Get Involved
Right Arrow
Stay informed of new research published and other Citizens Research Council news.


By submitting this form, you are consenting to receive marketing emails from: Citizens Research Council of Michigan. You can revoke your consent to receive emails at any time by using the SafeUnsubscribe® link, found at the bottom of every email. Emails are serviced by Constant Contact
February 8, 2024
Memorandum 1177

An Assessment of Detroit’s Economic Condition and a Critique of its Economic Development Efforts

This report is the first of two that addresses Detroit’s economic condition and assesses the city’s use of tax incentives. Ten years from bankruptcy presents a demarcation point by which to evaluate the City of Detroit’s economic development policy and economy. This report was drafted at the request of the City Council’s Legislative Policy Division. Citizens Research Council was asked to provide: (a) an economic analysis of the city, to provide context to assessments of (b) its economic development policies, (c) opportunities for reform, and (d) alternative approaches to the city’s reliance on tax incentives. The report relies on decades of expertise in public matters accrued over the Research Council’s 108-year existence, peer-reviewed research, conversations with community members and the Detroit Economic Growth Corporation (DEGC), and data collected from various sources. This first report covers (a) an economic analysis of the city and (b) its economic development policies. The report provides Detroit-specific socioeconomic data to contextualize the city’s reliance on tax abatement and tax increment financing (TIF) and whether that reliance is appropriate for the current economy.

In a Nutshell

  • Detroit’s economy has improved substantially since it filed for bankruptcy a decade ago, yet the city still has serious socioeconomic problems that, when combined with high property tax rates, make it hard to attract and retain businesses.
  • The property tax rate is one of the handful of costs to do business that the city controls, and to reduce that cost and subsidize what may otherwise be unprofitable investments the city offers tax business attraction incentives—tax abatement and improvements funded through tax increment financing.
  • After nearly 50 years of granting tax abatements and using tax increment financing to provide improvements in the downtown areas, it could be hoped that conditions in the city would have improved sufficiently so that their use would no longer be necessary.
  • A cursory analysis of the cost of locating in the city and the revenues businesses can expect to yield reveals that a gap continues to exist stacking the deck against the city for business attractions. Detroit can ill afford to cease the use of tax abatements until the gap between costs developers face and return on investment is closed.
  • The city has multiple reasons to end the Downtown Development Authority and resume the distribution of the collected property tax revenue to the taxing jurisdiction. All of those reasons are negated by the fact that the DDA anticipates needing more than $571 million to finance bonds pledged against tax capture. This suggests that the DDA could not cease operations until at least 2053 at the earliest.
Kindly consider a $25 donation for unlimited access to this important report.
We have always made all of our publications, whether in paper or electronic format, available to all without charge. We will continue to provide unrestricted access to every publication in our library. 

To ensure continued free access, we are asking YOU to help with a $25 charitable donation (or what you can afford) to the Citizens Research Council of Michigan TODAY to ensure timely and comprehensive analysis of the issues driving state spending. Donations of any amount are appreciated. Please consider making your donation recurring.
February 8, 2024
Memorandum 1177

An Assessment of Detroit’s Economic Condition and a Critique of its Economic Development Efforts

This report is the first of two that addresses Detroit’s economic condition and assesses the city’s use of tax incentives. Ten years from bankruptcy presents a demarcation point by which to evaluate the City of Detroit’s economic development policy and economy. This report was drafted at the request of the City Council’s Legislative Policy Division. Citizens Research Council was asked to provide: (a) an economic analysis of the city, to provide context to assessments of (b) its economic development policies, (c) opportunities for reform, and (d) alternative approaches to the city’s reliance on tax incentives. The report relies on decades of expertise in public matters accrued over the Research Council’s 108-year existence, peer-reviewed research, conversations with community members and the Detroit Economic Growth Corporation (DEGC), and data collected from various sources. This first report covers (a) an economic analysis of the city and (b) its economic development policies. The report provides Detroit-specific socioeconomic data to contextualize the city’s reliance on tax abatement and tax increment financing (TIF) and whether that reliance is appropriate for the current economy.

In a Nutshell

  • Detroit’s economy has improved substantially since it filed for bankruptcy a decade ago, yet the city still has serious socioeconomic problems that, when combined with high property tax rates, make it hard to attract and retain businesses.
  • The property tax rate is one of the handful of costs to do business that the city controls, and to reduce that cost and subsidize what may otherwise be unprofitable investments the city offers tax business attraction incentives—tax abatement and improvements funded through tax increment financing.
  • After nearly 50 years of granting tax abatements and using tax increment financing to provide improvements in the downtown areas, it could be hoped that conditions in the city would have improved sufficiently so that their use would no longer be necessary.
  • A cursory analysis of the cost of locating in the city and the revenues businesses can expect to yield reveals that a gap continues to exist stacking the deck against the city for business attractions. Detroit can ill afford to cease the use of tax abatements until the gap between costs developers face and return on investment is closed.
  • The city has multiple reasons to end the Downtown Development Authority and resume the distribution of the collected property tax revenue to the taxing jurisdiction. All of those reasons are negated by the fact that the DDA anticipates needing more than $571 million to finance bonds pledged against tax capture. This suggests that the DDA could not cease operations until at least 2053 at the earliest.
Kindly consider a $25 donation for unlimited access to this important report.
We have always made all of our publications, whether in paper or electronic format, available to all without charge. We will continue to provide unrestricted access to every publication in our library. 

To ensure continued free access, we are asking YOU to help with a $25 charitable donation (or what you can afford) to the Citizens Research Council of Michigan TODAY to ensure timely and comprehensive analysis of the issues driving state spending. Donations of any amount are appreciated. Please consider making your donation recurring.

Stay informed of new research published and other Citizens Research Council news.
Back To Top