Duggan resurrects $250M Detroit blight bond, with changes

July 13, 2020, 6:38 PM by  Violet Ikonomova

Detroit Mayor Mike Duggan is resurrecting a $250-million bond proposal to demolish more abandoned houses as the city grapples with economic devastation wrought by the coronavirus.

The latest version of the bond, to be presented by the administration to a city council committee Wednesday, addresses some of the concerns that led to its 6-3 rejection last year. If passed, it would go to voters for approval in November.

Dubbed “Proposal N for Neighborhoods," the plan would fund the demolition of 8,000 abandoned houses and securing of 8,000 more deemed salvageable. Property owners would pay about $57 annually on the average home with a taxable value of $19,000, council’s fiscal analyst projected last year. Taxes would not go up over current levels, however, as debt retirements are due to lower the millage rate before the bond takes effect.

About 21,000 homes have been demolished over six years with about $350 million in city and federal funds. The federal money, however, has almost dried up, and the city side of the demolition program has come to a near halt due to pandemic-related budget cuts. A $348 million loss is projected through the end of this fiscal year, ending June 30.

Duggan’s bond was rejected last year for a variety of reasons, including mismanagement of the existing demolition program, as outlined in a scathing review released by the city’s Auditor General just before the vote. City Council President Brenda Jones said she wanted an ongoing criminal investigation into the program to wrap before greenlighting more money. Councilmember Mary Sheffield took issue with a lack of Detroit hiring. And neighborhood groups wanted to see more homes saved.

The program is also controversial because demolishing a home can be more costly than preventing one from becoming vacant in the first place. A Deadline Detroit investigation last year found the city spent approximately $23 million to demolish 1,300 homes that were occupied within the past five years and tax-foreclosed for an average of half of what it cost to demolish them. A separate study found the city spent $34 million demolishing homes purchased by real estate speculators at the county tax foreclosure auction through loopholes that still exist.

Housing advocates have predicted more evictions and foreclosures are on the horizon as the nation grapples with historic levels of unemployment.

The new plan would “give preference to Detroit companies ... with a goal of 50%+ work performed by Detroit contractors” and “to companies who commit to train and employ Detroiters with a goal of getting these companies to employ at least 51% Detroit residents.”

It also would “give preference to Detroit residents to acquire and reuse the vacant land in their Neighborhoods” and combine the bond funds “with other funding sources for broader neighborhood redevelopment.”

Other concerns addressed last year included giving council more oversight of the program, previously run by two quasi-government authorities. The remainder of the program would be overseen by a new Demolition Department housed within city government.

The bond funding would be coupled with Housing and Urban Development, philanthropic and other dollars to help address a total estimated 22,000 abandoned houses that remain in the city. The bond itself would allocate an estimated $90 million to properly securing the 8,000 vacant houses deemed salvageable with plans to eventually sell them through the Land Bank for rehab. Another estimated $160 million would go toward 8,000 in demolitions.

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