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Downtown Detroit. Credit: David Tansey.

Over the past week, “consent agreement” became the two most important words in the city of Detroit.

Michigan governor Rick Snyder offered a proposed “consent agreement” as a way to avoid appointing an emergency manager for the city.  We did our best to explain the proposal last week, and our partners at Michigan Radio have had extensive coverage.

But the governor’s consent agreement is a long and sometimes confusing legal document. The folks at Code for America seem to have found a unique way of breaking it down. They’ve published the entire proposed agreement to detroitagreement.digress.it, and opened it up so people can comment on each individual paragraph.

So far, commenting has been light, but plenty of people have questions about how certain sections of the agreement will be interpreted.

We talked to Matt Hampel, who created the website as part of his fellowship for Code for America. He and two other fellows are working with the city of Detroit on web-based apps to help the city. Hampel says the consent agreement site is kind of a side project, but the Code for America Team will have new web projects coming out over the next few months.

“We’re looking at issues of transit information, and we’re looking at building some tools around community mapping … We wanted to build online tools that make it easy to collect information about your neighborhood.”

Hampel says he also plans to follow up on the consent agreement site, as new proposals are released. You can find updates at codeforamerica.org/detroit.

Next Tuesday is the illinois Republican primary. But today, Illinois is the center of the political universe (not that it doesn’t always think it is).

Two Republican presidential candidates and President Obama are all in the state today, looking for votes, and in the case of the president, money.

Former U.S. Sen. Rick Santorum makes two stops in Arlington Heights today, with three downstate on Saturday.

Former Massachusetts Gov. Mitt Romney hit a Rosemont restaurant Friday morning, with more stops planned ahead of Tuesday’s election.

Obama, meanwhile, spoke to a fundraising luncheon in Chicago before heading to Atlanta.

Not to be outdone, Newt Gingrich was in Illinois on Thursday. His performance in the state could determine whether the GOP race narrows to Romney and Santorum, or whether it remains a three-way contest.

 

Indiana Gov. Mitch Daniels

Welp, looks like Mitch Daniels stepped in it.

The Indiana governor held a press conference on Monday to reflect on accomplishments made in the latest legislative session. He talked about getting approval for full-day kindergarten, a smoking ban and a new agreement to have Amazon collect Indiana sales tax. He also talked about Right to Work, the most controversial, and significant, change in Indiana law in the past year.

Daniels said, after passing Right to Work, three companies have decided to expand their business in Indiana. Only one company, the MBC Group, has been identified publicly. Daniels said even more companies are in negotiations with the state, thanks to Right to Work.

“I probably underestimated how important an addition to our already excellent business climate this was going to be,” Daniels said during the press conference.

There’s just one thing: the one company Daniels named that expanded because of Right to Work didn’t actually expand because of Right to Work.

The Associated Press tracked down the president of MBC Group, Eric Holloway.

“We are not a union shop,” Holloway told the AP. “The effect that this was going to have was not going to affect our decision one way or another.”

Holloways company is planning an expansion that’s expected to create 101 jobs, and include $4.1 million in new investment.

The Right to Work mixup seems to have come from a press release issued from the governor’s office last month. The release included this quote from Holloway:

“With its low tax environment, robust infrastructure, superb logistic support network and ‘right to work’ status, Indiana was a no-brainer location for us.”

Holloway tells the AP he did sign off on the quote, “but probably would have changed it had he noticed the ‘right to work’ language.”

And, Holloway says he personally supports Right to Work.

But with all the controversy about Right to Work, those who support it are eager to point out the benefits. In the case of the MBC Group, the claim was a little ahead of the facts.

The Indiana AFL-CIO was quick to jump on the mistake. On its website, the union said:

While it’s not shocking, it’s disappointing that our officials would stoop to this level in order to deceive the public which they are supposed to represent. It’s equally disgusting that the administration is clearly pressuring businesses that are applicants for or recipients of state economic development incentives into furthering this deception.

This should cast doubt on any future claim made about this legislation’s economic impact.

The gaffe could also have implications beyond Indiana’s borders. As Right to Work becomes an issue in Ohio and Minnesota, you can count on this story coming up again.

A hydraulic fracturing operation near Malvern, Ohio. Credit: flickr user Chiot's Run.

A “Mid-biennium Review” sounds like just about the least exciting thing in the world.

But Ohio governor John Kasich used his “Mid-biennium” budget talk yesterday for a ground-shaking announcement. Among a number of proposals unveiled, the governor announced new taxes for the many companies that are trying to extract natural gas and oil from Ohio shale.

