RenCen: It’s Time For Detroit To Reject Silver Bullet Thinking.

The Gilbert regime has finally released its preliminary proposals to redevelop Detroit’s iconic Renaissance Center, which it purchased from General Motors earlier this year. GM, having long occupied portions of the five towers, previously announced that it was going to be moving into the new Hudson’s tower. A shinier site, of course, for which both GM and Bedrock have received massive public subsidies in the name of “job creation,” a mathematically elusive concept that has since largely been rebranded as “job retention.” And Gilbert is back for more! GM says that without a nine-figure sum to renovate the buildings, it will tear down the whole RenCen. Both are terrible ideas.

Proponents of lavish public subsidies for private corporations argue that it’s acceptable to transfer vast amounts of public wealth to the private sector in order to catalyze investment activity that wouldn’t happen otherwise. In terms of The Discourse, this is often framed in terms of Detroit’s revitalization at long last, led by Mike Duggan, who has ridden in to the decimated remains of a once-great city on his shining horse. “Downtown’s coming byack,” a Macomb County man will argue with a strong Michigan accent, with the implication (and something I’ve heard spoken verbatim): “now that they’ve got that white mayor!”

Credit Where Credit Isn’t Entirely Due

To be fair to Duggan, I admit that this is one of my “reduction or hyperbole for the purpose of illustration” moments. The Mayor– who recently announced that he won’t be running again despite being eligible, is fairly popular with Black Detroiters (see Politico or — perhaps a redundant phrase here- vacuous commentary from Mitch Albom). He recently declared that he will run for governor in 2026, but as an independent– an interesting strategy as he will be competing with the Democratic successor to a relatively popular Gretchen Whitmer as The White Guy Who Really Turned Around A Black City.

And God help us if the Democrats put up Republican Mark Hackel in the name of appeasing Those People (Hackel is a registered Democrat in the same way Joe Manchin is a registered Democrat).

As someone who studies this stuff professionally and academically– not that we care about those things in the post-truth age in which we live– I’d argue a few things. First, I’d argue that Detroit’s “turnaround” can be substantially credited to macroeconomic factors that mirror broad growth trajectories in other cities. Next, I’d point out that Detroit is either still losing population or only barely not losing population– if we are to believe the United States Census Bureau. (Mike Duggan, for his part, does not).

The Mixed Bag of the Duggan Record

I spend so much time focusing on Duggan because, for the most part, things don’t get done in Detroit if he doesn’t want them to. This is true for both good and bad things. When I worked in the building department for all of 45 minutes, the mayor appointed a chief technocrat to bust heads and exact the emancipatory science of Lean Six Sigma on a blue collar workforce that still took notes with paper and pencil. It was unclear what the objective was, other than indicating to the rank-and-file that the mayor was in charge here. No matter that, you know, there was no long-term strategy (or short-term strategy, for that matter).

And no organization. Just a requirement of fealty and yes-men (almost all men). We can examine a similar trajectory in the planning department, whose previous director was pushing for broader, innovative policy packages for zoning reform until he pissed off the mayor and got fired was asked to resign. Maurice Cox’s successor, Antoine Bryant, just announced his resignation. The dude was very good at showing up and impressing people and doesn’t seem to have gotten much done, nor was he apparently able to ever respond to anyone’s e-mails or phone calls.

It’s not all gloom and doom, to be clear. The Department of Housing and Revitalization has done quite a bit of at least interesting things, ranging from innovative home repair programs to public-private partnerships to facilitate affordable housing development. I spent years trying to get a job working on some of this stuff, especially as it was a logical segue from working on the nonprofit side of real estate finance. Arthur Jemison eventually stopped returning my calls. But even though I didn’t fit into the philanthropic fellowship to technocrat pipeline and am still honestly a little bitter about it, this doesn’t stop me from conceding that there was actually valuable work being done in HRD.

Specifically, the challenges of Detroit are often the opportunities. In the aftermath of the mortgage bubble, it became necessary to not only dispose of real estate assets, but also to reinvent the systems to finance them. Appraisals didn’t work. We had to invent new financial products, and this required the concerted collaboration of everyone ranging from Mike Duggan to Rip Rapson to neighborhood activists. I worked on a bunch of these things and I feel good about having worked on them. I don’t particularly care that a few corporate executive bankers patted themselves on the backs about the good work they did, because they weren’t receiving corporate welfare to do it per se, and we got a lot of good work done.

