It’s official: There will be a new plant in Detroit.
On May 21, two votes cleared key elements for the expansion of the Fiat Chrysler Automobiles (FCA) plant on Detroit’s east side. Detroit City Council voted 6-3 in favor of a land transfer and about a dozen other details, and the Michigan Strategic Fund approved tax incentives and funding for the land assembly.
No matter whether you think this is an enormous boon to the city or that a multinational automaker got a sweet deal, it’s undoubtedly a big moment for Detroit, which hasn’t had a new assembly plant built in the city for 30 years.
Here’s everything you need to know about the votes, subsidies, criticisms, and more.
FCA plans to invest $2.5 billion in expanding its Mack Avenue facilities—building a new plant and refitting its Jefferson North Plant—which it says will create nearly 5,000 new jobs.
In order to secure the project’s construction, the city had to acquire 215 acres of land in the plant footprint owned by various real estate companies and entities. It went past the deadline imposed by FCA, but managed to secure all the necessary land on May 3. The total came to $107.6 million, which will be split between the city and state.
In addition to funding for the land swap deal, City Council also approved the Community Benefits Agreement and tax abatements on two FCA facilities at 50 percent for 12 years. In the CBA, the automaker says it will invest $13.8 million in workforce training and other programs.
Mayor Mike Duggan was obviously pleased with the news, calling it “the greatest day in my term as mayor.”
"Today was historic."— Mayor Mike Duggan (@MayorMikeDuggan) May 21, 2019
4,950 good-paying jobs are coming to Detroit, and Detroiters will get to apply early for jobs. Special hiring consideration will also be given to returning citizens & veterans.
Learn more about Fiat Chrysler jobs at @DetroitAtWork: https://t.co/cwsh4ywHHM pic.twitter.com/JWNegTKnAT
FCA also requested and got $223.5 million in tax incentives from the state of Michigan—the automaker is investing in three other Michigan plants. According to the Detroit News, that money comes from...
- $55 million for land assembly activities including land acquisition and site preparation
- A $10 million grant in a Michigan Business Development Program
- A 100 percent Good Jobs for Michigan Withholding Tax Capture for up to 10 years valued at up to $99 million
- A 100 percent State Essential Services Assessment Exemption for up to 15 years valued at up to $13.4 million for the Jefferson North Assembly Plant
- A 100 percent State Essential Services Assessment Exemption for up to 15 years valued at up to $18 million for the Mack Engine Plants
According to the city, construction on the plant is expected to start this summer.
Detroit residents and UAW members will have an exclusive, four-week window to apply for jobs at the new plants. Though FCA isn’t hiring yet, prospective applicants will eventually be able to apply through the city’s Detroit at Work program. Those who fill out a form now will receive a text alert when the application process begins.
The Neighborhoods has more info about how to apply.
Concerns from residents, representatives
Not everyone is pleased with the outcome of the deal, objecting to the sizable city and state handouts, and other issues.
There’s often a great deal of urgency with developments like this. City officials are afraid to have the project fall through and will make unfavorable deals in order to ensure it happens.
At a meeting of the Economic Development Corporation earlier this month, one of the members equated the deal to a “shakedown.” The body controlled some of the land needed for the transfer, and ultimately voted 7-2 to approve it, but there was clearly loud dissent.
A big winner of the FCA plant is the Moroun-owned Crown Enterprises, which sold an 82-acre parking lot to the city for $43.5 million. It bought the property for $10 million in 2016.
Crown also got 117 acres elsewhere in the city, much of it in southwest Detroit. The Morouns own the Ambassador Bridge international crossing, which exits in Mexicantown, and many in southwest feel they’ve been mistreated by the family over the years.
“For decades, Matty Moroun and his businesses have been the worst neighbors in southwest Detroit, polluting our communities, stealing public land, and letting their properties crumble and turn into nuisances,” U.S. Rep. Rashida Tlaib told the Detroit Free Press.
Others who got money or swapped land include DTE Energy Co., Hantz Farms, and the Great Lakes Water Authority.
Some critics cite the lack of guarantees that Detroiters will get jobs at the new plants.
Councilmember Raquel Castaneda-Lopez, one of the “no” votes on City Council, said, “I cannot commit to something that does not guarantee you 100 percent or any percent of jobs. I appreciate the prioritization and opportunity for Detroiters to apply. But so often, it becomes a racialized issue or a class issue and we’re told over and over again ‘Well, there just aren’t enough Detroiters.’”
People have also noted that the negotiations for community benefits were hastily done. One of the other “no” votes, Councilmember Mary Sheffield, said that the land swap deals were made after the CBA was negotiated. Had residents known that the city would pay out millions of dollars to these companies, it might have negotiated differently.
There are also concerns about environmental mitigation, as the new plant will generate more pollution in the area.
projected environmental impact of new FCA plant and expansion pic.twitter.com/jDgLivUhlt— violet ikonomova (@violetikon) May 21, 2019
There have also been a few curious elements about the land swaps and purchases.
The Metro Times reported that one billionaire developer, Anthony Soave, bought parcels essential to the FCA deal just a month before the announcement. The parcels were former dump sites for contaminated waste and cost just $60,000.
Soave’s purchase will pay off—big time. In exchange for the two contaminated parcels (5.3 acres), which would be used as parking lots for the assembly plant, the tentative deal calls for Soave to receive 72 parcels (9.5 acres) in the area of Van Dyke Street and Lynch Road for a new development.
The state of Michigan wasn’t exactly transparent in its handling of the deal, either. It kept the details of its incentive package secret until Tuesday’s vote. Crain’s Detroit Business notes that that the vote from the Michigan Economic Development Corporation to approve the $223.5 million package passed “without any substantial questions or scrutiny from the board of business executives.”