Executive Summary

While much recent attention on economic development has focused on Oakland County and western Michigan, an important part of the state's economy has been and will continue to be the Downriver area.

Seventeen communities south of Detroit in Wayne County encompass the Downriver area. Several critical factors have contributed to the long-term feasability of economic development in the region. First, Downriver is economically and geographically tied to Detroit, one of the nation's ten largest metropolitan areas, and the Detroit-based auto industry. Second, Downriver offers industry access to the Detroit River, the Great Lakes and ultimately the St. Lawrence Seaway, one of the world's major international waterways. Water access has been a major factor behind industry's decision to locate in the area. Third, Detroit Metropolitan Airport, a major transportation center for southeastern Michigan and the state's largest airport, is located Downriver in Romulus. Fourth, major surface routes such as Interstate-75, I-94, and I-275 traverse Downriver. Access to transportation centers and routes has been a key factor behind existing economic development in the area. Finally, Ontario, Canada is accessible from Downriver via the Ambassador Bridge and Detroit-Windsor Tunnel, a factor which could take on added significance given the 1988 Free Trade Agreement between. the United States and Canada.

Downriver Detroit could best improve its economic climate by reducing its property tax burden, which acts as a disincentive to economic development. Property taxes are too high in the Downriver area, where the millage rate average is more than 22 percent higher than for 13 competitor communities in northwestern Wayne and Oakland counties. In 1987, the average millage rate for the 17 Downriver communities was 72.11 mills. The average rate for the 13 competitor communities, with such high-growth areas as Novi, Southfield and Troy, was 58.94 mills. The Downriver millage average is also higher than the statewide average of 63.44 mills for cities and 47.27 for townships. Local property taxes must be reduced if Downriver is to compete with areas like northwestern Wayne and Oakland counties, which have experienced record economic growth this decade.

Economic development Downriver is linkedto Detroit's economy which has declined while growth has increased in Oakland County. Historically, Downriver has benefitted from Detroit's position as an economic activity center. The automobile and steel industries are major employers, and their impact on the region cannot be understated. Failureto diversify has left the area vulnerable during periods of economic downturn Downriver suffered a severe economic depression during the late 1970s-early 1980s while the rest of Michigan experienced a recession. Community leaders have attempted to attract new business using property tax abatements, with limited success. Oakland County economic growth has occurred largely without reliance on abatements, the economic development strategy that is most discussed downriver. To the extent that Downriver officials can, they should support actions which would improve Detroit's economic climate. Detroit must lower its property tax burden, the highest in the state and the fifth highest nationwide among the largest cities in each state. Detroit should utilize an enterprise zone approach, rather than property tax abatements, as an economic growth strategy.

The high and increasing tax burdens of the Downriver area can only be offset by extraordinary public services. One way to achieve this goal is through privatization, the process whereby the private sector performs functions provided by a public sector, government unit. Such action would establish a different picture of Downriver, a picture of an innovative area acting to improve its economic climate. Downriver has generally been perceived as an area of inefficient municipal government. Two communities in particular have contributed to this perception – Ecorse and River Rouge – although other Downriver communities are providing questionable services, and other services in a questionable manner. Privatization has played a role in improving economic development possibilities in Ecorse, while the concept is being considered in River Rouge. In Ecorse, privatization of public services has successfully been implemented to reduce a $6 million budget deficit. In River Rouge, privatization is an option for reducing the existing $4.4 million budget deficit.

Privatization already exists to a limited degree Downriver, and should be further explored. A first step should be the establishment of privatization commissions in all 17 communities to review the prospects for transferring services from the public to private sectors. Each commission should include a mix of residents, business and community leaders and elected officials and should meet at least once publicly for public input. Commissions should examine why services performed by the private sector elsewhere are provided by the public sector in their own community. For example, a Wyandotte privatization commission should examine why the city provides public cable TV service when it is provided by private firms in other communities. Likewise, privatization commissions in Riverview and Southgate should review why those communities operate municipal golf courses that compete with privately-owned commercial courses in the area.

Sixteen Downriver communities have already privatized garbage collection, although competition does not exist to the degree that it does in north Oakland County, where 20 of 30 communities allow competing private firms. Eight Downriver communities have part-time fire departments, in keeping with a national trend from fire suppression to fire prevention. Three of the four largest Downriver communities, size-wise – Romulus, Brownstown Township and Gross Ile – are served by part-time departments. Trenton, the only community Downriver that provides garbage collection for its residents, should privatize the function, and the nine communities with full-time fire departments should replace them with part-time forces as an interim step.

Downriver has property tax millages for public education which are slightly higher than the statewide average, but as a percentage of total taxes, school taxes in the area are lower than the statewide average. Downriver communities should consider lowering the percentage of property tax burden which is not school-oriented. Furthermore, the efficiency of Downriver public schools could be improved by offering parents schools of choice, a choice for their children. Under a schools of choice system, parents choose which school to send their children to, and their tax dollars follow. The schools of choice concept has been successfully implemented in New York's Spanish Harlem and Minnesota, and has been proposed in Michigan.

An east-west surface route south of Metro Airport would significantly reduce transportation costs for firms locally in the Downriver area. A bridge to Ontario Canada is another important infrastructure improvement that would aid economic development. The private sector should be given first consideration for both projects. An encouraging recent development has been the emergence of private toll roads across the U.S. and elsewhere. The existing Ambassador Bridge between Detroit and Windsor was built privately and remains a privately-owned firm.

Downriver has the potential to become an economic growth area which can lead Michigan. But area communities must act together to create a reputation for efficiently providing local services at non-burdensome tax rates. Accomplishing this goal will require bold and creative leadership, and above all else, vision for the future.


This Executive Summary is based on a Mackinac Center Report, "Regional Economic Development: Downriver As A Case Study" by Greg Kaza and Gary Wolfram. Copies of the full 32-page report are available from the Center for $5.00, or at no charge for Michigan media. Copyright 1989 by The Mackinac Center.