Recommendations summary

Chapter 2: What is the context for our work?

Detroit Future City’s land use policies and the Mayors 10-Point Plan provide the framework for the Task Force recommendations. In addition, this plan relies on an approach to community engagement that will continually gather the best possible insights into blight removal from residents, and will apply that information to shape the best possible interventions for all Detroiters.

RECOMMENDATION 2-1. Build and maintain digital communication tools. The Task Force recommends the Detroit Land Bank Authority implement the following: Information portal. Leverage Motor City Mapping (MCM) to implement an ongoing, open, parcel-level information portal, available on-line at all times to all residents;

Website. Design and maintain a regularly updated website that provides real-time information related to the blight removal strategy implementation; and Social Media. Deploy an active and aggressive e-mail and social media strategies.

RECOMMENDATION 2-2. Leverage neighborhood points of contact. District Manager. Continue to leverage the Department of Neighborhoods District Manager as the consistent points of contact.

Chapter 3: What do we know?

The Task Force recommends the following actions to assure more robust, reliable, integrated, and updatable shared property information for Detroit.

RECOMMENDATION 3-1. Implement Motor City Mapping Phase II and Phase III. Phase II of Motor City Mapping is the creation of a centralized, public database. This database will contain information from Motor City Mapping Phase I, plus data from a wide variety of sources, including numerous municipal departments. The project is planned for launch in spring 2014 and scheduled to be completed in fall 2014.

Phase II has four deliverables:

  • Public Dashboard
  • Mobile App
  • Land Bank Tool
  • Data Management Team

Phase III delivers an expanded site control dashboard and connects all municipal departments whose functions and responsibilities are associated with real property.

RECOMMENDATION 3-2. Annual survey of all 380,000 parcels. Keeping the data and the MCM current is paramount to the viability of the entire system. The Task Force recommends that all 380,000 parcels in the City of Detroit be surveyed annually. The more effective way of surveying the entire city would be to allocate the parcels over a 12 month schedule requiring significantly fewer resources to accomplish the goal of annually updating information on each property. There is nothing that compels the simultaneous surveying of all properties during a short period of time. It would be very short sighted to not allocate the relatively inexpensive amount of resources needed to keep the information current.

RECOMMENDATION 3-3. “Blexting Boot Camps”. The Task Force recommends conducting public training sessions (Blexting Boot Camps), led by DDD and Loveland Technologies, which would be integrated into regular community meetings attended by the city’s new District Managers.

Participants will be trained to use the Public Dashboard and the Blexting application. The training will enable participants to read and interpret the Public Dashboard and contribute information to the MCM. Residents who do not own a computer or smart phone will always have the ability to work directly with their District Manager to obtain information from the Public Dashboard and provide information to the MCM.

These blexting boot camps should rotate between districts during the next three to six months. Special, additional boot camps should also be held for community leaders interested in becoming “Blexting captains.” These leaders will be trained to conduct their own classes on Blexting and the Public Dashboard.

RECOMMENDATION 3-4. Neighborhood Reports. Phase II of MCM will allow District Managers to generate in depth parcel and neighborhood related activity reports. The Task Force recommends that reporting be communicated by the District Managers at neighborhood and community meetings on a monthly basis.

RECOMMENDATION 3-5. Open Data Policy. Blight is a shared problem among all city stakeholders: city agencies, organizations, private companies, and citizens. The Task Force strongly encourages all stakeholders to share and collaborate non-private information in a visible, open, and real-time environment.

It is imperative the city make a strategic investment in technology and create a philosophy of open and enthusiastic sharing of information among city employees, departments, and citizens.

This mission critical element must be supported from the city’s top leadership on down to not only realize the success of the blight removal initiative but also to achieve a bright future for every neighborhood.

Chapter 4: How does this information guide us?

RECOMMENDATION 4-1. The Detroit Land Bank Authority (DLBA) should use the Maximizing Community Input (MCI) to identify initial areas of prioritization and work directly with community groups within those geographies to refine intervention strategies.

