Duggan pitches revised $250M bond plan to save more Detroit homes from demolition

Candice Williams
The Detroit News

Detroit — A neighborhood improvement plan that would hinge on a $250 million bond proposal on the November ballot was introduced Tuesday by Mayor Mike Duggan and other city officials.

The plan — called Proposal N, as in neighborhoods — would stabilize 8,000 vacant but structurally sound houses and demolish 8,000 structures that can't be saved. The city would commit to a goal of awarding more than 50% of all contracts to Detroit companies.

"This will transform the quality of life in the neighborhoods in this city if we secure 8,000 houses and move families in and get rid of the 8,000 burned-out houses that can't be saved," Duggan said during a press conference. "We believe all of this is possible and we're going to put people to work."

The latest proposal follows the City Council's rejection last fall of Duggan's previous $250 million plan aimed at erasing blight. At the time, some city council members cited unresolved questions and concerns including a long-running federal criminal investigation into the city’s demolition program. Others called for more inclusion in the hiring of Detroit workers.  

The council rejected Duggan's previous proposal after weeks of contentious debate and a packed town hall meeting that drew upwards of 500 residents, activists, clergy and lawmakers.

The City Council is expected to consider in the next two weeks whether to put the latest bond proposal on the Nov. 3 ballot. If voters approve the proposal, bonds would go to market in December, officials said. According to the city, the bonds can be sold without raising property taxes by phasing in new debt payments as other debt drops off.

The proposal would be funded by unlimited tax general obligation bonds, which are voter-authorized debt. The existing tax rate would remain at 9 mills instead of eventually dropping to about 6 mills, according to the city.

The new proposal puts higher priority on saving structurally sound houses, officials said. The previous plan was more aggressive on demolitions and called for 19,000 demolitions by mid-2025. 

According to the city, there are 14,000 houses that require demolition. Under the latest proposal, 8,000 would be demolished during the next three years. The city plans to seek other funding to complete the rest of the demolitions in 2023 and 2024.

The city has depleted the $263 million it received through the federally funded Hardest Hit program. It was used to fund 15,000 demolitions. 

Contractors will be required to either comply with the city's executive order requiring that 51% of all hours on the job be worked by Detroit residents — or pay into the city's job training funds. Another option is to interview Detroiters first from a list of applicants provided by the city's Detroit at Work program.

"We're going to be able to knock down homes in our most challenged neighborhoods, in our most low-income neighborhoods — the areas that didn't see these types of resources in the past," City Councilman Scott Benson said.

"We're going to be able to hire our residents who are going to be looking for jobs," he said.

Proposal N would save 8,000 vacant, structurally sound houses in Detroit and demolish 8,000 structures that can't be saved.

After the $600 a week in extra federal unemployment benefits runs out July 25, Benson said, "You're going to see a great change in people's economic standing within the city of Detroit. It's important that we give people a chance to invest and rebuild their own communities."

City Councilman Andre Spivey said Tuesday that after the council rejected the mayor’s previous proposal, he asked for a more robust plan that would include renovation and provide more opportunities for local demolition contractors.

“I support this plan,” he said. “I’m ready to vote on it when the time does come. I still receive phone calls from residents who live near a vacant house, and it is leaning close to their home. I still have residents who cannot get homeowners insurance on their property because they live in an area where they have too many vacant homes."

Not everyone is in favor of the latest proposal. 

Police Commissioner William Davis was opposed to the proposal last fall and said Tuesday he doesn't like the latest plan. 

“They start off with the premise that it’s not going to raise your taxes,” he said. “That’s true, but they’re also not letting people know upfront as clearly as they should… that if nothing happens, your property taxes are automatically going to go down.”

Davis said the city has not clearly outlined the structural changes that have taken place in how it handles demolitions. 

“I think they can do more with less,” he said. “I don’t think it should cost as much as it do to tear down these structures as they are proposing. I think that this whole thing is ripe with possible kickbacks. “

Securing the 8,000 houses that would be saved would involve clearing out the structures, installing secure exterior coverings over doors and windows, and fixing holes in roofs.

“It adds value to anybody that wants to buy it," Duggan said. "We’ll probably put $10,000 or so into securing the outside, fixing the roof. That means for anybody who to buy that house, we’ve added $10,000 of value right off the bat. It makes it far more attractive to the community groups.

"And if you’re a buyer, you can put in plumbing and furnace and not have to be nearly as worried that somebody is going to come in and steal them because we have a secure exterior system in place.”

The plan would put $90 million toward stabilizing homes and $160 million for demolition.

The city exited bankruptcy in 2014 with a plan to shed $7 billion in debt and invest another $1.7 billion into service upgrades over a decade. Of those funds, about $50 million annually are allocated for blight. 

Since it launched in spring 2014, Detroit's controversial demolition program has been the focus of several state and local reviews and a federal criminal probe after concerns were raised in 2015 over rising costs and bidding practices. 

In April 2019, a federal investigation secured guilty pleas from two men over bid-rigging as part of a lengthy criminal investigation into the demolition program. The U.S. Department of Justice has signaled it doesn't expect to bring charges against public officials for wrongdoing. 

Earlier this year, the city hired a leader for its new demolition department and the demolition program shifted July 1 from the control of the Detroit Land Bank and Detroit Building Authority to the city government for the first time in six years.

The city took over demolition as the remaining portion of more than $265 million in federal blight dollars, a program overseen by the city's land bank and building authority, wound down. 

This comes after Detroit's auditor general released a critical report last year of city-administered demolition work. The report cited unreliable data, a lack of documentation and other failures. The mayor previously acknowledged the problems with the program that's been the subject of local and state reviews and the federal probe.

Federal program rules also required that blighted houses be torn down and the effort was limited to neighborhoods that were at least 70% occupied. But under the city's rules, the effort can touch all areas of Detroit and use some of the bond funds to renovate properties.

George Preston, president of the Mohican Regent Resident Association, said Tuesday he’s pleased to hear of the plans. Preston has lived in his eastside neighborhood for almost 40 years. One concern among neighbors is blighted vacant properties, he said.

Preston said he hopes an increase in residents in the neighborhood would attract more businesses to the area.

 “We try to do our part in terms of trying to keep it as clean as we possibly can, but we want people in these properties,” he said. “I’m excited when I hear that hopefully this is something that going is coming. We’re going to get people hopefully in these properties, we’re going to get these properties cleaned up and bringing about a vibrant neighborhood.”


Twitter: @CWilliams_DN