Editorial: City Council, don't scare off Detroit development

The Detroit News

The Detroit City Council is looking to expand the city's Community Benefits Ordinance, which forces businesses to meet unrealistic standards — or pay large fines. As the city seeks to attract new economic investment, these kind of shakedowns will only discourage development.

Last week, City Council’s Legislative Policy Division suggested changes to the city’s Community Benefits Ordinance, a voter-approved law that requires developers to commit to hiring Detroiters and quality-of-life benefits for residents living in proposed development areas.

Workers walk through the atrium inside the Michigan Central Depot.

We've had concerns about the requirement that 51% of labor for large city projects go toward Detroit workers, when it's evident there are not enough city residents with the skills to step into these roles. 

Contractors who don't meet that standard must pay significant fines. Under Mayor Mike Duggan, those fines are now directed to workforce training — a step in the right direction. Yet it still seems an unfair burden for developers. 

Regardless, City Council is intent on doubling down on the ordinance. 

Proposed changes include: 

►Lowering the development threshold from $75 million to $50 million. That means more development projects would require community benefit commitments.

►Lowering the threshold for Tier 2 projects from $3 million to $300,000 for projects seeking a land or tax abatement valued at $300,000 or more.

►Increasing public meeting requirements from one meeting to five, which would further wrap development projects in red tape.

More:Detroit panel seeks feedback on changes to community benefits law

At first glance, the Community Benefits Ordinance may look like a good deal. It may seem like big businesses are being made to pay a toll to ensure that communities benefit from new developments.

Don't be fooled. In reality, it’s Detroit taxpayers who are paying for these benefits.

Some of the money that developers use to pay for the required benefits comes from savings they were allowed to keep from tax abatements granted by the city. 

The ordinance simply uses project developers as proxies to redirect tax dollars toward community benefits.

There’s nothing wrong with investing in communities, and there’s nothing wrong with courting developers to bring business to Detroit.

But if the city wants to boost quality-of-life benefits for its communities, it should propose those expenditures directly to taxpayers. And if the city wants to boost employment, it should openly propose investing more tax dollars into workforce development.

Passing those dollars through development projects to make it seem like they came from somewhere else is a sneaky approach. 

While Detroit leaders may argue they need to offer tax incentives to attract business and stimulate growth, requirements that attach strings to those incentives make the city less competitive and keep it further from the day when businesses can pay full price for development.