about 12 percent of the city's budget. Since tax rates are one of the big things city leaders can control to keep and grow businesses and families here, why not cut the property tax burden in 25 or even 50 percent? That would only account for 3-6 percent of the city's budget. If you're already taking a chainsaw to the city's finances to fill it $250 million hole, why not go a little further and cut another $100-150 million? It would be a harsh pill to take in the immediate future but it would also be a bold move taken with a long-term vision in mind.

I don't think it will ever happen. Even a businessman like Bing probably doesn't have political chutzpah to try something like this. But it would be an interesting policy to try. Detroit has been trying to solve its problems with liberal ideas for decades. Maybe Detroit is so far to the left now that a good dose of a conservative idea would cause a profound impact.

Hidden costs dog business in the D: Higher taxes, extra red tape among issues

By Nancy Kaffer

For $312 a year, merchants on East Warren Avenue can obtain the services of a Clean Team to pick up trash from the Detroit business district's streets.

The price tag isn't high, but it's a cost business owners don't have to pay in Grosse Pointe Park, a stone's throw away.

Now add a higher tax rate: In Detroit, the nonhomestead millage rate, paid by commercial property owners, is 82.97 mills, according to the state Department of Treasury. In Ferndale, just north of the city, it's 47.35. In Southfield, to the city's west, rates range from 51.55 to 57.6 mills. In Grosse Pointe, it's 57.34.

Throw in an often-cumbersome bureaucracy, shortage of parking, insufficient code enforcement, concerns about public safety — and the cost of doing business in Detroit mounts.

Keeping existing business in Detroit is a priority for both mayoral candidates. Both challenger Dave Bing and Mayor Ken Cockrel Jr. say it's unlikely Detroit will see significant incoming economic investment in the immediate future.

Bing has said that cutting red tape for city businesses is a priority, along with effecting a change in attitude among city workers who come in contact with business owners.

Cockrel says the availability of tax relief mechanisms must be communicated to business owners, and he says aggressive code enforcement will help clean up business districts.

Business advocates say such changes can't come soon enough.

“There are all these programs to help start a business, all these programs to hire Detroit businesses to do city work, but where are the programs to help businesses cut through the red tape in order to succeed?� said Bill Swanson, director of commercial revitalization at U-SNAP-BAC and the CEM Business Association on the city's east side, funded in part through the city's Office of Neighborhood Commercial Revitalization.

Parking, high utility fees and the appearance of safety have all been concerns for Mr. Song Millinery, a Detroit-based hatmaker that recently announced plans to move to Southfield.

Getting customers to the Woodward Avenue storefront has become increasingly difficult and has taken a hefty advertising budget, said Luke Song, chief designer and CEO of Moza Inc., the company that owns the Mr. Song brand.

At the store's new Southfield location, Song said, the shop will receive a host of amenities that just weren't available in the city.

“It can be difficult to do business in the city,� said Sarah Hubbard, vice president at the Detroit Regional Chamber. “But there is a very solid base of customers that need to be served, and those who can cleverly mitigate their expenses will enjoy very close and direct access to that customer base.�

Hubbard said Detroit has access to tax incentive tools geared toward distressed cities — such as the 12-year tax-free renaissance zone — that can reduce a tax burden.

“Those are tools local governments don't have in surrounding areas,� she said. “You really have to avail yourself of the programs.�

But researching and accessing such programs can be time-consuming, Hubbard admits.

“The idea is that the savings should outweigh the burden of seeking those programs,� she said. “A lot of people who do business in Detroit do business despite the cost. They do it because they want to be close to their customers or want to be in an urban setting or they want to be close to their employee base. Those are the big reasons businesses continue to stay in Detroit despite the costs.�

Swanson, who is responsible for the East Warren Avenue area Clean Team, said his organization is forming a group to examine top business retention needs.

“We're looking at what puts us at a competitive disadvantage. What are the nuts and bolts to streamline the system for our businesses to be successful?�

Solutions, Swanson said, can be surprisingly affordable. Funding local business groups such as his lets the city fill in some of its service gaps, he said.

“With the Clean Team program, it comes down to about $3 a business, a day, to have someone clean up all the trash and all the litter,� he said. “A lot of what we do is remove stuff that should not be there in the first place.�

Obtaining permits can be time consuming, said Southwest Detroit Business Association President Kathy Wendler.

She said her organization supports streamlining the bureaucracy.

“It's an effort to speed up the permit process to ensure that obtaining permits does not impede doing business,� she said in a statement.

Cockrel acknowledges the problems — from taxes to clean streets. The mayor said he supports tax relief for all Detroit property owners — business and residential. But he warns that any tax cuts must be considered carefully and phased in slowly to preserve revenue.

A new clean streets initiative partners city departments with the Downtown Detroit Partnership, he said, and also will include targeted enforcement of neglected properties.

