Report: High rents 'insufficient' to justify District Detroit construction costs

Detroit seeks housing units for redevelopment plans

Christine Ferretti
The Detroit News

Detroit — The city wants to buy nearly 400 public housing units, including two vacant apartment buildings, from the Detroit Housing Commission to boost rental and ownership opportunities for lower-income residents.

Under the proposal announced Monday, the city would pay the commission $1.7 million for the Lee Plaza Apartments on West Grand Boulevard and the nearby former 44-unit Woodland Apartments near the Highland Park border as well as more than 100 single-family homes.

The multifamily buildings would be transferred to the Detroit Building Authority and marketed for redevelopment. The 127 single-family homes would move to the city’s land bank for its home auction program, officials said.

“Honestly, this is very critical to our ability to deliver affordable housing to Detroiters at the income levels that they are at,” Detroit’s Housing and Revitalization Director Arthur Jemison said while outlining the plan at a news conference outside the shuttered Lee Plaza near the city’s LaSalle Gardens neighborhood.

Jemison said the city intends to pay for the properties with a portion of unused Urban Development Action Grant funds. The funds were identified through an ongoing effort by the office of the Chief Financial Officer to close old, unused checking accounts.

The effort comes after the city last year commissioned a study on affordable housing and the income groups in Detroit who need to be targeted the most. The population with the greatest need, he said, are residents making 30 to 50 percent of the area median income of $33,450 for a family of four.

The deal, Jemison said, aims to eliminate blight and strengthen the Detroit Housing Commission’s ability to serve low-income Detroiters.

The government-created Detroit Housing Commission is an organization that operates separate from the city, and with 4,000 public housing units, is the largest owner of rental housing in Detroit.

Many of the 127 vacant single-family homes couldn’t be sold under the housing commission’s guidelines. Federal housing regulations require various approvals be granted in order to dispose of public housing. It’s a process, officials said, is typically not worth the effort for a single-family home.

If the deal goes through, the properties will go into the land bank’s inventory for auctioning or demolition, if deemed necessary. The single-family properties are mainly in the city’s University District and Fitzgerald and Bagley neighborhoods, Jemison said.

“Some of these houses are historic and very beautiful and some of them are just ‘those two houses on my block that are holding my block back,’ ” Jemison said. “By making them available, we believe we will be able to get positive ownership of those houses and rehabilitation of those houses along the way.”

The plan will be taken up in a Detroit City Council subcommittee later this week. Ultimately, it will go before the full panel for a vote. Once approved, Jemison said, the city will be able to solicit proposals to redevelop the buildings. He hopes that can take place by the third quarter of this year.

Richard Hosey, board president of the housing commission, said Monday the deal with the city would ensure future developers adhere to project agreements and timelines “to make sure these don’t just move into hands, but they move into capable hands and that the projects ultimately come to fruition.”

The housing commission in 2015 emerged from receivership with the city’s help. If the deal goes through, the commission moves closer to securing a high performance commission designation from the U.S. Department of Housing and Urban Development, officials said.

Funding from the transaction would be used by the commission to rehabilitate other developments.

The historic Lee Plaza building closed in 1993 and then fell into disrepair. The vacant 17-story residential hotel previously was targeted for a $200 million renovation project.

The proposal fell apart last fall after the prospective buyer was unable to secure financing, said Harold S. Ince Jr., executive deputy director of the housing commission.