City Journal Summer 2014

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Summer 2014
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Scott Beyer
Déjà Vu Detroit « Back to Story

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No one in the rest of Michigan takes Detroit seriously. It's a joke. The place is utterly corrupt, and the city has been destroyed beyond repair. I laugh when I hear these so-called "hipsters" bragging about their loft apartments and their new Whole Foods in one small neighborhood of Detroit that they claim is indicative of some kind of "comeback." That's nice, but if you get stabbed or shot on the street corner, you'll be lucky if the police show up 72 hours later, if at all. And you'll likely have long since died of your injuries by then. Drive around Detroit sometime - not just downtown and "Midtown." Downtown is a complete subsidy zone for crooked developers anyway. The vast majority of Detroit lies in ruins and absolute anarchy. The city government is entirely corrupt. Basic services do not even function in Detroit - buses run hours late - if at all, schools are a complete disaster and full of violence and illiteracy, the drug trade has completely taken over the neighborhoods, people live in fear for their lives on a daily basis, the police department itself has become a criminal enterprise, thousands of blocks of houses have been burned entirely to the ground. It's just a complete disaster. There is no hope for Detroit. Not even martial law and a massive federal bailout could save Detroit at this point. People steal the guard rails off of freeway overpasses and sell them to scrap metal yards and then use the money to buy drugs - that is the number one commercial enterprise in Detroit at this time.
This author challenged the bookkeeping logic underlying dubious cost/benefit claims related to new stadium construction but overlooked non-monetary reasons for building stadiums financed with taxpayer money. In Detroitís case, one unspoken reason is to re-build downtown Detroit as the entertainment hub of a large metro area Ė and to accomplish that rebuilding process before itís too late Ė both economically and culturally. Approximately 3% of Detroitís extensive geographic area is considered downtown, the remainder of the city proper is a vast wasteland with the exception of the so-called midtown area housing the art museum, a major non-campus city university and the former environs of General Motorís complex of administrative offices on Grand Boulevard. So Detroitís Movers and Shakers have come to envision the downtown area as one form of resource and the mile after mile of decaying urban wasteland as another form of exploitable resource.

Contrary to the doomsaying of academics and other self-nominated experts, Detroitís thousands of abandoned homes and slowly crumbling neighborhoods bring in almost a quarter billion dollars a year in outside charity, primarily federal charity but also state funds wrung from Michigan taxpayers living outside Detroit. The Ford Foundation has recently agreed to fund a consulting study on how better to harvest this charity and to suck even more funds from Americaís long suffering taxpayers through additional federal grants and other types of handouts. The current thinking is that Detroit loses out on untold millions in additional federal charity through bureaucratic inefficiency and institutional incompetence - even though the city is presently milking about 73 separate grant programs for free money. The Ford Foundation hopes to remedy that problem in the future, as deplorable as such aggressive pandering sounds to many taxpayers. And the frequent national and international media pieces emphasizing Detroitís claim to pathetic third world status assists in raising awareness of Detroitís plight and helps in the begging for charity industry.

The downtown area on the other hand is intended to compete with Detroitís more ambitious suburbs and their successful attempts to create their own cultural and entertainment hubs remote from Detroitís decay. Detroitís northern suburbs like Royal Oak, Birmingham and Ferndale have attractive restaurants, bustling nightlife and an atmosphere of playful optimism and hope Ė attributes sadly lacking in Detroitís downtown waterfront strip. Even Detroitís annual and nationally famous classic car Dream Cruise celebration takes place outside Detroitís city limits within these same northern suburbs. By attracting suburban residents to not only visit but to actually live downtown, Detroit is hoping to match the suburban sceneís claims on entertainment and other forms of consumer spending Ė particularly by young single adults.

Few established suburban families are planning to relocate into the downtown area but for single adults the attraction could be exploited by the city fathers. Charlie Le Duff, an author and local media celebrity who cashed in on Detroitís wicked downward spiral, has chosen a northern suburb for his familyís residence, a choice all too common among older adults who earn their living from various Detroit based activities.

However, downtown Detroit enjoys a unique geographic location among the many communities within the Greater Detroit Metro area. Stadiums surrounded by restaurants, office buildings and apartment complexes are a way to capitalize on downtown Detroitís only asset Ė an easily accessible central location serving the northern, western and southern suburbs. And as a rejuvenation strategy it may be a viable one although Detroit has a long and depressing history of generating dazzling visions for the cityís future which invariably fail to materialize.