The Task Force believes utilizing a tool like MCI to identify tipping point neighborhoods is a key element in prioritizing blight intervention. With that said, the Task Force also realizes that the output of the algorithms needs to be enhanced by the analysis of unique factors, conditions and needs of each neighborhood. In addition, community engagement throughout the process assures that all of these more intangible factors receive full consideration. The outcome of the MCI is not to prescribe a specific type of investment or intervention, nor to make recommendations parcel by parcel. Rather, it is to guide prioritization and intervention. Once specific geographies are identified using the MCI and these other factors, the Motor City Mapping tool can provide information regarding specific structures within those areas meeting the definition of blight and those with blight indicators. This becomes the start of the blight intervention road map and a place for the City of Detroit and the DLBA to start discussions with impacted communities, neighborhoods, and the historic designation community.

RECOMMENDATION 4-2. The Task Force recommends that the DLBA continue to collaborate with the Michigan Historic Preservation Network and Preservation Detroit to inform the parcel-by-parcel decision making process.

RECOMMENDATION 4-3. The MCI should be revisited and refined annually to reflect current conditions.

The MCI was created to identify strategic areas of intervention in the face of Detroit’s currently overwhelming vacancy and constrained funds. These conditions will change over time, and the MCI should be modified and updated to reflect the new conditions.

Built on the Motor City Mapping platform, the MCI serves as an example of the tremendous potential for high-quality, detailed data to support public policy and investment decisions. Given that much of the data will be publicly available, the opportunities for other analytical tools to be developed are limitless.

Chapter 5: What is the best intervention?

Legal title & legal authority

The city is working to create or strengthen its codes, ordinances, and laws that support a proactive approach to parcel level intervention.

In addition, the city should continue to take aggressive action to attain title and remove blight in abandoned and vacant properties that have been known community nuisances. There are currently three options the City and the Detroit Land Bank Authority (DLBA) can take:

  • Voluntary deed transfer by the title holder
  • Nuisance abatement
  • Demolition judgment liens and foreclosure
  • Recommendations to improve legal authority:

RECOMMENDATION 5-1. Take aggressive action to gain title to blighted properties through voluntary deed transfer, nuisance abatement, or demolition judgment liens and foreclosures.

RECOMMENDATION 5-2. Improve the current hearing process. The city should act decisively to enforce stricter adherence and enforcement of existing deferral requirements in 290-H. The current notification process should be enhanced to identify and communicate the minimum requirements for a property owner to be granted a deferral. These requirements should include the establishment of a demolition escrow account in which the owner contributes a minimum amount to be used toward permits or property improvements.

RECOMMENDATION 5-3. Establish a New Demolition Review Board. The city should revise Ordinance 290-H to support City Council’s creation of a demolition review board dedicated to hearing complaints. Members of the board should consist of three appointees, one by the council and two by the mayor. The entire job and function of this board would be to review dangerous building demolition requests.

RECOMMENDATION 5-4. Make changes to protect communities. Ordinance 290-H should be revised to include boarded-up properties in the definition of “dangerous properties.” It should also narrow the definition of “occupied” to rightful owners or tenants and exclude squatters.

RECOMMENDATION 5-5. Streamline the deferral process. Ordinance 290-H should be revised to reduce the number of deferrals BSEED may issue from three to one. Deferral time-lines should be shortened from six-months to 90 days. This does not remove BSEED’s ability to extend an active deferral, as long as the property owner is clearly making progress on removing blight RECOMMENDATION 5-6. Issue demolition orders earlier. The city should have a demolition order in place before the first deferral can be granted. This will communicate the urgency of remedy to the owner, and offer the city leverage to proceed if the owner does not act.

RECOMMENDATION 5-7. Add capacity for hearings and inspections. The city Clerk’s office should add significant capacity until the vast majority of Detroit blight has been removed.

Examples include:

  • Automate or outsource the hearing notice process,
  • Invest in training and support current inspectors to ensure consistency, and
  • Expand building inspector capacity through local hiring and training programs or partnering with Detroit-based businesses.

