FCA land deal gets green light from Detroit and state

Detroit — The City of Detroit will get its first new auto plant in nearly 30 years. 

The Michigan Strategic Fund board on Tuesday approved state incentives, including $55 million for land assembly, for Fiat Chrysler Automobiles NV’s proposed $2.5-billion plant expansion on the city’s east side.

The day proved to be a big one for the automaker, with the Detroit City Council approving earlier Tuesday a dozen key elements in the plant expansion. 

Fiat Chrysler plans to invest $1.6 billion in expanding its Mack Avenue facilities with a new plant and investing $900 million to modernize its Jefferson North Assembly Plant. The plant expansion is expected to add 4,950 jobs.

Pointing to FCA's planned $4.5-billion investment in five Michigan plants, Michigan.Gov. Gretchen Whitmer celebrated what she called a “generational investment” that will benefit Michigan workers at FCA and automotive suppliers, predicting a total job creation impact of closer to 50,000 jobs. 

“Today, we are reaffirming that Michigan remains the automotive capital of the world, and that Michigan UAW workers build the best cars, trucks and SUVs on the planet,” the governor said. 

Michigan is providing tax incentives valued at $223.5 million and is expected to “contribute” a total of $261 million to facilitate the FCA project, a price tag Whitmer defended as sound spending. 

The jobs will pay an average of $58,000 and will include “all levels” of employment, from plant managers to skilled trades positions, FCA North America Chief Operating Officer Mark Stewart said. Construction and worker training within the city of Detroit will begin “immediately” and the company intends to begin selling vehicles from the new assembly plan in the fourth quarter of 2020, he said. 

“Probably as early as tomorrow you’ll be seeing a lot of activity off of Jefferson and the different Mack roads there,” Stewart told reporters.

The Michigan Strategic Fund board approved the following for the project:

• $55 million for land assembly activities including land acquisition and site preparation.
• A $10 million grant in a Michigan Business Development Program.
• A 100% Good Jobs for Michigan Withholding Tax Capture for up to 10 years valued at up to $99 million.
• A 100% State Essential Services Assessment Exemption for up to 15 years valued at up to $13.4 million for the Jefferson North Assembly Plant.
• A 100% State Essential Services Assessment Exemption for up to 15 years valued at up to $18 million for the Mack Engine Plants.

"Now the real work begins," said Detroit Councilman Andre Spivey, whose district includes the plant expansion. "Making sure that we get the residents who are in the immediate impact area, get them prepared, resume training, interview skills, get them ready. And then as we reverberate throughout the rest of the city, to make sure that as many of the 5,000 we have can be hired when the time comes."

Council members approved Tuesday the project’s community benefits agreement and land-swap proposals involved in the deal. The council also approved industrial facilities exemption certificates for 2101 Conner and 4000 St. Jean. The certificates would allow for a 50% tax abatement for the automaker for up to 12 years.

The city’s total investment in the deal is $50.6 million: $36 million from uncommitted City of Detroit bond funds, a $7.5 million loan to the Detroit Brownfield Redevelopment Authority and $7.1 million from the sale of the city's Millennium Garage.

Detroit Mayor Mike Duggan said the approval on Tuesday marked the greatest day in his term.

“Detroit was the city that built the middle class in America, and today we started to rebuild the middle class in Detroit,” he said. “It starts with 5,000 jobs but we already have four more logistic centers and supplier parks for Chrysler that are going to be coming forward in the coming weeks with another 1,500 to 2,000 jobs. We have turned a corner.”

In late February, Fiat Chrysler and the city announced the automaker's plans for the new plant and expansion as part of a $4.5 billion investment in five Michigan plants including Detroit, Warren and Sterling Heights. The city of Detroit worked to assemble acreage needed within a nearly 60-day timeline.

Since the initial announcement, the city administration worked to address concerns council members have expressed about the hiring of Detroit workers. 

The automaker has said it plans to give Detroiters exclusive access for four weeks to apply for the jobs, and ongoing priority for job openings for the life of the plant. The city will have eight Detroit at Work hiring centers throughout the city by the end of the year.

“I cannot commit to something that does not guarantee you 100% or any percent of jobs,” Councilwoman Raquel Castaneda-Lopez said Tuesday. “I appreciate the prioritization and opportunity for Detroiters to apply. But so often, it becomes a racialized issue or a class issue and we’re told over and over again ‘Well, there just aren’t enough Detroiters.’”

Ron Stallworth, a manager with FCA’s external affairs department said that after the four-week application period for Detroiters, hiring will be opened to the general public.

“It’s in our best interest," he said, "to hire Detroiters."

Not all measures were passed unanimously by City Council. Castaneda-Lopez  was among council members who expressed concerns about property the Moroun family will receive in exchange for 82.2 acres of land it owns through its real estate arm Crown Enterprises. The powerful family owns the Ambassador Bridge between Detroit and Windsor, as well as large parcels of other property in the city. Officials have said the Moroun land was a critical piece of the deal.

Castaneda-Lopez said Crown Enterprises has “illegally” been occupying city-owned parcels and has closed off city streets. She wanted to know what penalties they would face, if any.

President Pro Tem Mary Sheffield said there had been no public input on the land swap, and it was worked out after a community benefits agreement was forged. “It sets a bad precedent,” she said.

Council approved Tuesday the sale of the city-owned Millennium Parking Garage on Congress, which city officials have said is needed to help fund the city’s contribution in the land purchases. Councilmembers James Tate, Castaneda-Lopez and Sheffield voted in opposition to the sale. 

Tate had previously pressed the administration on whether the sale of the parking garage is "required" vs. "desired." He asked if there were any other city funds that could be used in its place. 

Katie Hammer, a deputy chief operating officer for Detroit, said the sale of the garage is “required to make this deal work.”

Staff writer Jonathan Oosting contributed.

cwilliams@detroitnews.com

Twitter: @CWilliams_DN