Blight Removal in Detroit, Mayor Duggan and a $200million bond issue

A week ago the Mayor proposed seeking voter’s approval to float a $200 million bond issue to remove all blighted homes by 2014. Several questions:

a) How many blighted homes are there in the city? The mayor said that 18,000 blighted homes have been removed since 2014 and that the bond issue would permit razing 20,000 more. The Census Bureau’s 2017 survey counted 99,000 vacant residential units. The 2014 survey of the 300,000 land parcels in the city estimated 40,000 blighted homes and 38,000 more at risk of blight. The 2018 report of the Detroit Removal Blight task force mentioned 85,000 blighted homes and parcels. Mayor Duggan also said that the bond issue would remove abandoned homes. Vacant, abandoned and blighted are very different. What number is correct?

b) How much does it cost to raze a residential structure? Mayor Bing took pride in spending about $7,000 each but, with new environmental concerns, I have seen an estimate of $17,000 per home razed in Detroit If $17, 000 is correct, $200 million will raze only 11,800 blighted homes, not the 20,000 the mayor suggests.

c)The voters must approve this increased in the city’s indebtedness. The newspapers are not clear but they suggest that it may involve about 9 mills. However, there are also reports that the city has funds that will be used to pay for much of the principal and interest on these blight removal bonds. Apparently, most homeowners will not see their tax rate go up by 9 mills. Detroit already has a very high millage rate, much higher than most suburbs. If you spend, $175,000 for a home in Detroit, your annual property tax may be about $6,000. For the same expenditure in Warren, the property tax will be $4,800; $3,700 in Northville, $3,900 in Farmington Hills an $2,800 in Rochester Hills.

d) Jason Hackworth has a forthcoming book, Governing the Deprived City. He devotes three chapters to Detroit. He present evidence convincing him that if a city razes blighted homes but does not put the vacant land into productive use, the blight removal does almost nothing to raise property values or stabilize population in the neighborhoods where the blight was removed. Blight removal seems important to me but there is a literature saying that it may not be a productive use of tax dollars.

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Originally Posted by renf

d) Jason Hackworth has a forthcoming book, Governing the Deprived City. He devotes three chapters to Detroit. He present evidence convincing him that if a city razes blighted homes but does not put the vacant land into productive use, the blight removal does almost nothing to raise property values or stabilize population in the neighborhoods where the blight was removed. Blight removal seems important to me but there is a literature saying that it may not be a productive use of tax dollars.

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Exactly. This is why, in many cases, city governments shouldn't be in the demolition business. Some exceptions would be governments tearing down single use structures like malls and stadiums after they become defunct.

This is just my opinion [[and I'm really not humble enough for
all practical purposes as you all know).

If you asked an average Detroiter this very tough question, if
there were to be a bond issue for 200 mil, and it were to be
approved, would it best be applied to improving 911 and
related communications or would it best be applied to
tearing down vacant houses, they might vote for a better
911 and followup response. I would vote for 911 myself -
this is not saying that it is bad to tear down vacant houses.
In the news there was a recent story of a schoolboy being
dragged into a vacant house and assaulted, but, the thing
is, he had to call 911 twice. The vacant house was indeed
an issue but having to call 911 a second time is a worse
issue.

https://www.wxyz.com/news/local-news...-investigation

Somewhere I think I read that someone has arranged for
a recorded message for 911 calls. No, no, and no. That is
an unworthy improvement on calling 911 and getting no
answer, which has happened.

Properly improving 911 response would go deeper than
staying away from recorded messages and making sure
all calls are answered quickly, competently, and respectfully
[[truly a difficult task) or at least answered [[that shouldn't
be hard).

A lot of decisions being made in cities and elsewhere are
much more investment bank friendly than citizen friendly.

Selling the Blue Water Bridge would be another instance
of this. This would very likely be better for the
investment bank[[s) than people working at or near
the bridge or people paying the tolls after the bridge
changed hands. Not to mention...private bridge owners
sometimes do like to fund campaigns for state
representatives and senators who then tend to
look out better for the bridge owners than anyone
else.