If you haven’t heard by now, Ohio is sitting on an oil and gas bonanza. Up until a few years ago, no one could get at it, because it’s locked away in Ohio’s shale formations. But because of a new drilling procedure you’ve probably heard of called hydraulic fracturing, or “fracking,” all that gas and oil is now available.

As our own Dan Bobkoff reported in December, there is no shortage of hype about the possibilites for fracking in Ohio. The industry says it will create, or sustain 200,000 jobs. $200 billion could be invested over the next twenty years.

Tuesday, Chesapeake Energy announced plans for a $900 million plant to process all the oil and gas it’s pulling out of Ohio’s shale formations. So the boom times have already begun.

And yesterday, governor Kasich said he wants Ohioans to get a cut of all the profits from this new industry.

The Cincinnati Enquirer quoted Kasich:

“If Ohioans aren’t benefiting, then some shareholder in Texas will benefit. There’s gold in them thar hills. How much gold, we’re not sure. But I’d rather be sharing the wealth with Ohioans than investors living elsewhere.”

So, Kasich plans to impose new taxes on oil and gas drilling in Ohio (though small producers get an exemption), and 100 percent of what the government collects will go back to Ohioans in the form of tax breaks. The governor’s office estimates the oil and gas taxes will generate between $900 million and $1 billion in five years. The tax breaks will go to people in every income bracket, though the specifics have yet to be announced.

One complication to the plan is that it means Ohioans’ tax rates will fluctuate year-to-year, depending on how much money the energy companies make.

And, of course, the energy companies don’t like the idea much.

In a statement, the Ohio Oil and Gas Association says:

“Crude oil and natural gas exploration in the state is still in its infancy and increasing the severance tax at this critical juncture will negatively impact the economic future of Ohio and its residents. For this reason, we oppose a tax increase of any kind, particularly one targeting an emerging industry.”

Kasich says the new taxes will be competitive with other states. He’s also proposing new regulations on the industry, to try to address some of the environmental concerns it creates. Among other things, the industry will have to disclose all of the chemicals it uses in the fracking process. And the governor says some areas will be off limits to drilling.

Many of the proposals in Kasich’s “Mid-biennial” review will have to get approval from the state legislature before they go into effect.

Credit: flickr user Michael Kappel

Yesterday, we used some Bon Jovi lyrics to explain the casino boom in the Midwest.

But while we were busy analyzing what casinos tell us about our regional economy, both The Atlantic Magazine and the New York Times Magazine published long, in depth looks at the state of casino gambling in the U.S. Both pieces are worth a read.

The Atlantic‘s Mark Bowden writes about “The Man Who Broke Atlantic City.” He profiles savvy blackjack player Don Johnson, who managed to win $15 million from three Atlantic City casinos on three different days.

Bowden writes that Johnson was able to take advantage of the casinos because, as a high-roller, he could negotiate his own rules for playing blackjack – small changes that tilted the odds of the game in his favor.

Bowden writes that the casinos gave Johnson the special rules because they’re desperate for revenue.

When revenues slump, casinos must rely more heavily on their most prized customers, the high rollers who wager huge amounts—tens of thousands or even hundreds of thousands of dollars a hand. Hooking and reeling in these “whales,” as they are known in the industry, can become essential. High rollers are lured with free meals and drinks, free luxury suites, free rides on private jets, and … more.

But, unfortunately, for the casinos, Johnson wasn’t just any whale. He knew how to win.

The story of Don Johnson looms so large in the casino gambling industry right now, it even gets a brief mention in the New York Times Magazine piece. Michael Sokolove writes about the largest casino in the Western hemisphere, the Foxwoods Resort Casino in Connecticut.

Foxwoods is trying to restructure $2.3 billion in debt. If would probably be in bankruptcy, except that it sits on native land, where U.S. bankruptcy laws don’t apply.

Sokolove writes that Foxwoods was doing fine when it was one of only a few gambling options on the East coast.

Resistance to gambling, however, has been overwhelmed by the need for new sources of public revenue in an era when it has become nearly impossible, at any level of government, to raise taxes or even to let temporary tax cuts expire. A kind of self-perpetuating momentum fuels gambling’s growth: the more states that legalize it, the more politicians in states that haven’t done so argue that if their citizens are going to throw money into slot machines, they might as well do it at home.

That pretty much explains why we’re seeing so many new casinos in the Midwest.

A rendering of the proposed Kewadin Lansing Casino. Photo courtesy of Sault Ste. Marie Tribe of Chippewa Indians.

Next week, the city council in Lansing, Mich. is expected to vote on a proposal for a $245 million casino for the city’s downtown.