RECOMMENDATION 5-8. The city should assume responsibility for demolition billing to owners. The city (specifically BSEED) should send the bill for demolition directly to the title holder instead of handing off this task to the county tax assessor’s office. The current process is an unnecessary bureaucratic additional layer that provides no value, creates inefficiencies and adds to costs.

Recommendations to improve title transfer:

RECOMMENDATION 5-9. Take full advantage of the new state blight ticketing law (MCL 117.4Q sub-section 3, PA192) to gain title to blighted properties. The city should enforce foreclosure on properties with unpaid blight tickets.

RECOMMENDATION 5-10. The State should amend MCL 600.2819 to allow for the city to create its own ordinance related to the foreclosure of a demolition judgment lien. The State of Michigan and the City of Detroit should also craft an agreement to allow the DLBA to perform all demolition judgment lien and blight ticket lien foreclosures.

RECOMMENDATION 5-11. With this new authority granted by the state, the Task Force recommends that Detroit create a new city ordinance to allow a streamlined process to foreclose on the blight tickets and demolition judgment liens. This ordinance should be written to transfer title for these properties to the DLBA.

RECOMMENDATION 5-12. The State of Michigan should pass a state law that eliminates or allows the rejection of back taxes when title is transferred to the DLBA. (Georgia law provides a model for this.)

RECOMMENDATION 5-13. The city should work with the American Land Title Association to create a modified title insurance form that addresses the specific situations of foreclosure and nuisance abatement cases.

RECOMMENDATION 5-14. Buildings, Safety Engineering, and Environmental Department should file Lis Pendens (notice of default) immediately after demolition order.

Strategic Assessment Triage Tool (SATT)

The Task Force believes that it is critical that the DLBA create a tool to provide standardized guidance in its parcel intervention decisions. The Task Force recommends a Strategic Assessment Triage Tool (SATT).

The SATT is designed to objectively evaluate and analyze the data on individual structures. As soon as a property is approved for demolition or its title is transferred to the DLBA, a team composed of a DLBA-selected environmental surveyor and a construction contractor should visit the site and survey the property together to ascertain the property condition and the potential environmental hazards associated with demolition. Data collected by the contractors can then immediately be transmitted to the DLBA for overall analysis. Outcomes of the SATT analysis could include removing the blight (structure or debris/trash), rehabilitating or repairing the structure, or securing the structure for intervention at a future date. If the parcel is a vacant lot, the team can immediately put that into the category of blight removal/clearing. Of course engagement with the local community is also essential, along with evaluation of the neighborhood context before any final decisions can be reached. This process not only informs the type of intervention (in this case of removal), but also provides input into the environmental, deconstruction, demolition and recycling processes.

The Task Force recommends the following guideposts for decision making:

RECOMMENDATION 5-15. The DLBA should leverage the SATT to provide standardized guidance in its parcel intervention decisions. The SATT is designed to objectively evaluate and analyze data on individual structures. Deploying SATT should occur as soon as DLBA has legal authority to do so.

RECOMMENDATION 5-16. Adopt clear and transparent guidelines for decisions on each structure. The SATT information, along with the previous information collected (Detroit Future City future land use map, Motor City Mapping data, community input, geographic predictive analysis, etc), provides the necessary information to determine the appropriate intervention method.

Chapter 6: What is the best way to remove the blight?

Removal of structures

Because neighborhood structures make up 99.3 percent of the total blighted structures in Detroit, the Task Force spent most of its time examining this category. Neighborhood structures include all residential structures and commercial structures that are less than 25,000 square feet in lot size. Although the Task Force acknowledges many opportunities to stabilize or rehabilitate structures rather than remove them, we assume the majority of the 78,506 structures with blight indicators will likely need to be removed. Due to this, and to the complexities and many considerations around demolition and structural removal, the Task Force focused more of its attention on four major areas of activity:

  • environmental measures,
  • deconstruction opportunities,
  • demolition needs, and
  • recycling potential.

1. Environmental MEASURES

RECOMMENDATION 6-1. The city and the Detroit Land Bank Authority (DLBA) should continue to require “wet/wet” demolition practices for dust mitigation in the permitting process.

