Detroit's battles over once-cheap land are 'sign of new era'

Louis Aguilar
The Detroit News
Eastern Market is one of the places where private investment has lead to concerns the area will lose its character as rents rise.

Detroit — Here in this city with enough vacant land to fit nearly all of Ann Arbor, battles are now frequently erupting as once-cheap land becomes valuable and criticism grows about those who are profiting.

Detroit Mayor Mike Duggan and other administration officials say the rising value of Detroit property is a sign of the city's turnaround. Duggan has argued that he has negotiated corporate deals that will benefit neighborhoods and small businesses.

But critics complain about land deals ranging from a new Jeep plant to properties in Eastern Market to the billionaire group that owns an area larger than downtown. They argue the city could have driven a harder bargain and blame cronyism, secrecy, city incompetence and greedy developers for the buying and swapping of potentially lucrative pieces of property that they argue should be saved for better developments.

Several analysts who study the intersection of urban land use and government policies say city officials are acting from old habits of desperation in striking deals instead of bargaining from a position of strength.

Anti-gentrification street art is popping up in Eastern Market as millions in private investment has many in the historic neighborhood on edge.

"It's a sign of new era," said Anika Goss, executive director of Detroit Future City, a think tank that follows land use and economic development in the city. "There are parts of the city where land is much more valuable than it has been for some time. So, before we made decisions based on desperation. It feels like we are using that same culture to make economic decisions."

The land battles are just the start, the analysts say, as the city rebounds from municipal bankruptcy and decades of population loss that left Detroit with tens of thousands of abandoned and neglected properties. 

"We have a huge amount of vacant land and buildings," Duggan declared two weeks ago during his keynote speech at the Mackinac Policy Conference. He touted it as one the city’s major assets that can lure private development with plentiful, inexpensive land. 

“The City of Detroit owns 92,000 parcels of land,” he said.

Among the land issues that have gained attention and criticism:

  • The city successfully bid to get a new Jeep plant as well as an addition to a factory on Detroit's east side.  It's a major political and economic victory, a $2.5 billion investment by Fiat Chrysler Automobiles that's expected to create nearly 5,000 high-paying factory jobs. The deal was met with some pushback, though, because the city had to buy 215 acres from private owners to make room for the new plant. Among the groups from which the city purchased property were the Moroun family, owners of the Ambassador Bridge. The bridge owners also received city-owned land in southwest Detroit near the international span linking the United States and Canada. That led to outcry from many southwest residents, who have long opposed the Moroun family's history of holding on to blighted properties.  The land swap as well as the swift 60-day timeline to seal the Jeep plant deal led critics to accuse the Duggan administration of lack of government transparency. 
  • An inexperienced developer, Sanford Nelson, was put in charge of a small group of investors, led by his father, who spent $30 million to buy at least 17 Eastern Market properties. Nelson promptly lost a longtime anchor of the market, Russell Street Deli, whose owners disputed Nelson's claim he needed to make $50,000 in repairs and sign a new lease that would have more than doubled the monthly rent. The restaurant opted to leave the neighborhood where it had been a staple for 30 years. The restaurant owners wrote a scathing Facebook message about Nelson's tactics. Critics saw the incident as a threat to the character of the once-inexpensive artsy area surrounding the historic farmers market. 
  • The Ilitch organization, owner of Little Caesars pizza, the Detroit Red Wings and Detroit Tigers, were pilloried over its years-long delay to develop 50 blocks of land around the arena, its Fox Theatre and MotorCity Casino Hotel.  Critics argued the city needs to get tougher on private landowners, particularly those who have received tax breaks and allowed blocks of property to remain vacant. 

The separate deals are not connected. They are not even in the same parts of town. Analysts say the common thread is the deals revolve around land that formerly was inexpensive and, in some cases, unwanted for years.  

"I agree that, when a city begins to come back, property ownership becomes a critical concern. The FCA Jeep plant (deal) and Ilitch (land ownership) are perfect examples, " said Kurt Metzger, a local data analyst and demographer who has long studied land and economic issues in the region. 

"What is needed is a constant monitoring of property records in the city," said Metzger, who also happens to be mayor of Pleasant Ridge. "While we may focus on downtown, the real story is what is going on in the neighborhoods," in terms of property being bought. 

In his Mackinac speech, Duggan pointed out the many collaborations with private foundations to invest in neighborhoods and partnerships with corporate patrons such as auto industry mogul Roger Penske, Chemical Financial Corp. Chairman Gary Torgow and American Axle & Manufacturing CEO David Dauch. All have made major commitments to work on bolstering neighborhoods and small businesses.

“The days of government or somebody from the outside coming in and doing your project — that's over," Duggan said. "People know what they want in their neighborhoods. There is collective wisdom there that we are listening to.”

City officials defend the Jeep plant deal as working within its limits to woo a major corporate investment. They also say the terms of the Ilitch deal to redevelop other properties was made with then-Emergency Manager Kevyn Orr, the Jones Day lawyer who ran Detroit during the city's bankruptcy. 

The issue goes beyond the mayor, said Alan Mallach, a senior fellow at the Center for Community Progress, a national nonprofit based in Washington, D.C., that examines how cities and rural communities can get rid of vacant and blighted property. 

"It has legal, economic, social dimensions,” Mallach said. "People start to see a market moving, and private investment tends to move much more quickly than government."

He pointed to the influx of private investors buying buildings around the Eastern Market. Mallach worked with the group that became the Eastern Market Corp. nonprofit that now manages the historic farmers market.

The Jeep plant deal shows the "tough balance needed" between a city's ability to negotiate a major investment and the public's right to know about development deals that affect their communities, he said.

Mallach and other analysts say it's time for officials and residents to really be aware of the issue and look to other cities and states for direction.

“We need better tools right now,” Goss said. “It’s a mindset we are talking about, too. Our properties, our neighborhoods, our history has value, and that’s the starting point we need when we enter these kind of deals.” 

Detroit is so famous for its empty and unused land that it is studied in universities. One example is a recent graduate class for urban policy students at Texas A&M University. 

Ann O’M. Bowman, who teaches at Texas A&M’s George Bush School of Government and Public Service, says her class looked at the property available on such sites as the Detroit Land Bank Authority. That's the public authority that owns, manages and sells 90,000 properties in the city. The agency is the largest landowner in Detroit. 

“Detroit is an interesting case to study. Its opportunities and challenges never fail to spark so much discussion among my students,” Bowman said. The students talk about potential policy issues and community efforts that they would pursue, she said. 

“There’s a lot of discussion," Bowman said, "but I think main theme is this: Don’t give up that land cheaply.”

Twitter: @LouisAguilar_DN