The proposal is just the latest in what’s starting to look like a casino-boom in the Midwest. Both Toledo and Cleveland have new casinos opening in May. The Detroit Free Press reported last week that there are no fewer than 22 casino proposals in Michigan right now. And Chicago mayor Rahm Emanuel is still holding out hope for Illinois leaders to approve gambling in his city.

At first glance, it’s easy to see why casino gambling is such a hot topic right now. Casinos bring hundreds of millions of dollars in new investment, including construction jobs and long-term jobs for dealers, waiters, cooks and others.

Also, research has shown that regions in economic stress are more likely to use gambling as an economic development tool. Here in the Midwest, there’s been plenty of economic stress.

But it’s not exactly a settled issue whether casino gambling actually creates economic development.

So why all the interest?

First, consider the research. Casino gambling can be a contentious issue, and, as with all contentious issues, there is a lot of conflicting information on both sides. But it seems clear that casinos can create economic development. Just look at Las Vegas.

But not every region that gets a casino turns into Las Vegas. Just look at Gary, Ind.

The Federal Reserve Bank of Boston took a look at this issue in 2006, as New England states were considering more casinos. The bank concluded:

In general, whether a casino will benefit or harm a local economy hinges on whether the casino is likely to attract tourists to the region … Casinos that cater to a local market generally do not bring outside money into the economy through the spending of their patrons. In fact, such casinos may have no net ancillary economic impacts. Residents patronizing such casinos may simply substitute gambling for other goods and services.

This is a huge point to consider. If everyone who spends money at a casino would have otherwise spent that money at a local restaurant or movie theater, then there’s no real economic benefit from the casino. It’s just moving entertainment spending – and jobs – from one place to another.

It’s the out-of-towners who make the difference.

So, to really get a sense of whether casinos can improve the Midwest economy, you have to consider not just how much money is being spent at the casinos, but where that money is coming from.

The answer, in many cases, is that the money is just coming from other Midwest cities.

When our own Dan Bobkoff looked into the plans for a new casino in Cleveland, he found that business leaders weren’t hoping to take tourists away from Las Vegas. They were hoping to keep their own residents from going to Detroit and Pittsburg.

And, as partner station WBEZ has reported, Chicago mayor Rahm Emanuel is very clear about why he wants a casino in the Windy City: to keep Chicagoans from spending their gambling dollars in Indiana.

“I can’t continue to afford Chicago to have gambling … in Hammond, Ind. and lose 20-25 million a month,” Emanuel said, according to WBEZ.

This helps explain why you hear mayors talk about casinos a lot more than governors. Thirty years ago, if people in Lansing wanted to gamble, they’d go to Las Vegas or Atlantic City. Now they can go to Detroit or Mt. Pleasant. Chicagoans can go to Indiana.

And it’s a lot more irritating for mayors to see that money going right next door, instead of all the way across the country. Casinos in more cities means more cities want casinos.

The mayors and city council members that are backing casino proposals in the Midwest aren’t really trying to build a tourist empire. They’re just sick of seeing money leave the city.

They’re trying to hold on to what they got.

It doesn’t make a difference if they make it or not.

They’ve got [their own residents] and that’s a lot [for economic development].

They’ll. Give. It. A. Shot.

OHHHHHHHH …

The political world didn’t think the Republican primary season would last this long. But after Rick Santorum’s victories last night in Mississippi and Alabama, eyes are now turning to Illinois, which holds its primary next Tuesday. 

A big question about Illinois is whether it will be the last stand for former House Speaker Newt Gingrich — or whether it keep him in the race longer.

He finished second behind Santorum in both southern primaries, and he is heading straight for Illinois for two days of campaigning. Gingrich told a Chicago radio station that he’s staying in the race until the August convention.

Said Gingrich: “When I was on a roll and Rick wasn’t, I was for Rick getting out of the race, too. And he correctly said no. And I’ve learned from him so I liked his answer.”

As he did in Michigan and Ohio, Mitt Romney and the Super PAC that’s backing him are expected to saturate the airwaves.

The Chicago Tribune reports the pair are pouring another $1.35 million in purchasing advertising time, even though the candidate isn’t expected in the state until Monday. That’s on top of $2.26 million already spent there.

Santorum doesn’t have that kind of budget, but conservative counties in southern Illinois seem ready made for his followers. He’s scheduled to hold a “Rally for Rick” in suburban Arlington Heights, Ill., on Friday.

 

 

Detroit is running out of money, and now it’s time for drastic action.