I couldn't agree more. The city needs more cops not more vacant lots. I understand that there's a drop in crime when an abandoned home is torn down, but[[and I'm not an expert here) there's also a dramatic drop in crime when there are more cops and better response times. I think Duggan is a great mayor, but this one doesn't make a lot of sense to me and I don't think people will vote for it.

I think this city's #1 problem is education, then blight/vacant homes. There isn't anything good going on in these types of homes [[this week's big story), and imagine the city without them and in their place were empty lots, trees, a park or a chance for a quality neighbor to expand their yard. I'm not sure about the Mayor's math, but any money put towards the elimination of blight is good. The OP mentioned 17k per house, that sounds about right. Jason Hackenworth has the wrong mindset, blight removal shouldn't be about increasing property values, it's about creating a safer and more livable city.

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Originally Posted by iheartthed

Exactly. This is why, in many cases, city governments shouldn't be in the demolition business. Some exceptions would be governments tearing down single use structures like malls and stadiums after they become defunct.

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Two thoughts:
1. If the city doesn't tear it down, the arsonists may burn it down. Then it's a problem for the overburdened fire department.
2. By the time a blighted building is being torn down, it is probably in a land bank, which makes it the city's [[or county's) property.

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Originally Posted by Luke09

The OP mentioned 17k per house, that sounds about right.

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Based on what?

I think blight removal is the next step to redevelop these neighborhoods. Vacant land can be sold to developers with new housing put on it. Then again new housing also requires good schools.

Crime remains a deterrent.

tlh908, thank you for joining the forum, looking forward to reading
your posts [[though I totally go away from time to time).
[[I've been commissioned to determine what drainage costs
are and am working on that bit by bit elsewhere in the forum.
Hopefully the person most interested in drainage does not
get booted before that is finished; but que sera sera.)

I'll bite.

About the vacant land, maybe you meant to say that it would be given
to developers, along with special tax treatment, brownfield credits,
and the like?

Many good comments above ^

This is Duggan's first unforced error. With all the contractor problems and bid rigging/federal charges in the demolition program/Land Bank - why would he want to double down on that f-up? Detroit is way more concerned about crime and education.

Quote:

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Originally Posted by tlh908

I think blight removal is the next step to redevelop these neighborhoods. Vacant land can be sold to developers with new housing put on it. Then again new housing also requires good schools.

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The problem becomes is the cost to develop the empty lots,if it costs 200k to build new then the lots will sit empty until the surrounding homes reach that value.

Other cities have tried the whole scorched ground approach and it came back to bite them,the most popular were the cities that used the drug house demolition approach method during the crack heyday,if a landlords rented a property out and it was raided for drugs,the next morning it was demolished.

It is a lot harder,time consuming and more costly to replace what you have not to mention the fabric is usually destroyed.

If the goal was to have this completed in 2014 as posted,it is now 2019 or was the 2014 thing a misprint.

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Originally Posted by Zacha341

Crime remains a deterrent.

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Getting rid of the "blighters" would quickly eliminate the blight.

For crying-out-loud; can somebody cut the city owned grass?

Nevermind, just heard the Dem's are giving the Ilitch's more city tax-payer millions, unsure exactly why.....

I guess we'll see what happens. I won't vote for the millage. Every year more homes go into foreclosure, get abandoned, "blighted".

Push for better tax relief for local homeowners who are lower income.

the derelict apartment buildings in the city tend not to be talked about in this narrative, but they need to be. Just as bad when it comes to the local vice-related issues.

Quote:

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Originally Posted by Dumpling

This is just my opinion [[and I'm really not humble enough for
all practical purposes as you all know).

