Detroit Faces $2 Billion Price Tag to Combat Blight
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The Fiscal Times
May 28, 2014

Long before Detroit became forever associated with the biggest municipal bankruptcy in history, some of this once-proud city’s leaders and benefactors dreamed of razing chunks of the sprawling, blighted city to make way for a brand new Motown.

The leaders wanted to shrink the 144-square mile city into a more manageable and coherent urban center, which could offer the jobs, housing and good schools essential to drawing the middle class back. Leading the charge four years ago was a new mayor, Dave Bing, a former NBA all-star and successful steel entrepreneur.  

Related: Signs of Hope in Detroit’s Historic Bankruptcy Case   

Bing’s plan called for demolishing 10,000 dangerous residential structures, “greening” the city with urban farms and parks, closing 41 school buildings as part of consolidating and enhancing the school system, building a light rail system to connect the downtown with outlying areas, and scores of other initiatives, as The Fiscal Times reported earlier.

Critics questioned, however, whether the cash-strapped city would ever undertake such a massive endeavor – and in hindsight, Bing and others vastly underestimated the scale of the challenge. On Tuesday, a task force issued a 341-page report describing the scope and cost of a major leveling of nearly a third of the city – and the figures are mind-bending.

The report found that 84,641 of Detroit’s roughly 380,000 land parcels are plagued by abandoned residential and commercial structures, according to The Detroit Free Press. About 40,000 of those structures need to be demolished or upgraded – at a cost of roughly $850,000 over five years, according to the study.

Related: Detroit’s 60-Year Decline into Bankruptcy Hell

If the city were more ambitious and willing to go after the many abandoned industrial sites as well, then the total price tag would balloon to $2 billion.

“Detroit needs to act aggressively to eradicate the blight in as fast a time as possible,” the report concluded. “Other cities contending with high levels of blight have never addressed more than 7,000 structures a year. At that pace, it would take Detroit more than 11 years to address” its disintegrating buildings and rubble-strewn lots.

Detroit has been undergoing nothing short of a sea change these last few years. Gov. Rick Snyder of Michigan, a Republican, appointed attorney Kevyn Orr as the city’s emergency manager in March 2013 after declaring a financial emergency. Orr and the city filed for Chapter 9 bankruptcy in July of that year, when Detroit’s debt was somewhere north of $18 billion.

Orr and the city’s creditors, employees and retirees have been moving toward a final settlement under the aegis of a no-nonsense federal bankruptcy judge. And Mike Duggan succeeded Dave Bing as mayor last fall, the first white mayor elected in the majority black city in 40 years.

As The Free Press noted, the message delivered yesterday by Duggan and others in releasing the Blight Removal Task Force report is, “The task is immense but the time is now.”

Related: Detroit Bankruptcy Is Big Red Flag for Other Cities  

Duggan told reporters that the report could be used by the Detroit Land Bank Authority as it attacks blight on multiple fronts – from suing absentee property owners of delapidated structures to determining which vacant structures should be demolished and which should be sold to new homeowners for rehabilitation.

“This blight has gone on for years,” Duggan said. “It’s gotten nothing but worse.”

City officials say they have plans for how to pay for about $450 million of the massive demolition effort, The New York Times has reported. Most of it would come from Detroit’s pool of money that officials hope the federal bankruptcy judge will allow them to spend to spruce up the city and improve municipal services. Other dedicated federal funds will be used. “Still, that leaves the city nearly $400 million short, without even considering tearing down the old factories, officials said,” as The Times reported.

How they would get all the way to $2 billion remains to be seen.

Still, Dan Gilbert, chair of Quicken Loans and one of three co-chairs of the blight task force, told a conference of civic leaders and reporters that raising the rest of the blight removal funds will be “the least of the big challenges,” The Free Press reported.

“This money will come. This money will flow,” he said. “We’re going to find the money and we’re going to get this done.”

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Washington Editor and D.C. Bureau Chief Eric Pianin is a veteran journalist who has covered the federal government, congressional budget and tax issues, and national politics. He spent over 25 years at The Washington Post.