After the Troy City Council turned down $8.4 million in federal funding to construct a transit center, a lawmaker urged the governor and transportation officials to keep the funds in Southeast Michigan, and a business leader called a halt to further expansion in the company’s Troy facilities.
What do these two have in common, if I may ask?
The Troy City Council rejected the funding and transit center plans in a 4-3 vote at a Dec. 19 meeting. Mayor Janice Daniels, and councilmen Wade Fleming, Doug Tietz and Dave Henderson nixed the plan, citing ongoing operation expenses, use of federal funding on principle and the cost of the center in light of current mass transit use. The federal funds cannot be transferred to other Troy projects.
Good. Light rail has never shown that it has a payoff. The line in question supposedly runs from Troy to Pontiac, a pretty-much dead city at this point. There is also an apparent problem with current mass transit utilization — why put in something for which there is no demand and which will be a permanent suck on the taxpayers (other than the big megacorp, of course) — like, for instance, the residents who own houses there.
On Dec. 20, Troy Chamber of Commerce President Michele Hodges received an email letter from Frank Ervin, manager of governmental affairs at Magna Corp., an auto parts manufacturer with 300 facilities worldwide, more than 100,000 employees and more than $24 billion in sales in 2010.
Ah, here it comes….
“After watching the disappointing behavior of City Council and being exposed to some of the individual actions such as those of the mayor and Councilman (Wade) Fleming this morning, I am drafting a memo to all Magna group presidents and our Magna corporate executives strongly recommending that Magna International no longer consider the city of Troy for future site considerations, expansions or new job creation,” the letter states.
And why is that, exactly? Specifically, would you mind explaining exactly why the city’s unwillingness to stuff money down a rathole when there appears to be no justification on a usage basis with existing mass transit is something that makes you uncomfortable Frank?
I would think you’d want a city government that is a good steward of tax dollars and uses them wisely; after all, that’s what an entity should be doing with its resources…. right?
This past April, the Michigan Economic Growth Authority approved a three-year $1.5 million state tax credit for Magna in support of plans to invest $765,000 in its Troy facility for a new division, which was estimated to create 200 new jobs.
Oh that’s nice. The state paid twice for the investment that the company made? As for the number of new jobs, can we have an actual headcount instead of “estimates”? Exactly how many actual long-term jobs were created, if I might inquire, and at what rate of pay? What’s the net benefit to the State from this handout? That should be trivially able to be provided since the firm does remit payroll taxes and knows what its headcount and wage base is….
The company, which is based in Aurora, Ontario, leased 9,738 square feet at the Troy Technological Park, off John R, between 14 Mile and Maple, for powertrain operations. General Motors had previously occupied that space, which had since been empty.
9,700 square feet is not much. That’s less than a 100×100′ box, basically. I had 8,300 square feet in Two Prudential and it was about 1/3rd of a floor; we supported thirty employees in that space, more or less. We could have probably added another five, maybe ten if I reconfigured a bunch of stuff — but that’s all.
Someone is lying here. 200 employees in 9,700 square feet eh? That’s a square of about 7′ on a side with no other space involved — no aisles, no cube systems, no bathrooms, no closets, no IT infrastructure, no front desk, no chairs, no hallways, no private offices, well, you get it.
Now maybe there are other facilities involved in the deal, but this much I’m very sure of — there is no way that 200 employees were packed into 9,700 square feet of space.
Peters said that the plans had included transit bus lines connecting the transit center in Troy to Macomb County.
“It doesn’t make any sense to do that now,” he said. “I always believed the rapid bus line should go up to Pontiac.”
He said the evidence is overwhelming that where investments are made in public transit systems, there are huge returns. “It really spurs the economy and is not something we’ve had in the history of Detroit. It (economic development) goes hand in hand. The Troy transit center was a piece of that. I’m certainly disappointed in the council’s decision.”
Really? Show me the numbers please Mr. Peters, D-Bloomfield.
And make sure that when you do that you count the entire sunk cost of these facilities, plus the operating expense, and put against it the number of actual full-time jobs that are created and stay once the system is complete, including those you steal from the other end of the line, along with number of actual users of these new facilities and per-user cost figures on both a capital and recurring basis.
There are good, solid arguments for transit systems within high-density urban areas. Between them is a much dicier proposition, in that movement of people between those areas doesn’t necessary do anything other than siphon people from one area to another.
The better question that I have here, however, is over this entire tax subsidy thing. $1.5 million in subsidies for a $765,000 investment is effectively paying a company twice to spend money. The claim of 200 jobs in 9,700 square feet is facially bogus and went unchallenged in the source article, so one has to wonder exactly what sort of idiots we have for so-called “reporters” at that paper.
This, in turn, calls into serious question exactly what other hinky deals this company (and others) are getting in Michigan and more importantly, who the costs and taxes are being shifted to in order to support this outrageous and incestuous behavior between these corporations and the state and local governments involved.
Absent more information that changes my mind I applaud Troy for saying NO MORE to this blatant and obvious scam.
A call to the reporter to inquire on the paper’s investigation on these matters was not returned by press time.