Detroit taxpayers will go to Wall Street for money to tear down or preserve 16,000 blighted homes. (file photo)

By a more than 2-to-1 margin, Detroit voters approved Mayor Mike Duggan’s plan to wipe out up to 16,000 blighted homes and lots that mar virtually every neighborhood. 

An overview of Proposal N for Neighborhoods

Voters approved the city government borrowing $250 million in the form of municipal bonds from Wall Street investors. City officials say about $160 million will be used to demolish 8,000 homes. Another $90 million is for 6,000 to 8,000 properties originally slated for demolition but instead would be secured. At some point, all the properties were lost by a private owner through tax foreclosure and now owned by the Detroit Land Bank.

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Securing means cleaning out all debris, covering windows and doors, and fixing the roof if necessary. Community development organizations, CDOs, play a key part in the homes that would be secured. The groups would help the city identify which blighted homes in their neighborhoods are worth saving. The groups would then be able to buy, renovate and sell the properties.

Why Proposal N was created

Mayor Duggan’s administration needed a new source of funding to continue its widespread campaign to tackle blight. Since 2014, the city relied on $265 million in federal money to demolish about 21,000 structures. Another 6,000 vacant homes have been rehabbed and occupied since 2014. 

The federal money is now gone. The city’s budget is strapped due to the COVID-19 pandemic, which wiped out an estimated $410 million in tax revenue, according to city officials. 

Detroit is turning to Wall Street investors. The money will be paid through Detroit property taxes over 30 years. With interest, the bonds could cost a total of $450 million to $490 million, according to city documents. 

On a larger point, most Detroiters can’t get mortgages, particularly Black Detroiters, or even home repair loans. In 2018, only 1,271 home mortgages were issued in the city, according to the Detroit Land Bank. 

Proposal N is part of the city’s overall effort to change that, said Arthur Jemison, the head of the city’s Planning Housing & Development, Mayor’s Office. 

“Detroit should have access to the same kind of market participation that other parts of the region have, and it doesn’t,” Jemison told BridgeDetroit. 

“What we have learned is we can bring the market to Detroit, but you have to actually build partnerships and… take risks and get private parties to take risks. The scale and dollar amount can’t be provided by the public sector and philanthropy alone. We have to find a way the market is comfortable operating in the city.”

Is Proposal N a tax increase?

Opponents say yes and city officials say no. The most neutral way to describe it is that with Proposal N, Detroit property owners won’t get a tax cut they would have received if the measure was rejected. City officials say the property tax rate stays at 9 mills with Proposal N’s approval. 

Proposal N gives the city much more control. 

The measure gives the city government more oversight, including the selection of properties, overseeing the demolitions, and hiring of contractors. When the city relied on federal money, it came with the regulation the funding had run through a different organization other than the city. That organization was the Detroit Land Bank, a quasi-public agency. 

The city has set up a demolition department that will handle the razing of structures. The properties targeted for either demolition or potential redevelopment can now be citywide. Previously, the federal funding meant demolitions could only be in neighborhoods designated as “hardest hit” by the mortgage crisis in the late 2000s and early 2010s. 

Community development organizations, CDOs, will help determine which homes will be preserved. The groups would help identify which blighted homes in their neighborhoods are worth saving. The groups would then be able to buy, renovate, and sell the properties. 

Duggan has mentioned some properties where homes will be demolished may be given to neighborhood groups so that the neighborhood can decide what to do with the land, such as creating a park or garden. 

When does Proposal N start? 

City officials said if the bond passes it would assemble a team to decide the next steps. Its aim would be to start soliciting bids for demolitions and identifying which properties could be secured within a few weeks.  

Here’s the city’s official link to Proposal N. 

Louis Aguilar is BridgeDetroit’s senior reporter. He covered business and development for the Detroit News, and is a former reporter for the Washington Post.

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