For years, Detroit has grappled with the rising cost of living, forcing many long-time residents out of their homes as property values and rents have surged. Now, the city is introducing a pivotal solution to address these growing housing challenges. Mayor Mike Duggan, along with key members of the City Council, is unveiling a Fast Track Payment in Lieu of Taxes (PILOT) ordinance that could drastically alter the landscape for affordable housing developments in Detroit.
“We have built or preserved $1 billion in affordable housing units in the last five years, but the way our population is growing and rents are rising, we have to build another $1 billion to keep long-time Detroiters from being priced out of the city,” Mayor Duggan said.
The Fast Track PILOT Ordinance is designed to speed up the approval process for affordable housing projects, reducing the typical bureaucratic delays that can slow projects down by as much as 6-9 months. This new proposal, spearheaded by Councilmembers Fred Durhal, Mary Sheffield, Mary Waters, and Coleman Young, seeks to streamline the approval process while also securing long-term affordable housing for low-income residents.
The challenges for affordable housing developers are significant. Under the current system, developers face numerous legal and financial obstacles that make it difficult to build housing that low-income residents can afford. The tax breaks available to them have historically been limited to 12 years, despite most financing for housing projects needing to be spread over 30 years. Additionally, state law has required multiple layers of hearings and approvals, leading to prolonged delays that can span years. Projects like Violet T. Lewis Village, Preserve on Ash, and 7850 E. Jefferson each took around three years from application to construction, with the Dreamtroit project stretching out for five years.
The new ordinance seeks to change that. Through Michigan Public Act 239, which went into effect last year, cities like Detroit can now offer more generous and flexible property tax reductions to affordable housing developers. Instead of waiting for multiple hearings and approvals, developers who commit to 15 years of affordable rents can receive tax breaks that last for up to 30 years. This new legislation allows cities to waive property taxes for affordable housing projects and substitute a smaller payment to local governments in exchange for long-term affordability commitments.
“The need for affordable housing in our city is urgent and ongoing, so we must implement a lasting solution rather than depend on one-time or uncertain funds,” said Councilman Fred Durhal. “Detroiters deserve real access to affordable housing, and I’m proud to sponsor the PILOT ordinance to help build more affordable homes efficiently.”
Housing advocates and developers are embracing the new proposal, recognizing its potential to fast-track much-needed affordable housing in a city where property values have risen for seven straight years. This rise has benefitted homeowners, but renters—especially low-income ones—have been left struggling to keep up.
“We know housing in Detroit is going to keep getting more expensive for those who can least afford it, and Fast Track will help us make sure there are affordable housing options for all Detroiters,” said Council President Mary Sheffield, who also sponsored the city’s original Inclusionary Housing Ordinance.
Under the expanded PILOT ordinance, developers can access property tax reductions based on the affordability of the rents they offer. Projects offering units at rents affordable to households earning as little as 30% of the Area Median Income (AMI) could receive deeper tax breaks, while those offering units to households earning up to 120% of AMI would also benefit, but with a less substantial reduction.
For example, a one-bedroom apartment rented to someone earning less than $39,000 a year—about 60% of AMI—would see its property taxes drop from $600 annually to $100 under the new system. For apartments rented to those earning closer to $80,000, the property taxes would drop from $5,600 to $1,500 per year.
The ordinance would also help to bring vacant multi-unit apartment buildings back to life. These properties, which are often the most challenging to finance due to their size and condition, could become more viable under the PILOT system’s tax predictability. This offers developers the assurance of lower costs and easier financing, encouraging them to invest in these otherwise difficult-to-develop buildings.
To ensure the effectiveness of the PILOT tax reduction program, developers must meet several criteria. These include a 15-year commitment to affordable rents, completion of development projects with a Certificate of Compliance, and an annual audit to ensure ongoing affordability. Developers who fail to honor these commitments will automatically lose their tax abatement. Moreover, the City Council will conduct quarterly reviews to monitor the program’s success, ensuring that it meets its intended goals.
The draft ordinance is set to be introduced to City Council on Tuesday, September 24th, with hopes that it will be approved by the end of the year. If passed, developers could begin applying for PILOT tax reductions as early as 2025.
The Fast Track PILOT ordinance signals a commitment to ensuring that Detroit’s growth does not come at the expense of its residents. With the backing of Mayor Duggan and key council members, this proposal is a critical step toward safeguarding the city’s future as a place where all Detroiters, regardless of income, can afford to call home.
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