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Gilbert announces $500M to revitalize Detroit neighborhoods

Detroit — What about the neighborhoods?

In recent years, as investments in Detroit transformed much of downtown and Midtown, a short drive away on any main road — up Woodward, up Grand River, down Jefferson, up Gratiot — told a different story, and for some Detroiters the real story: the city's neighborhoods, where its people live, where its small businesses call home, are still struggling.

New skyscrapers and sports venues are nice, critics said, but what about the neighborhoods?

Dan Gilbert speaks to "CBS This Morning" in an interview that aired Thursday, March 25, 2021.

A partial answer to that question came Thursday when Dan Gilbert, the billionaire business owner and a driver in transforming downtown over the past decade, said he plans to invest $500 million in the city's neighborhoods over the next 10 years.

The Quicken Loans Inc. founder and Cleveland Cavaliers owner made the announcement during an interview that aired Thursday on "CBS This Morning," and expanded on it at a 10 a.m. press conference at One Campus Martius.

"I'd like to see the people of Detroit benefit," Gilbert said. "You look at every level in downtown right now and we have to carry that through to the neighborhoods and have the whole city have that energy."

The business titan told CBS the effort will start with $15 million for overdue property taxes. It will cover about 20,000 homes, Jay Farner, CEO of Rocket Mortgage, said.

For subscribers: Immediate impact of Gilbert's pledge 

Farner said the gift will “eliminate the burden of property tax debt.”

He hailed Quicken for playing a “small role” in the city’s rebirth since moving its headquarters downtown 11 years ago, but said that “systematic and generational” issues the city faces will have no “quick fixes.”

How the programs work

The Detroit Tax Relief Fund will work through two existing efforts: Detroit's homeowner's property tax assistance program and Pay As You Stay (PAYS), under the Wayne County Treasurer's Office.

Low-income people who owe current-year taxes will be enrolled in Detroit's program.

People enrolled in the Detroit program, who have back debt are enrolled in PAYS too, which wipes out that debt.

Wayne Metro Community Action Agency will administer the Detroit Tax Relief Fund. It also administers Wayne County's property tax foreclosure relief program.

In addition to the funds, counseling is available to help keep a one-time issue from becoming a longtime problem, the Gilbert Foundation said. Wayne Metro will run that too.

People who want to learn more can visit waynemetro.org/propertytax. People who want to find out if they're eligible can call 313-244-0274. Eligible incomes range from $17,000 for a family of one to $49,000, for a family of eight, with a partial exemption.

The city accepts an unemployment letter as proof of income. And this year, participants don't need their documents notarized. Both changes owe to COVID-19, according to the city's website.

'Extraordinary day for Detroit'

Mayor Mike Duggan said the gift made Thursday "an extraordinary day for Detroit, a major step forward on a strategy to start to break the cycle of intergenerational poverty in this city."

Over the last decade, Gilbert chaired the Detroit Blight Task Force. That work brought him in close, and regular, contact with Duggan, and that relationship continues.

"Dan became totally focused on stabilizing the neighborhoods," Duggan said. "He said to me, 'If we don't stop the people from leaving the houses, all we're going to be doing is being behind.'"

Duggan continued: "I​​​​​t was Dan and his team that paid for neighborhood groups to knock on every single door in this city that had a family in danger of being foreclosed on, telling them all of the programs available, signing them up for the poverty exemption, and we cut the foreclosures of owner-occupied houses by 95%."

"We have very few foreclosures now," Duggan said. "The stress is that you have people with bills from four, five, six years ago hanging over their heads, making them insecure in their life, every day, and what the Gilberts have done today is give them a road to financial security," Duggan said.

Property taxes were an issue that residents were concerned about, Farner and Gilbert said on CBS.

"It was very clear to us that it was property taxes that caused the majority of blight in Detroit and the vast majority of citizens were at one point in tax foreclosure," Gilbert said in the CBS interview. "With interest and penalties, that debt kept building and in some cases it was more than they owed on the mortgage and people would just walk from the houses because they just couldn't afford it anymore."

