News Story

Detroit Dishes Out Excessive Taxes, Fees To Business Owners

City licensing and inspection fees among the highest measured; $400 for an awning

Detroit licensing cost comparison to other cities

Restaurant Owner Janet Sossi Belcoure knows all about the business stifling taxes and fees required to operate in Detroit.

"They tax my parking lot even though I don't charge people to use it,” Belcoure, owner of Roma Cafe in the Eastern Market, said.

She pays $1,800 for a valet license. And the city taxes her $400 simply for having an awning on the outside of her building.

"It's just crazy," she said. "They just keep taxing and licensing us to death to bring in income," Belcoure said. "It's to the point if somebody asks me about opening a restaurant in Detroit, I would recommend against it. It's so costly. It's not a business friendly city."

The Eastern Market Corp., the business association for the Detroit market, did a survey of what it would cost in terms of licensing and inspection fees to start a food business in Detroit as compared to Oakland County, Grand Rapids, Ann Arbor, Portland, Ore., and New York City (see image nearby).

The survey found it was two, three or more times as expensive in Detroit ($1,794) to start a food business as Grand Rapids ($784), Ann Arbor ($614) or New York City ($390) when reviewing four common licensing fees. Detroit ($2,660) also was higher than Ann Arbor ($1,849) and Oakland County ($471) when looking at four common inspection fees.

Licensing fees for restaurants are set by the county or local branch of government. The city of Detroit has its own health department and sets its own fees. Cities without health departments have their fees set by the county.

While much has been made about bureaucratic incompetence in a city that filed for bankruptcy and couldn’t even agree with how many city police are on patrol, the high cost of business also played a part in the city's financial distress.

"Regulatory burdens and the fees associated with them is just another form of taxation, which raises the cost of living, working and investing in cities like Detroit," said Michael LaFaive, director of the Morey Fiscal Policy Initiative for the Mackinac Center for Public Policy. "The Eastern Market survey is another reminder of how Detroit unnecessarily punishes the entrepreneurial class for having the moxie to try and run businesses there. Other cities do far less regulating and impose fewer in the way of fees, too. Detroit should look to them for regulatory reform guidance."

Justin Winslow, spokesman for the Michigan Restaurant Association, said it wasn't surprising to most restaurant owners that the cost of doing business in Detroit is higher than surrounding communities.

"Those brave souls who have kept their doors open are paying inexplicably higher rates to comply with the same ordinances and laws as their peers in surrounding communities, with very little service to show for the higher cost of doing business," Winslow said, in an email. "It is a primary reason why Detroit's restaurant community pales in comparison to similar urban centers, and why so many surrounding communities like Royal Oak, Birmingham and Novi have developed world-class restaurant clusters of their own."

Linda Vinyard, spokesman for Detroit Mayor Dave Bing, and Bruce King, director of Environmental Health Service with the city of Detroit, didn't respond to requests for comment.


See also:

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Detroit Bankruptcy: Why the Emergency Manager Powers Were Insufficient

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Detroit's Fiscal Emergency Cannot Wait; Manager Needs To Fix Administration

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