Detroit to give 50% discount on homes
Detroit — Mayor Mike Duggan unveiled on Monday a plan to give city employees, retirees and their families a 50 percent discount on houses bought through the Detroit Land Bank's housing auction program.
The program aims to strengthen the city's neighborhoods by encouraging families to live near each other. It also is open to contract workers and workers for various city authorities including Cobo Center, The Detroit Zoo, public library, lighting and others.
"We are extending this offer not just to employees, but to immediate members of families; parents, siblings and children or legal guardians," Duggan told reporters during news conference. "We want our folks back in the city."
City administration met with union leaders on Friday to discuss the plan. Today, they intend to disseminate details to city employees and will host public information sessions at City Hall on Tuesday and Friday, Duggan said.
According to the city, individuals must register and be verified by the city prior to bidding and the 50 percent discount will be applied after the person makes a winning bid. Currently, about half of the city's employees reside in Detroit.
Employees and retirees will still be subject to existing requirements in the program for repairing and occupying the homes, Duggan said.
The new program was approved last week by the Detroit Land Bank Authority. It is expected to go before the City Council on Tuesday and be up-and-running by mid-February. Duggan added the houses and neighborhoods in the inventory will be more expansive by March.
City Councilman Andre Spivey noted that Detroit employees have "taken a big hit" in recent years with concessions in health care and through pay cuts.
"This is an opportunity to provide an incentive to have (employees) come back and move into the city of Detroit. Beyond that, having their families stay here and move here," he said, adding he's optimistic that the effort will help grow the city. "People build neighborhoods, communities and cities."
Duggan says the discount program will require a person to own the house for at least three years.
If a person resells the house before that time, he or she will have to share any profit with the land bank on the following formula:
■Sale in the first 12 months: 75 percent of profit returned to the land bank
■Sale in the 13-24 months: 50 percent of profit returned to the land band
■Sale in the 25-36 months: 25 percent of profit returned to the land bank
Duggan on Monday also discussed financing challenges for those seeking mortgages in Detroit and efforts to tackle the problem.
The conditions have created snags for some buyers in the auction program, which originally launched in May. Of the 394 properties auctioned by the end of last year, buyers had closed on only 138.
In addition, out of 10,000 recorded residential purchases in the city last year, only 462 were bought with a traditional mortgage. The rest were cash purchases.
To address the issue, the mayor said some agreements have been negotiated with local financial partners. Businessman and Quicken Loans Inc. founder Dan Gilbert is also evaluating strategies, he said.
Duggan has also approached Gov. Rick Snyder and federal officials about the issue. Duggan has met twice with U.S. Treasury and will do so again next week, he said.
"We've got a huge mortgage problem in this country, facing the areas that have come back most slowly," he said. "I'm hoping we get a national solution."
Marquita Vaughn, who works at an executive assistant in the city's Information Technology Department, says she's eager to take advantage of the program.
The Southfield resident and mother of four says she and others want to come back. She's eager to cut down her commute and be a part of the city's rebirth.
"This is a great opportunity for us to support our city," Vaughn said Monday. "We are building the city up."
Duggan said there had been a six-month employment minimum required for eligibility in the program. But after talking with public safety unions, the administration reconsidered, he said.
"As soon as you start work, you are going to be eligible," Duggan said. "That's significant as police and firefighters start training in Detroit. We wanted to make sure this was immediately available."
Martin McClung, of the Detroit Fire Fighters Association, said that having public safety workers residing in the city will also build rapport with the community that they protect.
"We are excited about programs grow the city...and bring the world-class city we all know, want and deserve," said McClung, of the organization that has about 880 members.
Erica Ward Gerson, chairwoman of the land bank's board, said once the discount is approved by City Council, the person will go on the land bank website, register as a bidder, and then be eligible to bid on any house.
"If an employee wins the house with a $10,000 bid, they will pay the Land Bank $5,000," Gerson said .
According to the city, the website already has auctioned 400 vacant homes. The website auctions off two homes each day and bidding, which runs 9 a.m. to 5 p.m., starts at $1,000.