Wayne County Executive Warren Evans announced that the county would contribute another $5 million in foreclosure prevention funds.

“Is it a total solution to the foreclosure problem? Absolutely not,” Evans said. “Is it a step in the right direction? It is. It leads us down the path.”

Evans described foreclosure as a “social process,” not merely economic.

“Sometimes you wonder, how do people fight through it?” Evans said. The home is the “biggest investment most people make,” Evans said. Stabilizing homeownership will stabilize families, he said.

As The Detroit News reported previously, between 2005 and 2015, Quicken Loans had the fifth-highest number of mortgages ending in foreclosure, and half of those properties were left blighted.

While the other four firms went out of business, Quicken's growth took off. The company went public in August, as Rocket Companies. According to Forbes' Real Time Billionaires List, Gilbert's wealth, roughly $47 billion, makes him the 25th richest person on the planet.

In an interview at the time, Gilbert said the number of foreclosures on the company's loans reflected the large volume of investments Quicken made in the city. It had little role, he said, in the eventual conditions of homes in a city otherwise decimated by the economic meltdown, abandonment and high taxes.

"It's very hard to make any causation between these loans and the fact that (homeowners) walked away or could not afford the payments and some eventually became blighted," Gilbert told The News in 2015. 

"I'm sure some lenders contributed to part of it," Gilbert said in 2015. "But No. 1, I'd have to say, is property taxes. … That was like throwing gas on a fire."

Mortgage foreclosures happen when someone can't pay back the money they borrowed to buy the home.

Tax foreclosures happen when someone can't pay the government the taxes owed on their home. They are separate problems. 

But city hall has a property tax issue of its own. The Detroit News reported, in 2020, that Detroit overcharged homeowners $600 million on their property taxes by failing to accurately bring down property values in the years following the Great Recession.

January 2020:Detroit homeowners overtaxed $600 million

"Today's announcement is a doubling down on our commitment to Detroit its people, its mayor, its council, its county executive and its future," Gilbert said. 

But when asked if the relief program, announced in a Detroit mayoral election year, is a gift of sorts to the Duggan administration, Gilbert said no.

"This donation has zero political motivation whatsoever," Gilbert said. "It wouldn't matter who was in there. Well, it always matters who the mayor is, but it wouldn't matter from our standpoint. We would be doing this."

Gilbert addressed the "moral hazard" argument, that people who are able to might get the impression they don't need to pay their property taxes. He discouraged that belief.

"You still want to pay your property taxes if you can afford to," Gilbert said. "There's probably more pride in doing that, and it allows the funds to go to those who really do need it."

Gilbert also spoke about recovering from a May 26, 2019, stroke and spending months in rehabilitation.

"You start to appreciate everybody and everything more than you did," he said. "When you have a stroke, it's like the whole family had a stroke."

The CBS reporter, Dana Jacobson, said that as of the interview a couple of weeks ago, Gilbert said he was going into the office about two days a week and uses a wheelchair to help his mobility. Additionally, he has hours of physical therapy almost every day.

At the event in Detroit, Gilbert, wearing a light blue sweater, walked to the lectern with the help of a cane and an aide.

“Nice morning for a stroll,” Gilbert said.

Gilbert said that the more he and his team studied Detroit’s issues, they came to believe property tax foreclosures were at the root of them, creating “mass cycles of blight.”

“This isn’t a sparse problem,” Gilbert said. “It’s massive, and it’s contagious. And big problems require big solutions.”

Jennifer Gilbert, wearing all-black, stood slightly behind Gilbert, with her right hand on his right shoulder, during both of their remarks.

“Detroiters need greater access to economic opportunity,” she said. Property tax debts are “the root of the problem.”

In 2010, the mortgage mogul and real estate developer moved Quicken Loans headquarters from Livonia to downtown Detroit. His Bedrock company owns more than 100 downtown properties. It and its affiliates are Detroit's largest employer, with more than 17,000 workers.

Gilbert's companies have invested and committed more than $5.6 billion in its efforts to help revitalize Detroit.

cramirez@detroitnews.com

Twitter: @CharlesERamirez