Detroit: Get Out of The Real Estate Business

Before bad policy decisions permeated Detroit City Hall and disrupted long-established patterns of economic vitality and community organization, the city was largely defined, and given much of its character, by its great neighborhoods.

Population loss destroyed political influence, affected taxes and spending and business investment. Neighborhood decline spread as blight caused residents, then businesses to flee. Today, neighborhoods bear witness to signs of a vulnerability that in the city’s heyday was unimaginable. The fabric of Detroit’s existence now hangs by a thread.

Detroiters with means pay dearly for city services that shriveled in proportion to the population. They pay for a public school system that can’t find a formula that assures delivery of quality, cost effective education. They pay financially and psychologically for a persistent crime problem propelled by predatory street criminals. Simply put, most Detroit neighborhoods have a quality of life that most middle-income families find unacceptable.

The city has been acquiring tax-foreclosed or vacant property at accelerated rates since the 1960s. In the ensuing years, it has become the biggest landowner in America. Besides amassing property, the city wants to act as broker of its various real estate holdings. But based on the unenviable history of past administrations, it’s difficult to fathom why the city council believes it should still be trying to manage what amounts to worthless property.

A case in point is the council’s recent approval to assign some 10,000 vacant parcels to the Detroit Land Bank. The move is intended to get these lots back in the hands of residents for a paltry sum of $100 and on the tax rolls. A secondary intent might be to keep large tracts of parcels out of the hands of speculators who theoretically might hold up redevelopment projects with exorbitant price demands sometime in the distant future.

The action, however, can hardly be considered a serious effort to rebuild the shrinking base of homeowners. Land banking isn’t the answer. It is merely a control mechanism that allows the city to operate as a master planner. It hasn’t worked.

No amount of land bank holdings will allow the city to compete with the suburbs in attracting developers who need large parcels for major industrial or residential projects. The city has always been willing to make properties available to developers who submit “reasonable” plans. But few “desirable” plans ever surfaced. The city is left with a bunch of parcels that are of no use to anyone.

Taming the population hemorrhage requires a significant improvement in the life prospects of residents and their children who struggle to exist in a rapidly deteriorating environment. The city desperately needs streets that are filled with homeowners with a stake in where they live, as opposed to renters. But high taxes make it very unattractive to own or sell homes in the city. An across-the-board property tax reduction would reduce the cost of homeownership, raise property values and be a catalyst for bolstering a stagnant real estate market.

Before any community can become vibrant again, a sense of community must be restored. Communities of opportunity must be created.

Since those most likely to set up residence in downtown Detroit tend to be younger than those opting to leave, neighborhood revitalization hinges on vastly improved amenities for blue-collar and educated professional families with children. Vacant lots don’t interest them. Middle-income or market rate housing might get their attention if safety and education concerns are addressed.

If city officials are serious about attracting new, middle-and-working class residents, they should first get out of the real estate business. There are benefits in letting licensed real estate brokers sell city-held property on the open market — if a market exists.

Of course, if city officials don’t think the “hardest hit” areas can be made attractive under any circumstances in the foreseeable future, it’s perfectly okay to continue making meaningless gestures under the guise of neighborhood restoration.


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