One of the big local decisions Detroit voters face Nov. 3 is whether to approve the city’s plan to get rid of 16,000 blighted homes by 2025. Proposal N will allow the city to borrow the $250 million in the form of bonds from Wall Street investors. The investors get paid back through taxpayer money. Detroit voters will be asked to approve the city’s selling of the bonds.
BridgeDetroit will periodically examine some of the numbers and other claims city officials are using to pitch “Proposal N for Neighborhoods” to voters.
City officials say Proposal N is needed. Is it?
Blighted homes and lots are the terrible physical reminders of bad housing policy and a city that’s lost over 1.1 million residents, including more than a half-million since 1990. Detroit’s current population is estimated at 670,031, according to the U.S. Census.
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Detroit has waged a campaign on blight for six years using $265 million in federal money. About 21,000 blighted structures have been demolished, and 6,000 vacant homes have been rehabbed and occupied since 2014.
But now the federal money is gone. The city is cash-strapped as the COVID-19 pandemic has wiped out an estimated $365 million in tax revenue, according to city of Detroit data.
The blighted homes and lots that Proposal N will target are all owned by the city of Detroit Land Bank Authority. The land bank takes ownership of properties that have been foreclosed because the private owner didn’t pay the property tax. The quasi-public agency is the city’s largest landowner.
The estimate that 8,000 homes are salvageable is a fluid estimate.
The claim that 8,000 homes can be saved mainly comes from the land bank’s ongoing analysis of its inventory. But the number changes as properties continue to sit unoccupied, according to a July memo by the land bank to the city’s Demolition Department. City officials also say they will work with community groups in various neighborhoods to help identify properties — how many of those can actually be saved is still unknown.
The math is fuzzy on how much it will cost to secure 8,000 homes.
The city says it will spend $90 million in securing homes. That amounts to spending $11,250 on each property. Various city documents and several city officials say as much as $15,000 may be spent on securing a home.
Not every property fix-up will cost the same. City officials will need to keep a vigilant eye on costs to meet the 8,000 homes goal with $90 million.
The city doesn’t plan to fully restore the homes.
Just enough work will be done on the properties to prevent further deterioration and be ready to sell, various city documents show. That means getting rid of debris, fixing a leaking roof if necessary, and securing the windows and doors.
Once a home is secured, the city aims to make it quickly available for sale through the city land bank so the property doesn’t become blighted again, officials said.
$160 million for 8,000 demolitions.
That adds up to $20,000 on each demolition. A 2019 report by the city’s Auditor General found the average cost of a house demolition was $17,198. The audit added that when factoring in administrative and “soft costs” the real amount per structure is $27,750.
The city’s demolition program has been plagued by charges of bid-rigging and incompetence. A federal investigation resulted in criminal charges in 2018 against two former employees of a demolition firm, one of whom was a former city employee.
City officials contend Proposal N is essentially a new start because oversight will now be in the hands of the newly-created Demolition Department and other city departments.
Proposal N won’t eliminate blight in Detroit.
If the plan works it can bring new life into many city streets. However, the land bank estimates it owns a total of 22,000 blighted properties. Proposal N aims to transform 16,000 properties.
Not all neighborhood blight in Detroit is owned by the land bank, though the agency said it controlled “a significant portion” of the city’s empty homes, according to a July document by the land bank.
There’s also plenty of commercial buildings from former storefronts, warehouses, factories, office buildings, apartments, schools, churches, etc. that are not part of the Proposal N plan.
It’s too soon to tell whether the current economic crisis brought on by the COVID-19 pandemic will create more blight.
Proposal N details:
The city’s official Proposal N page explaining its goals.
The official Proposal N resolution approved by City Council and Mayor Duggan.
A July 2020 legal analysis of Proposal N by the City Council’s Legislative Policy Division.
A July 2020 response by City Council’s Legislative Policy Division to 19 questions asked by Councilwoman Mary Sheffield.
A November 2019 audit of the current residential blight program by the city’s Auditor General.