FCA-Detroit deal edges closer to reality

FCA headquarters
Fiat-Chrysler Automotive's headquarters | Greg Gjerdingen, Flickr

The city of Detroit continues to get closer to securing a $2.5 billion investment from automaker Fiat-Chrysler Automotive (FCA).

The city announced Friday that it had completed deals — a week later than an initial 60-day deadline — with various property owners to acquire about 215 acres on Detroit’s east side. As part of the land deals, the city of Detroit will pay Crown Enterprises Inc. $43.5 million for 117 acree. The company is tied to the billionaire Moroun family, which owns the Ambassador Bridge and several other holdings.

The Ambassador Bridge
Ambassador Bridge | Wikimedia Commons

The city says that to the “maximum extent possible” Detroit officials engaged in land swaps in which vacant city-owned land was traded for land within FCA’s proposed project area as a way of saving cash. In total, the city will use $48 million of cash for the land acquisitions. The Detroit City Council still needs to approve the land deals, as well as a $35.2 million community benefits agreement (CBA) that will provide city residents advance opportunity to apply for positions at the plants and various specialty training programs for the positions.

The CBA was approved last month by a Neighborhood Advisory Council (NAC) by a vote of 8-1.

U.S. Rep. Rashida Tlaib (D-Detroit), who had previously pushed for “real community benefits,” on Friday slammed the deal with the Morouns, however, saying that component was never shared with the council. Tlaib has clashed with the billionaire family since her tenure in the state House.

Detroit Mayor Mike Duggan, however, praised the efforts by the NAC.

“I can’t say enough about the neighbors who got engaged in the process, faithfully attended meetings and especially those who served as NAC members,” Duggan said in a statement. “They represented their neighbors extraordinarily well and negotiated a comprehensive community benefits package that the entire city should be proud of.”

Detroit Mayor Mike Duggan
Mayor Mike Duggan | Andrew Roth

Should Detroit’s elected officials approve the deals, FCA plans to build a $1.6 billion assembly plant, which would be the first new assembly plant in the city in decades.

The company also plans to spend $900 million retooling and updating its Jefferson North assembly plant. The overall investment is expected to result in about 5,000 jobs.

There are also state-level approvals required, including a reported $160 million incentive package from the state’s Michigan Strategic Fund.

A spokesperson for the Michigan Economic Development Corp., the quasi-public organization that administers the fund, did not immediately respond to a request for comment as to when the FCA deal might go before the MSF board.

Gov. Gretchen Whitmer
Gov. Gretchen Whitmer, April 16, 2019 | Susan J. Demas

Gov. Gretchen Whitmer has previously confirmed to the Advance that the incentive package for FCA will contain “pieces” of both the state’s Good Jobs for Michigan law and “transformational” brownfield incentives.

The economic development programs began under former Gov. Rick Snyder’s administration and are targeted for larger projects, such as the FCA proposal. They allow the company to keep much of the sales, use and payroll taxes they would otherwise pay as a way of offsetting costs.

Whitmer has said the incentives will be “incredibly conservative,” when compared with the return on investment.

Nick Manes
Nick Manes covers West Michigan, business and labor, health care and the safety net. He previously spent six years as a reporter at MiBiz covering commercial real estate, economic development and all manner of public policy at the local and state levels. His byline also has appeared in Route Fifty and The Daily Beast. When not reporting around the state or furiously tweeting, he enjoys spending time with his girlfriend, Krista, biking around his hometown of Grand Rapids and torturing himself rooting for the Detroit Lions.

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