If you asked an average Detroiter this very tough question, if
there were to be a bond issue for 200 mil, and it were to be
approved, would it best be applied to improving 911 and
related communications or would it best be applied to
tearing down vacant houses, they might vote for a better
911 and followup response. I would vote for 911 myself -
this is not saying that it is bad to tear down vacant houses.
In the news there was a recent story of a schoolboy being
dragged into a vacant house and assaulted, but, the thing
is, he had to call 911 twice. The vacant house was indeed
an issue but having to call 911 a second time is a worse
issue.

https://www.wxyz.com/news/local-news...-investigation

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It's an overlapping cause and effect argument...I say keep the blight removal momentum going AND improve 911/response times. $200 million bond, $100 million to each.

Who will buy that bond issue - not really a great value ......

Quote:

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Originally Posted by Dumpling

tlh908, thank you for joining the forum, looking forward to reading
your posts [[though I totally go away from time to time).
[[I've been commissioned to determine what drainage costs
are and am working on that bit by bit elsewhere in the forum.
Hopefully the person most interested in drainage does not
get booted before that is finished; but que sera sera.)

I'll bite.

About the vacant land, maybe you meant to say that it would be given
to developers, along with special tax treatment, brownfield credits,
and the like?

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Thanks for the welcome. Your idea is even better, it is quicker than selling land on the market. Let the city give away neighborhoods to developers who will do something constructive. Northville, Novi, Plymouth and Canton, etc are getting full. What would be the worse thing to happen if the city gave someone like Toll Brothers 640 acres that is cleared?

It isn't my idea. There are various parties that would benefit from
the giving of land and credits to developers. To be fair, even I
would somewhat benefit indirectly from this.

Quote:

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Originally Posted by O3H

Who will buy that bond issue - not really a great value ......

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General obligation bonds secured by the taxing authority,which means that the state or city can raise taxes to meet the obligation.

Long term 10-20 years pays a higher rate then US treasury and is exempt from federal taxes.

The only risk is if the city is not in a better place 10-20 years down the road but you never lose your initial investment.

So you do your research,where was the city yesterday,where is it today and where will it be tomorrow.

Unless the city goes bankrupt,odds of that happening are slim.

I would trust my money in that bond way more then a 401k that can disappear at a moments notice,as long as the city sticks with the removal of the burnt out hulks and continues on the path of saving what they can,which is what they are doing anyways.

Giving large chunks to developers is not the answer either,aged infrastructure costs millions to replace before construction which translates into higher taxes in order to replace.

More bonds,more debt for future generations and back to bankruptcy again.

So the burden is placed on the current taxpayers forcing them out of pricing,so you can develop a cookie cutter city that looks like a joe blow suburb.

Its a bit more complex then saying Detroit is not worth investing in,some feel differently.

I think one would be hard pressed to find any inner city in the entire country where schools and crime is not a concern,nobody has been able to come up with a solution for that no matter how much money you throw at it.

If anybody comes up with a solution for that they will probably get a chiseled head on Mount Rushmore.

Back In 2015 when the first bond offering after the bankruptcy came up,my little sister invested $500,000,everybody called me and told me what a moron I was because Detroit was in a junk status at the time.

But with a 2029 termination it was paying 4.6% a full point above A rated cities and no way your are getting that return tax free from bank interest which was lucky to hit 2% at the time.

Granted it was expensive money for the city but if nobody believed in it enough to take the risk they would have never been able to sell the bonds,and it was necessary to start generating revenue.

Melissa Nann Burke's essay in the Detroit News today reports that about $180 million in TARP funds were spent in Michigan to demolish about 17,600 blighted homes. This suggests an average cost of $10,200.
The City of Detroit spent about $115 million in TARP funds to demolish about 11,300 blighted homes. This also works out to about $10,200 per home.
If $10,000 per home is correct, a $200 million bond issue would permit
demolishing about 20,000 blighted homes in Detroit.

I wonder how they are doing the math,with tarp funds that was for a specific purpose,the city would occur a cost to implement,staff payroll etc. which I think would have been included in the total costs.