Detroit council approves $250M blight bond plan for Nov. 3 ballot

Detroit —  A divided City Council voted Tuesday to send a $250 million blight bond proposal to the November ballot after a lengthy debate over a lack of public awareness on the plan and unanswered questions.

The nine-member council voted 5-4 to advance the initiative following an hour of public comment and nearly two more hours of discussion over the plan that Detroit Mayor Mike Duggan introduced last week. A motion to delay action for another week failed by a 5-4 vote. 

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 also would commit to a goal of awarding more than half of all contracts associated with the work to Detroit companies. City residents would get preference for acquiring homes that can be salvaged and reused.  

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

Detroit Council member Raquel Castaneda-Lopez warned Tuesday that pushing forward so quickly on the measure is a "complete compromise of values" and "transparency" for the council.

"I feel morally and ethically compromised ... by moving this forward within just a seven-day time period," said Castaneda-Lopez, who voted no. "It's truly, truly disappointing."

Council member Raquel Castaneda-Lopez asks questions of Advanced Disposal Services, Inc. and GFL Environmental USA, Inc. executives.

Other members, including James Tate and President Pro Tem Mary Sheffield, said they would have supported the plan but based on the controversial history with demolition efforts in the city felt one extra week to strengthen guarantees wasn't much to ask. Council President Brenda Jones also voted no. 

Voting yes were council members Janee Ayers, Roy McCalister Jr., Scott Benson, Andre Spivey and Gabe Leland, who last week was charged with misconduct in office by The Monroe County Prosecutor's Office. 

Ayers noted prior to the vote that the bond concept isn't new and an affirmative vote puts the ultimate decision in the hands of Detroiters. 

"The only portion of it from what I've been reading that is new is the incorporation of the things that many of us have asked for," Ayers said. "Right now, we're losing sight of the fact that we have an opportunity to simply do what we can to put it on the ballot in front of the people we were elected to represent."

The council's approval comes after the panel rejected a separate bid from Duggan last fall after weeks of contentious debate and a packed town hall that drew upwards of 500 residents, activists, clergy and lawmakers. Critics then cited worries over a long-running federal criminal investigation into the city's demolition program and the need for more guarantees for the hiring Detroit workers. 

During Tuesday's public comment, some residents expressed optimism over the plan and an urgency to clean up neighborhoods. 

"It has been just short of Hiroshima over here as far as the blight goes," said Kecia Escoe, a Nardin Park resident and owner of Detroit-based quilting business Umi's Comfort. "I am in support of N, and we will do whatever we can in this area to assist with that."

A group of block club and community organization leaders meanwhile cautioned residents haven't had the time to digest the plan. 

Ruth Johnson, a public policy director for the Community Development Associates of Detroit, warned that the time for Detroiters to discuss and provide feedback on the plan is "insufficient."

"I urge the council as well as the administration to allow time for its residents, its stakeholders, to weigh in on this most important decision," Johnson said. 

Bernadette Atuahene, a professor at Chicago-Kent College of Law and a member of the Coalition for Property Tax Justice, told The Detroit News Tuesday that giving away vacant homes to overtaxed residents without aid to rehabilitate them is “no kind of compensation."

A Detroit News investigation published in January found that the city overtaxed homeowners by at least $600 million between 2010 and 2016, after officials failed to accurately assess properties to keep pace with falling property values during the Great Recession. The group of activists, along with Sheffield, in mid-January proposed ideas for homeowner compensation that Duggan had said he was considering.

And Atuahene said launching a demolition bond without correcting over-assessments is not enough to stop blight.

“It’s like cleaning up the blood when the wound is not sutured,” she said.

The Coalition for Property Tax Justice believes the city should wait on Duggan’s proposal and see what type of federal bond programs are set up to help cities cope with the coronavirus pandemic because they may enable cheaper borrowing, Atuehene said.

Arthur Jemison, the city's chief of services and infrastructure, told Jones that he's "prepared to review in detail" a proposal to address the over-assessment issue, saying "people have raised their voices and we've heard them."

Council recently adopted budget revisions as part of an overall plan to stave off a projected $348 million shortfall in the last and current fiscal year tied to revenue losses from the COVID-19 pandemic. 

The aggressive cuts, proposed by the Duggan administration, were aimed at ensuring a state-appointed emergency manager isn't reinstalled to oversee Detroit's finances. The move affected a range of programming and the city's demolition program. 

The mayor has said he's concerned about neighborhood blight but keeping services intact was the top priority and stressed "we need to come back with a solution to finish the job on blight."

Detroit Charter Commissioner Nicole Small called in for Tuesday's meeting to criticize Duggan's handling of blight removal funding and accusing supporters of the plan of "buying into fools gold that was sold to them by the mayor and probably, respective council members."

The plan, she said, "talks about what can be done, not what will be done."

If voters approve the initiative, the bonds would go to market in December. Detroit's administration contends that the bonds can be sold without raising property taxes by phasing in new debt payments as other debt drops off.

The existing tax rate would remain at 9 mills instead of eventually dropping to about 6 mills, according to the city.

The plan puts more emphasis on saving structurally sound houses over the past recommendation, which focused on demolishing 19,000 blighted homes by mid-2025, with $90 million being put toward stabilizing homes and $160 million for demolition.

The administration has said of the estimated 14,000 homes that need to be razed in the city, 8,000 would come down over the next three years. The city plans to seek other funding to complete the rest of the demolitions in 2023 and 2024.

The city received $263 million in federal Hardest Hit Fund monies to demolish about 15,000 houses since the spring of 2014. The program came under scrutiny in the fall of 2015 when questions were raised over bidding practices and spiraling costs and became the focus of multiple local and state reviews and a federal criminal probe.

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 at the time 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.

Detroit's auditor general released a critical report last year of city-administered demolition work, citing unreliable data, lacking documentation and other failures.