City Council votes to subsidize Detroit land bank

Christine Ferretti
The Detroit News

Detroit — The City Council on Tuesday voted to direct $11.8 million from the city’s general fund to help prop up Detroit’s land bank in the upcoming fiscal year and transfer nearly 38,000 city-owned residential parcels to the authority’s inventory.

The approvals — including a comprehensive policy governing the land bank’s practices — come after the council in February delayed action on the massive parcel transfer amid concerns over a lack of clarity on future land use strategies in Detroit.

Tuesday’s approval will put all remaining Detroit-owned residential parcels in the hands of the Detroit Land Bank Authority, bumping its overall portfolio to more than 80,000 parcels for its various programs. The land bank is a public authority dedicated to returning Detroit’s vacant, abandoned and foreclosed property to productive use.

Some council members, however, were critical of allocating general fund dollars to support the land bank and say they remain worried about the long-term impact of turning over control of the properties.

Council President Brenda Jones, who along with members Raquel Castaneda-Lopez and Janee Ayers voted against the subsidy, said she’s reluctant to take on the financial responsibility.

Detroit, she said, is operating under the oversight of a Financial Review Commission that will go away if officials budget responsibly and avoid deficits for three years.

“My concern is this; we just emerged from a bankruptcy,” Jones said. “The city looks pretty good. I don’t want a deficit to occur in three years because the city is going to be responsible for what the land bank does if the land bank doesn’t have any money.”

Ayers questioned why the land bank is “operating in the red” but continues to put demolition orders in.

“Obviously, the Detroit Land Bank Authority is not going to be a self-sustaining entity,” she said.

Jones, Ayers and Castaneda-Lopez also voted against the land transfer. In addition, Jones and Castaneda-Lopez didn’t support the land bank agreement with the city.

But Alexis Wiley, chief of staff to Mayor Mike Duggan, countered that funding the land bank is a “good investment” because it allows the authority to carry out services that the city no longer has to take responsibility for. It’s also at a rate that far exceeds what the city was able to do historically, she said.

The council’s majority support, she added, illustrates its confidence in the land bank.

“Their work really speaks for itself and it’s great that the council knows that,” Wiley said.

Castaneda-Lopez fears that some parcels will remain vacant.

“Not all residential parcels currently fall into a program. Either they sit with the city or the land bank until those programs are developed,” she said. “That’s problematic for me.”

The land bank was reinvigorated by Detroit’s former emergency manager Kevyn Orr, who initially allocated quality of life loan dollars to support it.

The 2015-16 fiscal year marks the first in which the authority is seeking general fund dollars to operate. The subsidy will come from a pot of $50 million earmarked for nondepartmental services including blight remediation efforts.

The land bank’s demolition efforts are largely funded by federal Hardest Hit Fund dollars. Additionally, it generates a profit of about $7 million annually through its programming and donations, officials said.

In March, the council approved a $20 million advance fund to allow the land bank to pay its demolition contractors as it waited for reimbursement administered through the Michigan State Housing Development Authority to come in.

President Pro Tem George Cushingberry Jr. told colleagues he believes the authority is doing good work.

“I would rather have an army of professionals who are dedicated to going out and expediting these things, than the mishmash we’ve had from four different departments in the past,” he said.