Billionaires need all the help they can get. Like Quicken Loans founder and Cleveland Cavaliers owner Dan Gilbert, whose material assets minus liabilities total almost $6 billion in value, according to Forbes.
Dan needs $250 million for one project in Detroit (or four projects, depending on how you count these things), and is asking Michigan for the money to make it happen.
I think one of the Rules of Acquisition says “Don’t spend your own latinum if you can spend someone else’s.” Lots of billionaires live by that rule, including Dan.
Last week, Louis Aguilar reported for the Detroit News:
An effort to win Detroit City Council approval for $250 million in new state tax incentives for Dan Gilbert’s Bedrock Detroit hit a minor setback Thursday and will remain in a council committee for at least another week.
Bedrock, which needs council approval to get the incentives for four “transformational” projects that could redefine downtown, was introduced Thursday to the council’s planning and economic standing committee. It was met with some public rancor over a billionaire’s need for tax money to help finance ambitious projects. And two of the three committee members opted not to move the proposal to the full council as Bedrock had hoped.
Bedrock is seeking quick approval as it aims to use part of the tax incentive to start construction next month on the former Hudson’s site, an estimated $909 million project.
Dan says the project will create 24,000 jobs. Gee, where I have heard that kind of thing before?
Tom Perkins explains in the Metro Times:
Because of the way the transformational brownfield law is structured, Gilbert could come back for more money each year between 2018 and 2021. The $250 million request could be the first installment of a series of annual public payments to Gilbert for his projects. In theory, taxpayers could give him up to $1 billion for eight major projects in the next five years – that's what the law allows.
And that’s the beauty of the arrangement, at least for Gilbert. It allows him to collect hundreds of millions of dollars piecemeal instead of at once, making it more difficult for people to oppose — and easier for taxpayers to digest.
But the issue at hand in the city council committee is whether Detroit taxpayers will pay for the tax incentive. The bottom line is the plan would divert tax money that should go to the state of Michigan and put it in Gilbert's pocket. So in that way all taxpayers lose, though that’s not how Gilbert’s team and city staff are framing it.
More specifically, Gilbert would collect income tax from any resident or employee of a business that moves into his new buildings. These businesses and residents exist right now, and they pay taxes to the state. Those taxes go to make road repairs, fund police, fund education, and so on.
When the residents and businesses move into Gilbert's new buildings, their income tax would no longer go to the state. It would go to Gilbert — and that would shrink the state’s tax base.
Perkins closes saying that the committee was to meet again this morning (the meeting might be breaking for lunch as I write this) and they might vote to move the issue to the full council.
And he reminds readers that Detroiters can “email and call their council members to let them know that they oppose public funding for billionaires.” I think I would have worded it pretty much the same way.