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Cost to remove some Detroit blight: $850M

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POSTED May 27, 2014 7:28 p.m.

DETROIT (AP) — Removing blighted residential properties and small commercial structures that have plagued Detroit neighborhoods for decades would cost $850 million, with perhaps $1 billion more needed to tackle the bankrupt city’s larger commercial and industrial property, a task force said Tuesday.

Nearly one in three structures need some form of “intervention,” including demolition or rehabilitation, the task force said. Overall, it found nearly 85,000 blighted parcels, of which 73,000 are residential structures.

The study is part of efforts announced last year by President Barack Obama’s administration to help Detroit, which cited $18 billion in long-term debt when it filed for the largest municipal bankruptcy in U.S. history. The report was drawn up to help determine which houses and buildings can be saved and which will be torn down.

Blight has “gone on for years” without a “real strategy” and has gotten worse as a result, said Mayor Mike Duggan, who added that a longstanding lack of action on the abandoned buildings and vacant lots is “a big reason for resentment” that residents have harbored toward city and business leaders.

“This is a fabulous plan — but it doesn’t come with a check,” Duggan said. “Six months ago, there was no strategy and no funding,” he said. “Now, we’ve got the strategy and we’re getting started on the funding.”

About 150 people were hired to inventory all of the city’s 380,000 real estate parcels last winter in what state-appointed Emergency Manager Kevyn Orr called an unprecedented effort.

For the first time in Detroit’s history, there is a “comprehensive proposal to analyze all the properties in 144 square miles in the city,” Orr said.

With the unprecedented effort comes an unprecedented price tag.

Officials said they have identified about $450 million for blight removal — about $370 million of which is in the city’s plan to get out of bankruptcy and still needs a judge’s approval — and are short roughly $400 million to reach the $850 million mark.

Recommendations outlined in the 330-page report include seeking more money from federal and state sources as well as cash, in-kind contributions or volunteer help from Detroit businesses.

The city’s plan to emerge from bankruptcy already largely depends on Michigan lawmakers approving spending $195 million to help prevent steep cuts in Detroit retiree pensions and the sale of valuable art. The Republican-led House approved the measure last week, but it still must pass the Senate. The governor supports it, but passage has been no sure bet in the bailout-averse Legislature.

The city also aims to strengthen ordinance enforcement, with a particular focus on absent owners, and require a $15,000 cash payment per structure from banks that transfer titles of properties for the intervention required to rehabilitate or remove structures.

Detroit businessman Dan Gilbert, a task force leader and a prodigious investor in downtown real estate, said “the money will come once progress is shown,” and officials can work for a few years with what’s been pledged — provided it all comes through.

“We’re going to find the money, and we’re going to get it done,” he said.

Task force officials said the Detroit Land Bank Authority began residential demolitions through the federal Hardest Hit Fund last month, and activity is expected to sharply increase this summer. About $52 million from the fund has been approved and allocated to removing blight in Detroit.

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