Watch live: Duggan addresses $100 million in Detroit job training opportunities

Howes: Landing jobs, big investments doesn’t come cheap

Daniel Howes
The Detroit News

Hunting big economic development game ain’t cheap.

Wisconsin Gov. Scott Walker earlier this week signed legislation obligating his state’s taxpayers to pay Taiwan-based Foxconn Technology Group $2.85 billion in cash over 15 years to offset the contract manufacturer’s payroll and capital costs, the Milwaukee Journal Sentinel reports.

That’s all in the service of landing a $10 billion complex in the southeast corner of the state that could provide as many as 13,000 jobs — if, that is, fickle Foxconn keeps promises better than it did in Pennsylvania and Brazil. And Michigan remains in the hunt for follow-on investments in the automotive space. Inc. is soliciting proposals from North American metro areas eager to land the giant online retailer’s so-called “HQ2.” Its second headquarters would deliver a $5 billion investment and up to 50,000 jobs with annual compensation averaging $100,000.

Bedrock to invest $2.1B; create 24K jobs in Detroit

Think the winning town, and its surrounding state, will win cheaply? Think again. The Amazon sweepstakes, turbo-charged by a tight Oct. 19 deadline for proposals, marks yet another high point in America’s newest corporate parlor game: playing regions and taxpayers off one another in search of the richest deal. Almost no politician can afford to sit it out.

Maybe not. But the prospects of Gov. Rick Snyder and state lawmakers obligating taxpayers to huge cash payouts for would-be business investment — namely, those measured in Wisconsin-style billions, not the more modest programs recently passed in the Michigan capitol — is close to nil in the Republican-controlled Lansing of today

All of this makes Quicken Loans Inc. Chairman Dan Gilbert’s $2.1 billion downtown investment plan to renovate four more buildings and create as many as 15,000 construction jobs cheap by comparison. Detailed Wednesday, it contemplates securing up to $250 million in new public financing, with the remaining $1.9 billion to be privately funded.

Radical concept, that, and it bears repeating: the revitalization of downtown and midtown — Gilbert’s myriad projects, the Ilitch family’s District Detroit, so many of the one-off investments powering enthusiasm in the city — is driven largely (but not entirely) by private investors risking private capital in ways the mega-projects mostly don’t.

More, such massive projects as those proposed by Foxconn and Amazon pose huge challenges for prospective host communities: land acquisition and utility capacity, road and bridge upgrades, municipal service delivery and permitting, housing and modern public transit. All of it costs money, requires crisp execution and demands teamwork between business and political leaders.

Foxconn clearly is talking big, which translates into big asks from states that inevitably would be shouldered by taxpayers. Big cash payouts of public dollars to would-be investors is a different proposition — and far more costly — than Michigan’s newly favored tool: incremental “tax-capture” financing recouped from the new jobs and new tax revenue generated by new investment.

It is true that “tax-capture” financing totaling nearly $325 million is helping the Ilitches to open Little Caesars Arena, a project pegged at $863 million. That price tag does not include follow-on investments in six residential housing units, Little Caesars’ new, nine-story headquarters on Woodward or outside investment in and around the District that Ilitch Holdings Inc. values at roughly $2 billion.

It is also true that the next wave of Gilbert projects — previously announced plans wrapped neatly in the $2.1 billion package smack in the middle of the build-up to the Amazon bid — assume a public component in their overall financing package.

Philosophical arguments over the propriety of taxpayers subsidizing the projects of billionaires, or the expansions of multibillion-dollar corporations, are an understandable response to the comparative bonanza unspooling in Detroit and around the country.

Consider the alternative, which Detroit lived for way too many years. In some places the wages of those debates will produce unrealized potential, as surely as things like public confrontations and petty political infighting will persuade would-be investors to look elsewhere to plant their capital.

Because this much is certain about the real business world: capital is more mobile today than anytime in human history. It has choices: it goes where it is invited, and it stays where it is welcomed, especially if it gets a helping economic hand from the communities that stand to benefit most.

(313) 222-2106

Daniel Howes’ column runs Tuesdays, Thursdays and Fridays. Follow him on Twitter @DanielHowes_TDN, listen to his Saturday podcasts, or catch him 3 and 10 p.m. Thursdays on Michigan Radio’s “Stateside,” 91.7 FM.