Can Detroiters afford the New Detroit?

PHOTO CREDIT: Alisha Dixon

The question, as Councilperson Mary Sheffield sees it, is not whether rapid development in and around downtown Detroit is a good thing for the city, because after so many years of drought, few would argue that this newfound desire to build big and beautiful things in Detroit is a bad idea. Detroit could use some big and beautiful things. Small ones too.
But the question, the really important question, is who will have access to this newly developed Big Beautiful Detroit? Who is this newly revitalized city being built for, after all? Is it for those of us who have been here awhile, or is it for, well, someone else?
Gauging by the price tag, the rather automatic assumption is that this New Detroit we keep hearing about is unaffordable for the rest of us – and somebody apparently wants it that way. This is the steadily hardening perception of downtown and Midtown held by more than a few Detroit residents that you can easily hear anytime you step outside of downtown and engage in some conversations with the rest of the city that isn’t yet facing rental rates approaching $3,000 per month.
Which is why Sheffield is proposing an Inclusive Housing Ordinance, designed to make sure Detroit doesn’t make the mistake of creating an exclusively wealthy area of the city perceived as off limits by the not-quite-as-wealthy  – especially not when the benefit of everyone else’s tax dollars is used to pay for that exclusivity. The ordinance would require housing developers who are receiving any sort of subsidy from the city, such as tax abatements, to set aside 20 percent of their housing units for low-to-moderate income tenants, defined as approximately $36,240 in annual income for a single person, and $51,680 for a family of four. Rent would not be able to exceed $955 per month for two people living in a 1-bedroom apartment. Currently developers are asked to set aside 20 percent for low income on a case-by-case basis, but there is no legally enforceable requirement in place.
“The goal, really, is to ensure that we are being diverse, and that those with different income levels are included in the new market rate development that we’re seeing in our city,” said Sheffield.
“We are seeing a rapid rate of new market rate residential developments happening in the greater downtown Detroit area, and I’m extremely excited to see it, however the amount and the price to live in those units is starting to be a concern. I think it’s important to have mixed income levels in all of our developments. We just want to make sure that there is a level of diversity and inclusiveness in the new developments that we’re seeing. Especially those that are being subsidized by public funds.”
Sheffield said that the ordinance has already been introduced to the council, and that it will begin to be discussed openly in council meetings sometime in October. The goal, she said, is to have an actual ordinance on the books by the end of November before council breaks for recess.
Ken Harris, president of the Michigan Black Chamber of Commerce, said he is strongly supportive of the ordinance and believes it send the right message for Detroit’s future as it continues to grow.
“I think it’s a great idea. One, it answers the question of inclusivity. And so, with this type of enforcement it allows for us to aim for what we know is very important, which is a diverse marketplace. But also a diverse residential population and atmosphere. And so this is a very good policy that councilwoman Sheffield is putting forward, and I think she’ll get support from the business community in the fact that we all want to see the city represent its true demographic,” he said.
“But most importantly, I think this is an opportunity for us to kind of set a model for other diverse communities and other urban environments. And so developers will [know up front] what that expectation will be through the policy, and by honoring that we’ll see a really diverse community as a benefit where all can participate and all can be included.
“As of now we’re in a great situation where we can acknowledge the fact that Detroit is a super majority/minority population where there’s over 80 percent African Americans and that all of our policies as we continue to revitalize and participate and be included in this revitalization that is inclusive of the entire community and not just a segment of the community. And so for this to happen downtown where there is a stigma of the two Detroits, policies like this help create the one Detroit that we all envision, which is a diverse Detroit. It’s just the beginning, and policies will continue to evolve, but this is definitely a progressive policy.”
Roderick Miller, CEO of the Detroit Economic Development Corporation, agrees that inclusivity is the best way to go.
“OK, so I think there’s a few things at play here; one of the things is to recognize where Detroit is in its development cycle. So I would say Detroit is probably in the strongest market that it’s been in the last 20 or 30 years related to new housing being built. Detroit is a market that has a different story. And I think as Detroit pivots, and it’s on the rebound, it’s essential that development is inclusive and that there are opportunities for people who may not make six-figure incomes to continue to live in new housing and in nice housing. This is an ordinance that will be essential in ensuring that Detroit remains a place that has diverse incomes and diverse people.
“That said, of course, anytime when you shift the structure as it relates to affordability, it impacts the structure of the deal. So I say that to say this; the structure of the deal will be different and will have to pivot some. But I think this market is a market that’s strong enough to handle that pivot and do well.”
When asked whether requiring developers to set aside a percentage of affordable housing units could potentially spook the market and cause some to back away from investment at a critical time, Miller said he is doubtful this would be a significant handicap.
“I think it sends a very important message to the market to codify it. It sends a message that this is not just something that we do in practice but it’s something that we’re committed to. It provides a level of clarity, and it also provides us with the backdrop to be able to be aggressive and to providing the financial support and tools to ensure that developers are able to do deals that make sense for all Detroiters.”
Sheffield says there will be some pushback from developers who feel that their back is already up against the wall.
“The cost of construction and the property tax rate here is extremely high, but our rents are low compared to the other cities, and this will be another burden to developers here in the city of Detroit. …There is a pushback I would say from the business and development community that they are already barely able to do 20 percent of affordable housing on the developments now, and to require it in a policy form may be a challenge.”
But Shefffield still believes the overall business climate is supportive of  the ordinance, and she is also pushing for a provision that would provide needed assistance to the truly needy.
“The ordinance as presented does not help the really low income people in the city. And based on the research, the housing that we need in the city is for those who are [truly poor], which is about $13,590 [in annual income] for a one-person family.
“What we’re gonna say is that if you’re a developer and you do not want to do affordable housing in the city based on the ordinance, then you can pay an en lieu [in place of ] fee. And the en lieu fee now in the ordinance is set at $50,000 per unit. And so you can pay this en lieu fee, and it will go into a housing trust fund, and that housing trust fund will be dedicated strictly to supporting families with the low income.”


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