But it may already be too late for both the City of Detroit and its surrounding suburbs as the areaís young folks look wistfully at other American cities as the choice for eventual relocation and launching their careers. Michiganís fine universities educate the stateís young adults but the problem will be stopping the brain drain out of Michigan and ensuring a successful future for the state, particularly the Detroit Metro area. No one boasts of being from Detroit when traveling outside Michigan, although a belligerent ďso what if I am from DetroitĒ attitude isnít uncommon. And the young folks within the Detroit area yearn to disassociate themselves from a decaying metro area by preparing for careers which will take them far from the Motor City.
This would be an extremely comic story, if not for how sad it is. All anybody has to do to see how little publicly-financed sports stadiums do for anybody other than their teams' billionaire sports owners is to take a look at Indianapolis. Irsay threatened to take the Colts elsewhere, so the city caved and built a monument to Irsay's arrogance (talk about "robber barons"; professional sports team owners outdo all of the Carnegies, Rockefellers, and others, combined). And what did Indy's citizens get in return? A Superbowl. Ask anybody who really knows how well the city's (Indy's) finances are, though, and they'll tell you that Indianapolis/Marion County is being forced to cut many necessary operating expenses. Go Colts! Go Irsay . . . straight to Hell!
Most stadium "stimulus" comes at the expense of OTHER local businesses. It's called the "substitution effect," where area residents and businesses spend their money on one activity rather than another.

Stadiums generate very little economic activity from outsiders. And for Detroit, this is especially true -- after all, what sane tourist would want to spend time in America's version of hell?
Calculating the public loss in Comerica Park investment should also reflect that naming rights to the stadium went to the team, not the city. During the second referendum on public financing (the first one voted the idea down but to politicians, especially Detroit's, the will of the people doesn't mean much unless it's what they want.

Around the ballpark there is some activity that wasn't there before. On the other hand, no one in the media has been curious enough to balance that against the loss of business activity in the area around Tiger Stadium. I've also been to a couple of football games at Ford Field. A few bars and restaurants are open on game days that might not have been, but the facility is basically used ten times a year plus an occasional concert or whatever. Why anyone seriously and honestly thought this would do much is another question.

We were also told that the money spent on hosting the Super Bowl would be returned in conventions, business moving here because they'd see that Detroit can do things, tourism, etc. Again, no one has bothered to check into this.

After the game I checked a few US and foreign newspapers. The consensus was, "Nice people. Good party.The city's a pit." This does not exactly spur a relocating business to head for Detroit.

Now more public money to make the team owner, Mike Illitch, even richer than he already is. But this time we've got it right and it'll work. You know, clap your hands three times, say, "I believe in fairies," and Tinkerbell will live.

(Full disclosure: I was executive committee chairman of the Tiger Stadium Fan Club.)
How much is a sports franchise worth to local municipal residents? Intrinsic, non-monetary values form a significant portion of that answer because major professional sports franchises have threatened to pull up stakes and move when locals wonít cough up the bucks for a new stadium. The pride and excitement related to the local sports heroes can be easily lost when taxpayers refuse to play the team ownerís game. But, in Detroitís case, is the implied threat regarding the Red Wings merely a local issue or are taxpayers in Traverse City, Dallas and San Diego also intended as financial benefactors to the billionaire owner of a professional hockey team?

For Detroit, this latest taxpayer funding swindle is complex, convoluted and a victim of horrible timing. The City of Detroit is broke, tax revenues canít begin to cover annual city expenditures and havenít met that funding burden for several years past. Bankruptcy has been declared but anyone with reasonable intelligence could see Detroitís bankruptcy on the horizon for at least the past decade. So why would Detroitís DDA (Downtown Development Authority) and the MSF (Michigan Strategic Fund) decide to direct desperately needed tax revenues to billionaire team owners rather than to impoverished city residents?

Yes, itís all perfectly legal, itís Detroitís leaders working together for Detroitís benefit, although itís not an evenly distributed benefit, a few politicians, some well-connected builders and wealthy team owners will reap most of the civic benefits in the form of monetary considerations.

But why is it anyoneís business who gets rich and who doesnít in Detroit? The answer is that Detroitís bankruptcy affects other municipalities - both within Michigan and around the country Ė when future bond issues are released to the investor market. Are municipal bonds a good risk after Detroit? Will annual interest rates and bond purchase discounts remain reasonable financial burdens on other municipal taxpayers after Detroit? Obviously, Detroitís bonds are junk status and the attorney managing Detroitís bankruptcy plans to stiff the current bondholders at the earliest opportunity Ė not a good omen for future municipal bond investors. And for all the talk about Detroit being unique, municipal bond issuances are receiving intense scrutiny at the moment and some municipalities have been forced to cancel or delay proposed bond offerings Ė thanks to Detroit.

