Detroit Mayor Mike Duggan has presented the Detroit City Council a request to authorize a March 2020 ballot initiative asking voters to give the city the authority to sell up to $250 million in bonds to remove all residential blight from every Detroit neighborhood by mid-2025.
The city is at the mid-way point in its blight removal effort. Since 2014, 19,000 vacant homes have been demolished and another 9,000 have been or are being rehabilitated through Detroit Land Bank programs.
Through bond funds and annual city budget allocations, 19,000 more structures will be demolished, and the land bank will sell or take legal action on 8,000 more to be rehabilitated and reoccupied. Duggan says he expects the bonds would be sold and funding would be available by the middle of next year. From there, it would take five years to clear all blight.
Up until now, the city’s blight removal efforts have been funded primarily by $265 million of federal Hardest Hit funds that have been supplemented by available money from the city. Federal restrictions on the funds have limited efforts to where large-scale demolition could take place.
“For the past five years, residents living outside of the federal boundaries have been asking me when it’s going to be their turn, and those have been difficult conversations,” says Duggan. “Because these funds will be completely controlled by the city, neighborhoods that have lived with blight for decades will see all of it removed within five years of the bond sale being approved.”
The bonds would be repaid over the next 30 years using existing tax revenue budgeted for debt retirement. The bond sale would not result in increased taxes. Without the bond funds, the city expects it would take 13 years to complete the same number of demolitions using available city general fund surplus appropriations called for in the city’s Plan of Adjustment.
“I can’t thank the U.S. Treasury Department and Sen. Debbie Stabenow enough for supporting our blight removal efforts with $130 million that have flowed to our program uninterrupted over the past three years,” says Duggan. “It has put us in a position to finish the job they helped us start.”
The administration submitted a proposed resolution for the bond sale to the city council on Friday. If approved by the council, voters would be asked to approve the bond sale during the March 2020 presidential primary election.
Along with the 19,000 buildings slated for demolition and the 8,000 slated for renovation, Duggan also is proposing using some of the bond funds to help incentivize renovations on 1,000 or more of these homes that would otherwise be demolished.
“If it’s going to take $15,000 to demolish a house that would be salvageable if not for the high cost of renovation, we can use that same $15,000 to help pay for renovations instead of demolition,” says Duggan. “This wasn’t possible with our federal funding due to U.S. Treasury rules, but since we are moving forward with all city funding, we have the ability to be more creative.”
Since 2018, 54 percent of all city-funded residential demolitions have been completed by Detroit-based businesses, compared to 37 percent of federally funded demolitions.
The city’s Office of Contracting and Procurement also will establish limits on the number of properties each contractor can be awarded at a time, creating opportunities for smaller companies.
In order for the ballot initiative to make the March 2020 election, the city council would have to approve ballot language by Dec. 17. Duggan says he hopes for earlier approval to allow for a full public education campaign.
If the measure is approved in March, the city plans to issue debt by the end of the summer and begin applying the bond funds to blight removal programs.
Since the city increased its demolition and vacant home renovation efforts starting in 2014, average property values across the city have nearly doubled from 2013-2018, according to Zillow. Structure fires in the city have gone down by 42 percent. Studies by Wayne State University, the University of Michigan, and Harvard University show a 3 percent reduction in violent crime for every 10 demolitions and an 11 percent reduction in fatal and nonfatal shootings in areas of concentrated demolition.