Duggan State of City: He'll focus on residents reaping benefits of growth

Detroit — In Mayor Mike Duggan's State of the City address Tuesday, he touted the return of big business and revitalized spaces in the city, and vowed to focus on initiatives that will enable residents to reap the benefits.

The second-term mayor delivered an invitation-only speech before a crowd inside the $160 million Flex-N-Gate manufacturing center in the city's Interstate 94 industrial park.

The venue was deliberate: The auto parts facility opened in October 2018, bringing hundreds of jobs. About half have gone to Detroiters. 

Duggan's theme of equity in reaping the city's bounty focused early on the issues that could make Detroit a more fruitful place for residents to live and work: a new auto reform law that will address alleged gouging by car insurers, marijuana licensing with a mandate to make sure at least 50% of the approvals go to Detroiters, widening city contracts to smaller players and granting tax abatements to start-ups that don't have the means to compete with major corporations that do business in the city.

The mayor added that 25,000 more Detroiters are working today than six years ago but said there are thousands more jobs that need to be filled. 

“I do believe we can build a city so that we can have a job available for every Detroiter who wants one," Duggan said. "That’s what I think is the Detroit of the future.”

Michigan lawmakers last spring approved a sweeping plan that reformed the state's no-fault auto insurance system. It was aimed at driving down sky-high rates, a project the mayor has long lobbied for, calling the system "morally indefensible." He's urged changes to the law that has produced some of the highest insurance rates in the nation.

Michigan's average yearly rate for car insurance is $2,611, double the costs elsewhere in the Midwest. In Detroit, the average is $4,100 a year to insure a car, he said Tuesday. 

"Why is it that Detroiters pay twice as much for the same car insurance?" Duggan asked.

The mayor said a series of forums will be held in the spring to help residents understand how to reduce their car insurance rates under the no-fault auto reform, which takes effect in July.

State Rep. Cynthia A. Johnson, D-Detroit, said the mayor should not have brought up insurance changes because there are "behind-the-scenes plans already in the works to help the community understand the insurance issue."

"He was selling a product, his idea," she said. "My prayer is that it works. You have no idea how much I want to be wrong," Johnson said. "I've had colleagues ... ask how people who are on Medicare can to opt-out totally."

He also spoke of tax breaks for Moroun company projects, Ford Motor Co. and other large corporations. But, he said, small start-ups must be given the same opportunities. 

As an example, Duggan highlighted Marcus Jones, saying Jones wants to bring a 22-employee, full dine-in restaurant to a boarded up part of McNichols.  After 10 years of vacancy, there was nothing left inside the building. Duggan said he is recommending that the City Council provide a tax abatement for Jones' project. 

"If it’s right for the big deals, it’s right for the small deals," he said, receiving a hearty round of applause from the crowd.

Parity also should extend to city deals, he said.

"Equity means making sure Detroiters get every chance at city contracts."

The mayor also waded into options under consideration by the city for homeowners with historically high property assessments. 

The Detroit News published an investigation in January that found that City Hall overtaxed homeowners by at least $600 million between 2010 and 2016 after officials failed to accurately bring down property values in the years following the recession.

Duggan has acknowledged past over-assessments but said he cleaned up the practice and lowered values after he took office in 2014. The mayor said he can't correct past mistakes because the current law doesn't allow for modifications.

State law requires that assessments reflect a home's market value. Taxpayers can appeal, but housing advocates say the process is difficult to navigate for most owners, and many are not aware they have the option.

In a recent memo to the City Council, Duggan's chief financial officer, Dave Massaron, argued the appeals window to challenge assessments is over and that any effort to repay people would be "so enormous" it would require higher property taxes, costing the city school district and libraries, along with the city.

And Massaron has said that The News' analysis was inflated, in part because conditions vary by neighborhood, and some areas might have seen actual losses in value over the time period analyzed. Properties in those areas could appear to have been overtaxed more than they were in the analysis, he argued. The city has not done its own study and doesn't plan to. 

Council President Pro Tem Mary Sheffield, researchers and community activists released a report in January that proposes ways Detroit could compensate thousands of homeowners who lost their properties in "illegal" tax foreclosures due to over assessment, from cash payments to free city-owned homes.

After the speech, Sheffield said she's glad Duggan touched on the over-assessment issue, but "I was hoping it would have got a little deeper into the solutions."

Duggan also pushed the need to rid the city of some 17,000 remaining blighted homes. 

His administration continues to explore methods to fund demolition work after a request by Duggan to add a $250 million bond proposal on the March ballot was rejected by the council last fall.

The city's federally funded demolition work landed the city at the center of federal, state and local investigations and reviews in recent years after soaring costs and bidding practices.

"We've got to build a city that's blight free," he said. "The speed of our demolition has brought problems. I haven't done enough to deal with it. We need to fix it. I think we can work together and do it. I don't have a monopoly on good ideas."

The council turned down the bond proposal by a 6-3 vote in November after weeks of debate and a critical report by Detroit's auditor general of city-administered demolition work that cited unreliable data, a lack of transparency and other failures. 

Council President Brenda Jones said Tuesday that she appreciates Duggan’s ambition. But she said there is more work to be done before a measure is ready for ballot.

“I still have some concerns with how things are done and think we all want the demolition to be done and for the blight to clear up," she said.

Duggan said he's going to "fight for every single neighborhood for as long as I'm here."

"It's going to take extraordinary leadership," he said. "I'm going to extend my hand to my partners."

Duggan also noted that the city is growing for the first time since the 1940's and said the administration is working on ways to manage that and ensure Detroiters benefit. 

According to U.S. Census estimates last spring, Detroit's population has continued to drop, but the losses were smaller than in prior years. The city's population was 672,662 as of summer 2018, a loss of 1,526 people. The previous year's loss was 2,695.

Touching on the upcoming Census, Duggan told the crowd that Detroit will not be treated fairly if its citizens aren't counted.

In 2010, Detroit had the worst Census return of any city in America, costing Detroit at least $300 million in the last decade.

The mayor also discussed marijuana licensing laws, highlighting a new plan to make sure there is room for Detroiters. 

City Councilman James Tate collaborated with Duggan on an ordinance proposal to ensure that at least half of the licensed recreational marijuana businesses will go to residents who are approved for licenses. 

Duggan also made note of projects he said were transforming the city, including Ford's renovation of the long-vacant Michigan Central Depot in Corktown, the Fiat Chrysler Automobiles NV plant that promises to add 5,000 jobs as well as the all-electric vehicle plant planned for Detroit-Hamtramck Assembly, which had been targeted for closure last fall.