DETROIT – Detroit has a new policy requiring criminal and civil background checks for developers and others seeking tax abatements and tax incentives for development projects.
Council Member Angela Whitfield Calloway said the policy is intended to give the city more information before deciding whether to approve tax breaks that can total millions of dollars each year.
“We award tax abatements, tax incentives like we hand out Skittles and Starburst,” said Calloway, who has taken issue with the number of approvals.
The City Council has the final say on tax abatements and tax incentives for development projects in Detroit.
“It’s our responsibility to do our due diligence on the front end to make sure that these folks are coming to the council with clean hands,” Calloway said.
The policy is modeled after practices used by the Michigan Economic Development Corp., which reviews applications and makes recommendations for financial incentives to the Michigan Strategic Fund.
That process is similar to the role the Detroit Economic Growth Corp. plays for the city.
Under the policy, each applicant, along with its key owners and personnel, will be subject to criminal and civil background checks for relevant convictions and civil liabilities in certain local jurisdictions within the past five years.
Any findings, along with mitigating circumstances, must be reported to the relevant city departments and the Law Department before a public hearing on the proposed incentive.
The same information must also be provided to City Council members before the public hearing.
“We’re going to give you a second look. You may not get the tax abatement that you’re requesting,” Calloway said.
The policy change came after a resident raised concerns with Calloway about the background of someone connected to a tax abatement request.
Detroit corporation counsel Conrad Mallett said in a memorandum to Calloway this month that the policy “represents a reasonable and significant step toward safeguarding the integrity of the City’s economic development programs and tax incentive determinations.”
The city says prior criminal convictions or civil misconduct do not automatically disqualify a tax incentive applicant under state law or Detroit’s ordinances.
“As a city, we have to be real careful about our willingness to grant or to award tax abatements and tax incentives to developers when they, some of them may not deserve these tax abatements,” Calloway said.