Should tax revenues from downtown Detroit properties be directed to stadium funding when private donors have to purchase new ambulances and police vehicles for the City through their personal charity? Should federal tax monies to the tune of $50 million dollars be given Detroit while local taxpayers build the Red Wings a state of the art palace? Detroit has over 100,000 abandoned buildings, both commercial and residential, so how far will $50 million go in razing existing buildings and who are the intended beneficiaries of this federal largesse? Are American taxpayers demolishing abandoned homes for the benefit of future Detroit stadium complexes?

For a city in a perpetual state of decline, this new stadium proposal is simply the latest in a series of clever funding swindles. Ford Field, home of the Detroit Lions owned by the Ford family billionaires, cost $500 million to build. Comerica Park, home of the Detroit Tigers, was built for $300 million. And if you dig into the details of these stadium deals, the same pattern emerges, public money from a city where public money is very scarce built new stadiums for the benefit of billionaire team owners.

If you live in Denver or Atlanta you may never attend a Red Wings game but you may have helped pay for the new stadium indirectly. It may be nobodyís business how Detroit pays for its stadiums but shouldnít Detroit and Detroiterís alone bear the financial burden?
I despise tax gifts -- but you're wrong about the impact of these gifts on Detroit.

The development of the neighborhoods around the ballpark has been nothing short of amazing. To see the impact, you would have to have seen those area 15 years ago. There was absolutely nothing going on there. Today, there are market-rate residences in the area. Twenty new restaurants -- and if you don't think the ballparks had an impact on the entire midtown area, you're wrong. Go and find some apartments for rent there. Other cities may laugh at our excitement, but there's a new Whole Foods Market walking distance from the ballpark. Food desert no more.

You need to look at Detroit development differently. We came from amazing depths.

We may not yet be where we want to be, but the ballparks have contributed mightily to downtown and midtown Detroit.
We're talking about slums: "The cityís planning department earned a sterling national reputation, but the developmentsówhich entailed mass demolitions and extensive relocation of residentsóproved ruinous for the communities."

And the big projects cited were all of them generated by the largest/richest capitalist leaders of the economic community. either the community subsidized their projects, or they would take their jobs and go away... which they did anyway.
With our national media spotlighting Detroitís bankruptcy, Detroiters are becoming irritated with every media and freelance reporter poking their noses into what is normal day to day Detroit corruption. This latest stadium funding swindle is particularly amusing since the timing is downright comical. Detroit canít pay its bills, tax revenues from city residents fall woefully short of city expenditures and Detroitís newly appointed financial czar happily proposes to stiff the poor fools who bought Detroitís revenue bonds with offers to pay only pennies on the dollar. Yet, future tax revenues from the only geographic area of the city which consistently pays taxes will be earmarked for a new stadium instead of street lights, mechanically sound ambulances and police protection.

Absurd, ridiculous and entirely inconsistent with responsible fiscal management Ė but typically Detroit in its deep seated corruption and greed. Defenders of the plan point out Detroit's DDA (Downtown Development Authority) has been getting away with this nonsense for years and besides itís all perfectly legal. Hundreds of millions in stadium funding will be taken from the city's wealthier taxpayers, like GM, in Detroitís downtown area while providing municipal services such as police and fire protection to the proposed new stadium complex which are not currently available to the average Detroit resident.

But what about Detroitís impoverished citizens? Shouldnít these future tax revenues be used to pay off the cityís debts, fund city pensions and provide municipal services on a par with civilized communities? You might assume that reasoning is a given under the basic principles of self-government but not if you understand Detroit and its unique way of thinking.

As a city, Detroit has always been crazy about sports. As the recent butt of numerous jokes by late night comedians, professional sports teams give Detroiters a measure of pride and offer a welcome distraction from the cityís self-inflicted failures. Plus, the inner city residents of Detroit canít afford stadium tickets to watch the Pistons or the Red Wings Ė the paying fans come into Detroit from the surrounding suburbs and from Canada, just a short trip across the river. One quickly learns that in Detroit sports are king and no one is foolish enough to demand Detroit give up its sports related goldmine simply to pay off pensions or bonds. Detroitís municipal unions demand that the cityís art treasures be put on the auction block to pay for their retirements but not an angry word will be spoken regarding this stadium funding swindle. Van Gogh and Rembrandt donít play for the Red Wings.

And despite all this blather about racial animosity destroying Detroit, itís downright amazing how billionaire team owners like the Fordís and Illitchís can work closely with local Detroit politicians to line their collective pockets. Apparently, the smell of money easily trumps racial tensions within Detroit. What Americans outside of Michigan should realize is that Detroit canít be as broke as it claims to be.

As this southeast Michigan comedy plays itself out, Detroiters will first aggressively demand, then pitifully whine and finally throw themselves on the mercy of the American taxpayer in their bid for financial charity Ė thatís always worked well in the past. Should Americans, in an outpouring of sympathy, bail Detroit out once again? Good question and how about those Tigers?