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Operation Compliance: Detroit's War on Small Business

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Published on Sep 17, 2013

"Someone breaks in, they never show up. Yet still, they want to come and blackball you and close your business," says Derek Little, owner of an auto shop along Detroit's Livernois Avenue.

He's one of many business owners in Detroit who's faced what he says amounts to harassment from the city's overzealous code enforcement. Amidst a bankruptcy and a fast-dwindling population and tax base, the city has prioritized the task of ensuring that all businesses are in compliance with its codes and permitting. To accomplish this, Mayor David Bing announced in January that he'd assembled a task force to execute Operation Compliance.

Operation Compliance began with the stated goal of shutting down 20 businesses a week. Since its inception, Operation Compliance has resulted in the closure of 383 small businesses, with another 536 in the "process of compliance," according to figures provided to Reason TV by city officials.

But business owners say that Operation Compliance unfairly targets small, struggling businesses in poor areas of town and that the city's maze of regulations is nearly impossible to navigate, with permit fees that are excessive and damaging to businesses running on thin profit margins.

"It is hard to run a business in Detroit. It's taken me three years to get approval for an outside patio," says Larry Mongo, who runs Cafe D'Mongo's Speakeasy a successful bar and restaurant in downtown Detroit.

While Cafe D'Mongo's is now well-established and successful, Mongo says that the inscrutable regulations, frustrating bureaucracy, and rampant corruption among city officials discourages many would-be entrepreneurs from ever pursuing their business ideas in the city.

"What about the person starting out? The reputation that they give their relatives, their cousins, their friends... They say, 'Hey, don't [start a business]. They rob you,'" says Mongo.

Operation Compliance is but one manifestation of a larger problem in Detroit says Michael LaFaive, Director of the Mackinac Center in Michigan. That problem is a local government more focused on collecting revenue and maintaining municipal worker jobs than it is on creating a business-friendly environment.

"Accidentally, the city has created sort of an anarchistic culture in the city, where many entrepreneurs, where many of the smaller retailers and entrepreneurs simply forgo getting the required permits," says LaFaive. "So entrepreneurs have said, 'Look, let them catch me if they can.' Right now, the city has decided, 'We're going to try to catch you, and we're going to put together a special unit to do so.'"

Officials from the city of Detroit did not respond to requests to be interviewed for this story.

Approximately 5 minutes. Produced by Zach Weissmueller. Shot by Tracy Oppenheimer and Weissmueller.

Visit http://reason.com/reasontv for downloadable versions of this video, and don't forget to subscribe to Reason TV's Youtube channel for more content like this.

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