Daniel Cherrin, Cockrel's press secretary, pointed to efforts by the city's Office of Targeted Business Development, which eases participation in the city's procurement process, encourages the retention and growth of targeted businesses and assists in the creation of joint ventures and mentor ventures to respond to Detroit contracting opportunities.

The city also works with outside agencies to encourage participation in the office's programs, he said.

“A whole range of issues can come up, from problems with the bank, to illegal dumping, to a utility bill,� said Olga Savic Stella, vice president for business development at the Detroit Economic Growth Corp. “Then, [[staff) will come back and work to resolve those issues, using relationships with city departments or DTE Energy, for example.�

Stella said the DEGC's role is in pairing businesses with the appropriate resources.

“It's difficult, because we have a small business attraction and retention program,� she said. “It's difficult when you don't have enough resources to meet all of the need, but we try to be as proactive as we can and also help leverage other resources.�

Matt Prentice, CEO of Bingham Farms-based Matt Prentice Restaurant Group, closed Duet when his five-year lease at Detroit's Orchestra Place expired in 2003.

Prentice had negotiated a tax abatement as part of his lease. But it didn't happen, and he said the 8,000-square-foot restaurant's tax bill topped $80,000.

“Taxes are out of control in Detroit unless you get abatements,� he said.

By the time he opened the Coach Insignia restaurant in the Renaissance Center, Prentice said, he'd learned his lesson.

“So when we negotiated for Coach Insignia, the taxes are minuscule compared to Orchestra Place,� he said.

Detroit's event-based business makes the venture worthwhile, Prentice said.

During a slow week, Coach Insignia might gross $40,000, he said. During an event week, sales could top $200,000.

Had Duet been his only restaurant, Prentice said, “It would have put me down. It did put me down — I left because of it.�

Nancy Kaffer: [[313) 446-0412, nkaffer@crain.com

[Gistok]

Thanks for the info E_Hemingway....

Also there's a lot of "nickel and dime" smaller taxes that add up to doing business in Detroit...

Such as annual dumpster inspections. One downtown business owner said that the city sends out an inspector every year to check the dumpsters... so for a several hundred dollars fee [[per dumpster)... a city worker comes out annually and basically says.... "yup, that's still a dumpster"...

[Gannon]

Has anyone done a full expose of the 'personal property' taxes the city levies on business owners in this town?!


Whatever an owner chooses to decorate and fill their shop with...artwork on the walls, fixtures, etc...is taxed annually.

I heard one bar owner's hit was in the many thousands of dollars...which he promptly telegraphed all over the downtown to his considerable list of friends.

Turning them all into creative assessors and re-decorators...some into liars and so-called tax cheats...but I cannot agree with that term because there IS no cheating an illegal usury tax, especially one levied without representation.

Everyone I know who has gotten hit with this happens to NOT 'look like council'...and YES I am introducing the race issue directly into this discussion.


Fuck the city and their usury taxes...they need to seriously correct these abuses that have incrementally and gradually grown to the beast we know now.

[gnome]

I guess it is still early, cuz I read the thread title and thought it had something to do with taxing dog business.

When my dog does his business I clean it up. Now the City is going to tax me while he does it, during clean-up, if its not cleaned up ... what if it isn't my dog, ... he's just staying here while trying to straighten out. I don't know him.

damn dog.

never mind

[Gistok]

Gnome, I too originally thought that it was about the dog business... especially about "she who no longer posts here"...

[digitalvision]

With the quotes in this article, I am sorta glad Cockrel didn't win and here's why.

Talking about this as an equation to preserve revenue is bullshit. We don't get anywhere enough for the taxes we already pay.

The government needs to be blown up financially and started over. There's way too much red tape that goes on, especially on the retail level. The GOVERNMENT is the problem with the retail not working in Detroit.

Hopefully, Dave Bing realizes this, realizes that the city needs to cut and live within it's means - get out of businesses it does not belong in, and start having it's focus being to provide services, not number one to provide jobs.

I know there are fixed costs - but some real hard decisions need to be made. There's no reason it can't be done, other comparable size cities have done the same.

Either cut the taxes - or give us what we pay for. The status quo, as shown by the exodus of people and businesses, is not acceptable.

[DetroitDad]

So, we have taxes, and then groups and programs to help us avoid those taxes? Why not just cut the taxes and eliminate the damn avoidance programs? That is a bunch of red tape that we just don't need.

[E hemingway]

My thoughts exactly DetroitDad. As a friend told me recently, government shouldn't be picking winners in business. If you need to give special tax abatements to attract or retain businesses, then your taxes are probably too high or the return on investment is too low as Digitalvision pointed out.

