The Detroit City Council gave the green light on two housing proposals, one that aims to ramp up how affordable housing is financed and another that would overhaul the city’s rental ordinance.
Last month, city officials including Detroit Mayor Mike Duggan and several council members pitched the so-called Fast Track PILOT program, a plan that would offer property tax cuts to developers based on rent prices. Months earlier, the city — in an effort to crack down on negligent landlords and boost inspections — proposed an amendment to revamp its rules for regulating rental properties.
On Tuesday, council members overwhelmingly passed both ordinances, which seek to address a broad swath of housing issues in Detroit.
Here’s what to know:
The plan to ‘fast track’ affordable housing
The Fast Track PILOT program aims to speed up affordable housing development in the city, and keep that housing affordable in the long term. The plan offers property tax cuts to developers based on rent prices, meaning the more affordable the units, the deeper the tax reduction. Eligible developers could receive up to a 15-year tax break and could renew that abatement for an additional 15 years.
The proposed city ordinance would essentially expand access to what is known as Payments in Lieu of Taxes, which is currently available only on certain projects that use federal dollars. City property tax rates on affordable housing developments would be connected to rent prices, instead of property value, according to a September news release.
The developers would also need to commit to keep rents affordable for households under 120% of the area median income (AMI), or a three-person household making $103,680. The area median income is a regional measure set by the federal government to determine housing affordability.
“It is a game changer because if we are going to push this city forward, if we’re going to finish our commercial corridors, if we’re going to house those who are in need and then support those who want to choose to elevate themselves, we’ve got to start somewhere, and I believe today is that start,” Council Member Fred Durhal III, among the co-sponsors of the property tax abatement proposal, said on Tuesday.
The City of Detroit’s Office of the Chief Financial Officer determined, in a memo to council, that the ordinance would have an “indeterminate fiscal impact.” That means there isn’t enough data to gauge the future effect on revenue or expenses, Donnie Johnson, the City of Detroit’s deputy budget director, told council members.
“It’s very hard for us to quantify what the revenue — the property tax revenue impact would be — but we also know on the flip side … that stable housing is a strong determinant of economic and health outcomes,” Johnson said.
During the public comment period, several housing developers spoke in support of the ordinance, noting that it would help developers speed up their projects. A handful of speakers pushed back against the proposal, asking for more time to hear from residents.
Sonya Mays, founding CEO of Develop Detroit, said nonprofit developers face the high cost of property taxes and the ordinance would alleviate that.
“It will allow us to better manage our properties, and I believe it will add a valuable tool for small developers working in our neighborhood, so they also can add more housing — more quality housing — to the people who need it most,” she said.
Projects that receive the tax cut must be up to code, maintain affordability and would be subject to an initial and annual compliance review by the City of Detroit’s Housing and Revitalization Department, according to the ordinance.
The eight council members who were present on Tuesday unanimously voted to approve the proposal.
The plan to revamp rental conditions
Detroit City Council approved proposed changes to the city’s guidelines for rental properties, 7-1.
The amendment would crack down on landlords with repeat violations, revamp a program that allows tenants to put their rent payments into an escrow account if their home isn’t safe and tweak lead inspection requirements.
Over the past five years, the city has issued 100,000 blight tickets, but struggles to collect on those fines. According to a comprehensive March report from the national nonprofit Center for Community Progress, the city has collected less than 20% of blight violation fines owed.
The ordinance would increase some fines and add penalties to bolster enforcement.
It would, for instance, increase the penalty for an owner who fails to obtain a certificate of compliance from $250 for the first offense to $400, from $500 to $650 for the second offense and from $1,000 to $1,150 for subsequent violations.
The ordinance would also allow the city to file a lien on a property for unpaid fees if a landlord doesn’t get into compliance — a new provision officials hoped would give more teeth to the ticketing process.
The ordinance would require a combined home condition and lead safety review in every rental property in the city, including a visual inspection for damaged paint and dust, Andrea Taverna, policy director in the mayor’s office, told council members.
The ordinance eliminates the requirement for an initial lead inspection and risk assessment upon rental registration, referred to as LIRA.
The lead provision in particular faced push back from Lyke Thompson, director of Wayne State University’s Center for Urban Studies, who opposed the ordinance, raising concerns about what he said are scaled-back lead testing requirements.
“Implementing this ordinance could lead to more children being lead poisoned,” Thompson said on Tuesday.
Detroit’s lead requirement is stringent for landlords and has been a factor in landlords failing to comply with rental requirements, the Center for Community Progress report found.
Taverna said the city’s inspection proposal is based on national best practice. Earlier this year, she pointed to Grand Rapids, Toledo, Pittsburgh, Philadelphia and the states of Maryland and New Jersey.
She said Tuesday that for the 25% of the city which has the highest prevalence of lead poisoning cases, officials would ramp up testing by taking dust samples in addition to visual inspections.
“We would do even more intensive testing to identify lead hazards and make sure that they are fixed before anyone is poisoned,” Taverna said. The ordinance would also include that the dust sample requirement expand to the entire city, from 25%, within six years of the ordinance passing.
Contact Nushrat Rahman: nrahman@freepress.com. Follow her on X: @NushratR.