Bidding for Business: The Efficacy of Local Economic Development Incentives in a Metropolitan Area

Bidding for Business: The Efficacy of Local Economic Development Incentives in a Metropolitan Area

Bidding for Business: The Efficacy of Local Economic Development Incentives in a Metropolitan Area

Bidding for Business: The Efficacy of Local Economic Development Incentives in a Metropolitan Area

Excerpt

The year is 1973. The Chrysler Corporation wants to rehabilitate the Mack Street Stamping Plant in the city of Detroit. Management had thought that it would spend $50 million (in 1973 dollars) for the upgrade, but suddenly declares that it needs government assistance in order to make the central-city project feasible. Five thousand people are currently employed in the plant. Chrysler officials meet with city representatives and explain the rehabilitation plans and remind the group of the plant’s large employment base. The corporation then inquires as to whether the city can offer assistance in keeping these jobs within the city’s limits. Detroit’s policymakers, who since the 1960s have faced an ever-declining population and manufacturing base, wish to do all they can to retain the 5,000 jobs.

Officials from the city believe that if they could reduce the burden of the city’s high rate of property taxation, Chrysler would have the assistance that it claims to need to accomplish the plant renovation. At the time state law offered the city no authority to reduce a specific firm’s property tax payments. City officials approach the state of Michigan, and discussions ensue between representatives from the central city, the auto manufacturer, and the state. The talks produce a draft of a bill that is introduced into the legislature in early 1974 by a representative from Detroit. The appropriate committees in Michigan’s legislature review the proposed bill and make only minor amendments. There is little opposition to the concept of giving cities the authority to grant property tax abatements to retain employment. The legislation passes the House without a single dissenting vote, and on July 9, 1974, Public Act 198 (Plant Rehabilitation and Industrial Development Districts Act) is signed into law. The act addresses the specific situation facing Detroit and the Chrysler Corporation but does not limit the offering of property tax abatements to only Michigan’s largest city.

By the late 1970s, other cities, villages, and townships in metropolitan Detroit and across Michigan use the authority granted by Public Act 198 to provide local property tax abatements to manufacturing firms wishing to locate new facilities in their jurisdiction or to rehabili-

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.