[kraig]

Daniel Cherrin, Cockrel's press secretary, pointed to efforts by the city's Office of Targeted Business Development, which eases participation in the city's procurement process, encourages the retention and growth of targeted businesses and assists in the creation of joint ventures and mentor ventures to respond to Detroit contracting opportunities.


See, that was Cockrel's problem. When addressed with the high cost of doing business in the City, his administration's response was geared toward doing business with the City. Besides, everyone knows that the OTBD was just put into place so that Kwame could give his friends jobs that they were not qualified for and that the civil service or union titles didn't exist. Ken either didn't know enough to shut it down or was planning on doing the same thing. The OTBD has done absolutely nothing in the 5 years it's been in place. Just a waste of tax dollars.

The City needs to realize that no one wants to have to go to a large number of departments, waiting all day at each department, a lot longer than they would at a suburban location. When you look at the Coach Insignia situation you see how ridiculous this City is. Why does someone have to jump through all the hoops in the world in order to open a restaurant in the Ren-Cen? Damn, it's not like the poor guy was trying to buy a building.

[digitalvision]

The city needs to stop looking at this as a "mothers teat" kinda thing. Business doesn't work that way.

As Hemingway adeptly stated, the city could cut the taxes on business greatly and not have to cut that much in revenue. Why should they do this? Why should the city decide their number one priority is business development of all kinds, especially micro-entrepreneurship?

Because the city, above all else, needs jobs. Yes, some of those jobs might go to some suburbanites; but the city needs to be THE job center of the region as it once was. Jobs help heal crime, which lowers policing costs; Jobs create tax revenue of all kinds; Jobs also bring pride into communities that have lost hope. It's not a silver bullet, but jobs are the closest thing to one Detroit could have.

People make decisions based on their pocketbooks, plain and simple. The city is facing horrid poverty and a lack of opportunity - BUSINESS is what gives that opportunity.

And why micro-entrepreneurship? That's the rung that many african-americans are going to start on [[and some white and latino folks too) due to the lack of financing available, exacerbated by the current economy climate. Maybe it's a community loan program; maybe it's grants; maybe it's bringing training programs to folks to be entrepreneurs.

Guess what - some of the best businessmen are former drug dealers. Being a drug dealer gives you all the prerequisite skills, with a little refinement. Bing is serious he says about creating opportunities. Let's see'em do it. There's some things that Bing could do immediately [[like change the parking policies) that could show Detroit is now open for business.

[Crumbled_pavement]

As Hemingway adeptly stated, the city could cut the taxes on business greatly and not have to cut that much in revenue.

To expand on what you're saying, the city could actually cut taxes and increase revenue. Better to have a low tax on a high amount of people than a high tax on a low amount of people. Lower the taxes and more businesses will come thus increasing the tax base over time. It's the same concept in pricing a product in a retail store. The price is too high and no one wants to buy it, lower the price. I don't understand why the city can't comprehend such a basic concept.

[Hypestyles]

I want my car insurance rate lowered-- even if you have a perfect driving record [[like me) it still sucks!! the next governor candidates had better have something to say about insurance reforms..

[Gannon]

I've got a new one for you...talking with the nice Calder's Dairy person over their factory store counter down in Lincoln Park yesterday morning...I asked about wholesale to the deli [[planning for those Boston Coolers).


"Good thing we got our license to deliver there"...


..."but we still cannot do any home delivery, because that's another license."


I haven't found out how much each cost, and what requirements the city pads upon their 'benefit' of servicing the residents.

But as soon as I know, you'll know.

[Moetown]

Calder's Dairy
Calder's Dairy
Calder's Dairy
Calder's Dairy

[detcbd]

Hello - I don't post much here, but wanted to clarify that Personal Property taxation is state-wide; it is part of the General Property Tax Act.

[croweblack]

To expand on what you're saying, the city could actually cut taxes and increase revenue. Better to have a low tax on a high amount of people than a high tax on a low amount of people. Lower the taxes and more businesses will come thus increasing the tax base over time. It's the same concept in pricing a product in a retail store. The price is too high and no one wants to buy it, lower the price. I don't understand why the city can't comprehend such a basic concept.

I don't understand why the posters on the non-detroit section don't understand it either

[Novine]

"The price is too high and no one wants to buy it, lower the price. I don't understand why the city can't comprehend such a basic concept."

People understand the concept just fine. What you apparently don't understand is that it's impossible for Detroit to compete with suburban locations when it comes to property tax rates. Detroit's hammered by the combination of having higher demand for services and property tax values that are a fraction of property tax values in the suburbs. Detroit's property tax base is $9.4 billion. Novi's is $3.5 billion. Detroit serves 900,000 people. Novi serves 50,000 people. You can't provide services to 900,000 people on the tax revenue for 50,000 residents or even double that.

"Lower the taxes and more businesses will come thus increasing the tax base over time."

Businesses won't come to a city where you're not funding the basic services like police and fire.