Saturday, August 3, 2013

Detroit Blight Authority to tear down 30,000 Buildings

<!--[if !vml]--><!--[endif]--> <!--[if !vml]--><!--[endif]--> <!--[if !vml]--><!--[endif]--> Detroit has agreed to aggressively tear down abandoned homes and buildings through a pilot project dubbed the Detroit Blight Authority, (an unofficial name designation), that recently cleared out 10 blocks of property near Detroit’s Eastern Market. The U.S. Treasury Department has made $100 million available to Michigan for this effort.
There are still another 30,000 empty buildings in Detroit that qualify for razing.
The DBA  project is a partnership between the city and Bill Pulte, grandson of the founder of Pulte Homes. In just a matter of weeks, this partnership has removed dozens of abandoned structures and cleared brush and debris from 10 square blocks. Let’s say, it's a start...but there are still 29,980 buildings to go.
And Detroit has just discovered there’s a considerable cost related to owning vacant buildings. Because the impending bankruptcy has forced a review on where all the money has been going, it was just discovered the lights in many of these vacant buildings were still on and the city is still paying for the electricity, and the water and sewage are also still on, and so is the gas. Just turning off the utilities at these vacant buildings will save thousands of dollars, razing them will remove the “attractive nuisance” that a vacant building offers and will prepare the land for reuse.  Naturally the city hopes to receive a bailout, or at least federal funding for the project.
Bill Pulte emphasized that neither he nor the Pulte company has an interest in the land cleared so far or the plans to redevelop it. The Detroit Blight Authority (DBA) together with the Detroit Future City project want to right-size the city’s resources to reflect its much smaller population, now down over 65%  from the glory days of the 1960's.
Since the city filed for bankruptcy, the world's financial community has been watching their every move.  Once city managers determine that it's OK for a city to file for bankruptcy, it's assumed others will follow suit. Cities file under Chapter 9, and once they see just how the financial community handles Detroit, some say dozens of other cities across the country--including several in California will follow suit.

Meanwhile, Detroit continues to be a tale of two cities. As Charles Dickens wrote of London, it was the best of times, it was the worst of times, the same can be said of Detroit. The business community keeps on doing what has to be done to run its businesses, whether the business is local, national or international. The dysfunctional city government's public bankruptcy has little to do with private business. The two have been functioning side by side for decades, so it's just more business as usual.

The city's unions and retirees are screaming and shouting and filing lawsuits, all to no avail because the government will be run by a federal judge who has done this before, and he or she will have the ultimate say. The union leaders can scream and shout all they want, but it's only for the benefit of their membership. Once upon a time they could have negotiated, but they passed up the opportunity. That decision might have been political suicide.

The city services will continue. In fact, the citizens might even see some improvement over the next few months as the solvency of the city improves. But the unions will have to beg for whatever is left, they will plead their cases, but it's the judge who will decide. It's too bad that it will be the retirees and bondholders who will be paying for the sins and actions of the city's free spending six decades. For many who have been enjoying the fruits of ill-conceived programs, their income streams will be abruptly coming to an end.
It's a pity that Detroit came to see too late they simply can't continue with 60 years of political baggage and croneyism.  But the future city and her future generations will be far better off if their leaders learn the lessons this bankruptcy can teach. 
Dane Hahn is a real estate professional serving Sarasota and Charlotte Counties. Reach him at 941-681-0312 or at See him on the web at:

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