Officially, leaders expect they’ll be out of cash by the end of June. For the past few months, a review team has been looking at the city’s finances to determine whether the state should appoint an emergency manager in Detroit.

Today, Michigan’s governor hinted strongly that there’s enough of a problem for him to appoint an emergency manager. 

But, in an effort to preserve some local control, and avoid a political showdown in the state’s largest city, Snyder has instead offered  a “consent agreement” to Detroit leaders.

They’ll stay in power, in return for a state role in the oversight of financial matters.

The agreement was presented to Detroit’s city council this morning, and the city has until March 28 to respond. If it’s approved, the document could change Detroit for years to come.

Partner station Michigan Radio has been digging into the agreement, and the response it’s generated.

The agreement calls for a nine-member panel to oversee Detroit’s budget for no more than three years. The panel would have the authority to slash budgets, close city departments and oversee the sale of city assets.

It also gives the mayor and the city’s chief operating officer the authority to negotiate, or terminate, labor contracts. That’s a power that goes to an emergency manager, and it’s one of the most controversial aspects of state law.

The Detroit News reports that the proposed agreement has already angered some in Detroit. The consent agreement caused a heated debate at the city council meeting today.

Snyder said this morning that he hopes to have the agreement signed in two weeks. If that doesn’t happen, or if the agreement is signed and later challenged by the city, the governor may still resort to appointing an emergency manager.

 

Sharon McClinton cares for the vacant land around her house. Detroit is trying to make it easier for residents like her to buy that land, too.

Apparently, the phone has been ringing off the hook over at Detroit’s planning department.  It’s all because of a few lines uttered by Mayor Dave Bing in his State of the City address last week. (You’ll find them about 30 minutes in.)

“This week we sent out over 500 letters to property owners in Hubbard Farms, Springwells Village and Southwest Detroit,” he announced, “telling them if they own a home adjacent to a vacant city-owned lot, they can purchase this lot for a mere $200.”

“No coming downtown,” the mayor said.  “No added bureaucracy. The city will mail back the deed.”

The initiative is a response to the overwhelming problem of abandoned property in Detroit.  It’s a problem we explored in our stories about Detroit “blotters” — which you can see here and here.

Blotting describes what happens when homeowners annex the vacant lot, or lots, next door. They create expanded properties, between the size of a lot and a city block.  Sometimes, residents can purchase these side lots.  Often, they’re constrained by bureaucracy or money, so they may just throw up a fence to ward off the dangers of abandonment.

Many cities have programs to encourage residents to buy vacant side lots at discounted prices.  Detroit has one too, but it’s been slow and unwieldy.  It can take years for residents to buy the lot next door.  Considering that Detroit owns tens of thousands of vacant land parcels, that wasn’t fast enough.

So on Friday, hundreds of Detroiters got the letters, written in English and Spanish. The city offered to sell homeowners the vacant lot next door for $200.

This new White Picket Fence Program is basically the same as the existing adjacent lot program.  What’s different is that instead of waiting for residents to come to them, city planners targeted certain neighborhoods, pro-actively identifying eligible lots.

It’s a kind of pre-approval on the city’s part, as well as a tacit acknowledgment that many residents don’t know their options or have given up.

Greg Holman, the Special Projects Coordinator at the planning department, describes himself as someone with “a weird passion for vacant, adjacent side lots.”  He’s been watching the responses come in.

As of 12:15 pm today, he’s received 20 completed applications in the mail.  It’s just been a few days since the city’s letters went out.  It shows how interested many Detroiters are in owning and caring for the land around them.

Though the expedited side lot program targets Southwest Detroit, Bing hopes it will be replicated in other areas.  It certainly won’t solve the problem of vacancy in Detroit.  But Greg Holman sums up the prevailing spirit: “Small changes can make big waves, is my theory.”

 

 

 

 

 

 

 

 

 

Chicago has roughly 2.8 million people. And last year, 531 million rides were taken on the Chicago Transit Authority — or 189 rides per person in the city.

Chicago/photo by Micki Maynard

That’s the highest number of subway and bus rides on the CTA in the past 20 years, according to numbers that came out today. It doesn’t beat the old record of 540 million rides, but if the pace keeps up, there could be a new record set in the near future.

The 2011 number was up 3 percent from 2010. The CTA attributes that to higher gasoline prices, and to improvements in the system, like adding LED signs at bus stops announcing when buses are coming.

CTA numbers show that ridership on the “L” light rail system was up 5.2 percent, while bus ridership rose 1.4 percent. The biggest jump by any transit line was the Blue Line, were the number of rides was up 8 percent. (We know where you can get a Blue Line t-shirt.)