The writer, a Los Angeles freelancer and former Detroit News business reporter, writes a blog, Starkman Approved.
By Eric Starkman
Dan Gilbert and Mary Barra
When I read this Detroit News story by Daniel Howes hailing GM CEO Mary Barra and billionaire Dan Gilbert for their “philanthropic” efforts to transform the Renaissance Center into a mixed use complex of office spaces, apartments, and a hotel, I wanted to puke. Barra’s and Gilbert’s altruistic philanthropy includes Michigan taxpayers ponying up $250 million for the redevelopment because the project includes converting adjacent land into public and entertainment space.
Never mind that the redevelopment will enhance the value of Gilbert’s rental properties, which Michigan taxpayers won’t financially benefit from. GM is willing to contribute $250 million to Gilbert’s $1 billion redevelopment efforts, but it isn’t clear from published reports how the automaker will benefit. Although the contribution is miniscule given GM’s balance sheet and soaring profits, I’m doubtful the motivation stems from the goodness of GM’s corporate heart.
If Michigan taxpayers don’t cough up the $250 million, Barra and Gilbert have threatened to huff and puff and tear down all five of the RenCen’s landmark towers.
For the benefit of Howes, and anyone else who isn’t outraged by the audacity of the $250 million taxpayer demand, let me provide some much-needed context missing from his column. GM in 2023 reported revenues of $171.8 billion and eked out more than $12 billion in profits. GM since late last year earmarked $16.5 billion to buy back the company’s shares, which were depressed after more than 10 years of Barra’s leadership.
GM last year paid a measly 4.1 percent tax rate on its hefty profits selling gas guzzling trucks and SUVs, according to Americans for Tax Fairness, a coalition of over 400 organizations dedicated to making the rich and big corporations pay a fairer share of taxes. The statutory corporate tax rate is 21%, while a typical American family pays 13.6%.
Share buybacks, once an illegal form of stock manipulation, typically boost the value of a company’s shares because there are fewer outstanding. Barra recently took advantage of the price runup to unload a big chunk of her GM shares, allowing her to pocket $84 million. Meanwhile, Barra has fired 1,600 salaried employees assigned to GM’s Warren tech center, including a beloved 38-year veteran who was notified of his termination in an early morning email.
Renaissance Center (deposit photo)
Dan Gilbert has an estimated net worth of $26 billion, making him the 27th richest person in America. Much of the redevelopment of Gilbert’s Detroit properties have been subsidized by Michigan and Detroit taxpayers. ProPublica in 2019 detailed how Gilbert managed to leverage his friendship with Donald Trump to benefit from a tax break intended to help the poor.
Little wonder Gilbert once referred to Trump as “a great friend.”
What Barra and Gilbert share are their piggish appetites to feed from the public trough, and a sense of entitlement that Michigan taxpayers continuously fund their business operations. Despite spending $16.5 billion on stock buybacks, Barra still shook down the Biden Administration for $500 million to retool and electrify GM's Lansing plant, no doubt threatening to move more jobs to Mexico, where under Barra GM became that country’s biggest vehicle manufacturer.
GM is far and away Michigan’s biggest corporate moocher, having received $3.5 billion in state tax credits that could be applied between 2010 and 2029.
Barra had hoped to keep her taxpayer largesse hush hush, but unfortunately Michigan’s Supreme Court ruled that Michigan taxpayers had a right to know details of the deals Michigan Economic Development Corp. (MEDC) was cutting with the Detroit 3 automakers. Ford and Fiat Chrysler Automobiles, now part of Stellantis, voluntarily disclosed the value of their tax credits respectively was $2.3 billion and $1.7 billion.
Not Alone in Outrage
I’m heartened that I’m not alone in my outrage about Barra’s and Gilbert’s entitlement. The Detroit Free Press’s Violet Ikonomova, who honed her journalism chops working at Deadline Detroit and Metro Times, did some real reporting and found credible authorities with the integrity and guts to call out the unseemliness of Barra’s and Gilbert’s shakedown of Michigan taxpayers. One of them is Detroit-based urbanist and University of Michigan architecture professor Craig Wilkins.
Professor Craig Wilkins (UM photo)
“It’s not uncommon that big corporations, when they want to do large-scale projects, present things in an either-or fashion to shape the debate in the direction they would like,” Wilkins told Ikonomova. “The idea of ‘if you don’t go with this, then we’ll just tear it all down’ seems like extortion to me, and I don’t think the public should allow itself to be extorted.”
Bill Bubniak, director of the Weiser Center for Real Estate at the University of Michigan’s Ross business school, told Ikonomova that Michigan taxpayers are entitled to a lot more information than Barra and Gilbert have disclosed.
“The public deserves to see if (the conversion of office to residential) makes sense financially and they deserve to see a demand study,” said Bubniak, noting that with residential conversions running between $200-$300 per square foot, it could prove more cost-effective to tear down the buildings and develop new projects. “The public does deserve to know, has the cost analysis been done properly of rehabbing the hotel (tower) and consolidating the office space?”
Playing politicians and taxpayers for fools are two skills Barra has demonstrated unrivaled excellence.
Under the original terms of the $3.5 billion in Michigan tax credits GM received, the automaker was required to maintain at least 4,000 jobs in Detroit. The Detroit News previously reported that Gov. Gretchen Whitmer’s administration agreed to relax the requirement to entice GM to invest $2.2 billion retooling the Detroit-Hamtramck assembly plant to build only electric vehicles.