This was, by and large, community work. It took place in the neighborhoods and it wasn’t part of the shining citadel of downtown. So, it’s easier to feel better about things that are less patently oriented to orchestrating things called “public-private partnerships” that are really more like “figuring out the most efficient way to channel the taxpayer dollars of a majority Black, impoverished city to a white suburban billionaire.”

Well beyond the Duggan regime, Dan Gilbert gets a lot of credit, too, because his name is attached to the highest-profile real estate development projects in Detroit. This goes back to his initial jockeying to jump into the fray of the post-subprime bubble decimation of 2009– an implosion his company arguably helped to create. Gilbert fanboys view the oligarch’s insertion into the Detroit real estate scene as a benevolent display of virtue. I view it as opportunism, taking advantage of a severely undervalued real estate market– the same thing that drove me to buy a 4,000 square foot commercial storefront building for $12,800 in 2011.

I didn’t get rich off this project, but nor did I receive any public money to work on it.

Gilbert was an outlier jumping into the moribund real estate scene in Detroit as early as 2009, so he deserves a nonzero amount of credit. Of course, people thought he was nuts. “You want to invest where?” I got the same questions when I got started in real estate and construction. The major difference is that I hadn’t broken the real estate market– I was trying to clean up the mess. We are still trying to clean up the mess in Detroit. The billions of dollars in corporate welfare funneled to the Gilbert regime has effected a transformation of downtown, from vacant commercial blocks to Gucci and H&M stores. A private security apparatus that, I’ve heard, even has its own mini-jail. You know, separate from the over-budget and behind-schedule jail he privately built for Wayne County (more handouts).

Is there a case to be made for the RenCen project?

In short, no. If any of these silver bullet deals had ever created the number of jobs they promised, maybe– but they don’t. The argument that “it wouldn’t happen without this monumental public investment” as specious, because the argument suggests the primacy of “it” as an objective in the first place. It’s a logical fallacy. If Detroit is on the upswing, it doesn’t need to continue to catalyze these huge projects. Right?

The argument for why these billionaire developers needed the subsidies in the first place was because the development wouldn’t have happened otherwise. When I moved to Detroit in 2015, the supposedly critical threshold was reaching a $1 per square foot residential rental rate (per month). Now, we’re looking at more like $2-4. And there’s no talk of these subsidies slowing down.

There’s a separate argument in favor that says that the project is, in fact, absolutely vital, because the Renaissance Center is such an iconic building. Without it, proponents of the corporate welfare argue, downtown’s comeback could be stymied. One Oakland County-based economic development consultant I talked to, who does work in Detroit, compared the RenCen to Ford’s Michigan Central project, which he viewed as a far better use of taxpayer dollars:

[The Michigan Central project] wasn’t perfect, but … a project like that would have never gotten done without incentives. On the other hand, General Motors is saying, ‘hey, we have a distressed asset, and you better help us– or else.’ I do think Bedrock has done more good than harm, especially when compared to the Ilitches, but double-dipping on subsidies that you promised were going to Hudson’s to bring businesses to Detroit should be null and void when you’re just bailing out GM from the RenCen and [bringing] a couple thousand [workers] from down the street.”

Of course, there were many advocates for the demolition of Michigan Central in the past decade or so. I am personally glad that the project got done, even though I don’t believe for a second that Ford spent a billion dollars on it (my inside sources tell me the total tab for the construction was actually closer to the amount that they received in public subsidy– $300-some million- but, given the absence of the requirement that these expenditures be certified or made public, it shall just all remain a great mystery forevermore).

The “help us or else we tear it down” argument” is a thoroughly specious one, to which I point out that General Motors received tax breaks— billions of which remain unspent, effectively banked in perpetuity- based on the promises of keeping jobs in the state. It hasn’t done that, for the most part, and the company hasn’t grown, for the most part. The stock price has languished. Rocket (NYSE: RKT) has similar lost more than half of its peak IPO valuation, largely the product of a slowdown in the residential mortgage market. Or the fact that the competitors at UWM do a lot more cocaine, one.

Dan Gilbert, meanwhile, has continued his meteoric ascent to become one of the richest men in the world. Water remains wet, but wealth still doesn’t trickle down. Mike Duggan doesn’t get this, as he still embraces the failed paradigm of Reaganomics. So, maybe it’s good that he’s running as something other than a Democrat.

There’s oodles of research that shows that these silver bullet projects never pan out to produce what the proponents claim they will. Even more has been written about sports stadiums, which we’ve also seen a strong affinity for in downtown Detroit with another billionaire-developed project that was substantially underwritten by Detroit taxpayers in exchange for the broken promise of a whole lot of other real estate development that hasn’t materialized for silly reasons.