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Why Amazon HQ2 probably won't be in Detroit

Oct 17, 2017

As you may know, Amazon is looking for another city in which to build a vast new headquarters that could mean billions in investment and up to 50,000 jobs.

Not surprisingly, just about every city wants that. But the place where it might make the most difference for the local economy is, of course, Detroit.

Dan Gilbert, the Quicken Loans czar who many regard as Detroit’s capitalist savior, is heading a task force that will submit a bid in the next two days to the giant mail order retailer. Mayor Mike Duggan would do just about anything to lure Amazon.

But the one thing he likely needs to do, he legally can’t. Amazon hasn’t been specific, but it probably needs a campus of at least 100 acres on which to build a complex of buildings. Detroit has 24 square miles of publicly owned land – but not in large tracts.

This summer, I talked to Mayor Duggan about that, after Michigan failed in its effort to attract a large plant the Taiwanese firm Foxconn eventually decided to build in Wisconsin.

Duggan initially hoped Foxconn too might come to Detroit, but instantly learned he couldn’t compete. Why? Foxconn wanted a thousand acres.

Duggan told me, “The city got built up as residential neighborhoods, and what we own is like a bunch of checkerboards of former residential lots.

“We are going to have to assemble those parcels, if we are to compete with the Pittsburghs and the Clevelands,” Duggan said.

Yet Detroit has no easy way to do that. Once, the city did have that power. In 1981, Detroit used eminent domain to buy up hundreds of homes and businesses which the city knocked down to turn the land over to General Motors, which built what is now called the Poletown plant. A similar process was used to get land for the Chrysler Jefferson Avenue North Assembly Plant, now the only two auto plants still making cars in the city.

But then, in 2004, the Michigan Supreme Court reversed an earlier decision, ruling unanimously that a city could not use eminent domain to seize land to give to a private entity. In that case, County of Wayne v. Hathcock, the court called the Poletown decision “a radical departure from fundamental constitutional principles.”

The city of Detroit can still try to buy up land to assemble a large parcel. The problem is, if word of this got out, speculators would undoubtedly grab vacant lots in the area and hold the city up for many times their actual worth. John Mogk has been a highly respected law professor at Wayne for almost half a century, specializing in urban problems.

He thinks what Detroit needs is a state constitutional amendment modeled after a California law that would allow the city to again use eminent domain to take land for private development, with one exception: Residents who had lived in their homes for at least a year would be exempt, and the city would have to pay them whatever they wanted.

Such an amendment would enable Detroit to compete for Amazon. Unfortunately, there’s no sign of any attempt to try to do that. Which means, that if Amazon were to come to Michigan, we are probably talking somewhere like one of the abandoned stadiums sites in the suburbs, or maybe Grand Rapids.

Jack Lessenberry is Michigan Radio’s Senior Political Analyst. Views expressed in his essays are his own and do not necessarily reflect those of Michigan Radio, its management or the station licensee, The University of Michigan.