Whitmer sacrificed thousands of likely higher paying white collar RenCen jobs for some 2,100 high risk factory jobs. The Detroit-Hamtramck plant exposes workers to potential lithium spills. WDIV reported on the health risks the Detroit-Hamtramck plant poses to its workers and the surrounding communities. An employee at the factory last week was hospitalized Thursday after a cylinder exploded in the plant.
As an example of GM’s pervasive institutional dishonesty and duplicity, the company no longer publicly discloses how many employees are assigned to the RenCen. When I last checked in March, GM’s website disclosed there were 857 employees working at the RenCen. The Detroit Free Press previously reported that it had obtained a website screenshot from Oct. 3, 2023, revealing there were 1,320 employees assigned to the RenCen.
Workers At Headquarters?
GM hasn’t disclosed the number of employees who will be assigned to the company’s “headquarters” when it vacates the RenCen and moves into Gilbert’s heavily taxpayer subsidized Hudson’s Detroit complex. The Hudson’s complex received significant public investment because of assurances it would attract new jobs and tax revenues to Detroit.
So far, GM is Gilbert’s only tenant, according to Ikonomova. Adding insult to injury, it’s debatable whether the Hudson’s complex will truly serve as GM’s headquarters as Barra claims.
Arden Hoffman (Linkedin photo)
A company’s corporate headquarters typically is where its top executives are located. GM’s top software and battery executives work out of the company’s burgeoning Silicon Valley office.GM’s top communications executive, Lin-Hua Wu, is also located in the Bay area. Arden Hoffman, GM’s chief people officer, told employees when she joined two years ago that she’d be dividing her time between Detroit, San Francisco, and Montana, where she presumably owns a home.
A source told me that Hoffman spends most of her time in Montana, overseeing GM’s supposed transformation into a world-class EV manufacturer. Boeing’s top HR executive worked remotely, and we know how well that turned out.
The source said that Norm de Greve, the chief marketing officer Barra lured from CVS, works out of GM’s tech center in Warren, but commutes weekly from his home in Hingham, MA, where his family still lives. Hingham, part of the Greater Boston area, is less than 50 miles from CVS’s Rhode Island headquarters.
The source said Shenan Reed, GM’s chief media officer, lives in Westchester outside New York City. Reed’s LinkedIn profile confirms she’s located in the New York City metropolitan area. Get this: GM recruited Reed from L'Oréal, a beauty company specializing in makeup, cosmetics, haircare, and perfume. With de Greve’s CVS expertise peddling beauty products, perhaps Barra has a vision for GM up the sleaves of her stylish designer leather jackets she hasn’t yet shared.
Jon Francis (Linkedin photo)
My source said Jon Francis, GM’s chief data and analytics officer, is located in Seattle, which Francis’s LinkedIn profile confirms. The source said Francis’s EDAI team (Enterprise Data and Insights) are in the Seattle and Portland regions and derided many of them as “mostly Starbucks rejects.” Francis’s LinkedIn profile says GM poached him from PayPal, where he worked less than a year, but earlier he spent more than six years as chief digital and analytics officer at Seattle-based Starbucks.
The source said Melissa Grady Dias, Cadillac’s chief marketing officer, lives in New York City, a detail confirmed on Grady Dias’s Linkedin profile. Prior to joining Cadillac, Grady Dias was SVP digital and e-commerce for Jackson Hewitt Tax Service.
It’s questionable whether Barra will spend all that much time in the Hudson’s complex, and if she does, it wouldn’t reflect well on her. GM still has some 20,000 critical employees at its Warren tech center, so one would expect she’d want to be close to the engineers and designers responsible for the company’s vehicles.
Chicken Greek Salad
Indeed, Tony Keros, who opened Coney Town in the RenCen in 1978, told the Detroit Free Press earlier this year that Barra and GM President Mark Reuss had stopped frequenting his eatery.
“Reuss used to come here two times a week. Not anymore," Keros said. “Barra used to come three times a week for the Chicken Greek (salad). Not anymore.”
GM spokesman Kevin Kelly gave the Free Press a statement saying, “If it ultimately comes to demolition, General Motors is willing (to) cover the cost, so the site doesn't fall into disrepair.”
Kelly’s statement suggests that GM’s motive for tearing down the RenCen Towers was altruistic.
In fact, destroying the properties would likely spare GM property taxes and other potential liabilities the company could incur if the buildings remained vacant. It would also make it easier for GM to sell the property if the RenCen’s towers were demolished.
It speaks volumes that Barra was willing to vacate the RenCen’s landmark towers without a plan firmly in place to ensure the abandonment didn’t harm Detroit’s image and comeback. Ford chair Bill Ford, who spearheaded the acclaimed restoration of Michigan’s abandoned train station, puts Barra to shame.
As for Gilbert, he’s done a lot of great things for Detroit but if he wants to be remembered fondly in southeastern Michigan, he should find an investor to offset his RenCen redevelopment plans and abandon his demand that Michigan taxpayers shoulder the risks and the costs.
It’s time Michigan taxpayers woke up and insisted on the derailment of the Barra and Gilbert gravy trains.
Reach the writer at Eric@starkmanapproved.com. Confidentiality is assured.