RECOMMENDATION 6-2. The city and the DLBA should engage with the U.S. Environmental Protection Agency (EPA), and other regulatory agencies involved in contractor safety, to use Detroit’s large scale blight removal effort as an opportunity to research and develop enhanced air quality monitoring devices that monitor lead (expanding on the current asbestos air quality technology). The scale and speed of demolition in Detroit is unprecedented and can provide the platform for solutions that can be used across the country.

RECOMMENDATION 6-3. The city and the DLBA should engage with the U.S. EPA to explore resources and opportunities to assist smaller contractors with barriers they face acquiring air quality monitoring devices, including solutions for financial barriers.

RECOMMENDATION 6-4. The DLBA should continually work to enhance the MCI predictive prioritization tool (discussed in chapter 4) to include lead level indices, as they are collected in the field. This could lead to the establishment of a high health risk building removal indicator.

RECOMMENDATION 6-5. The DLBA should consider additional allocation of field liaisons as building removal activities continue to scale.

2. Deconstruction

RECOMMENDATION 6-6. At present capacity, the Task Force recommends starting with the “skim” model of deconstruction, where the property is appropriate and a market exists. The Task Force also recommends continually monitoring and expanding the envelope on this promising area of practice, as cost-effectiveness improves and markets change.

3. Demolition

The Task Force identified several recommendations for the city to implement, resulting in expedited demolition more promptly once approved, reducing health impacts, and removing bottlenecks in the process.

RECOMMENDATION 6-7. The Task Force recommends that the DLBA schedule all utility disconnections as soon as the contractors complete data gathering via the Strategic Assessment Triage Tool. The greatest practical challenge to prompt demolition in Detroit has been disconnecting the gas, electricity, and water lines to the property. Disconnecting utilities involves communication and timing issues among two different utilities and the city.

After working directly with DTE Energy and the Detroit Water and Sewer Department (DWSD), the Task Force identified several efficiency opportunities for collaboration and cost savings between the DLBA, DTE and DWSD that should be implemented (some of these have already been implemented by the city and the DLBA):

Leverage the Motor City Mapping dataset to understand where disconnects have already occurred.

Reduce demolition costs by identifying properties they have already been targeted for disconnect by DTE and/or DWSD.

Schedule demolition for all structures on a block at the same time, which could result in one disconnect for the block instead of parcel by parcel disconnects, also reducing costs.

Create joint action teams to disconnect utilities and water at the same time. Cross-training team members can result in greater efficiency, increasing overall capacity, and reducing overall costs.

Qualify contractors to “cut & cap” the water line on site with proof that the job was done correctly, versus DWSD doing all the work themselves.

Create a billing system that bills contractors on a time and materials basis versus a flat fee.

For demolition work contracted by the DLBA, DWSD should allow contractors to proceed with disconnects and demolition BEFORE past due water bills on the property are paid.

RECOMMENDATION 6-8. The city should continue to charge a discounted rate for demolition permits in light of the scale of need. The city’s Buildings, Safety Engineering and Environmental (BSEED) should remove the demolition permit fee.

RECOMMENDATION 6-9. The DLBA should continue to use community meetings to engage community groups throughout the entire scope of planning and activation of demolition (or other interventions), in order to discuss and respond to community observations and concerns.

4. Recycling

RECOMMENDATION 6-10. The city should establish two new construction and demolition (C&D) recycling centers inside Detroit city limits; ideally, one on the east side and one on the west side of town. The Task Force sub-committee talked to three potential recycling center candidates, all with plausible business plans. All three candidates bring slightly different options and expertise, but may not represent the entire population of interested parties.

RECOMMENDATION 6-11. The Task Force recommends that the city’s Jobs & Economy team, with assistance from the Detroit Economic Growth Corporation, evaluate potential solutions and prioritize the selection, zoning, and economic support of at least two C&D recycling facilities in the city. Additional support from the state DEQ in delivering time sensitive support to navigating the regulatory and licensing requirements associated with opening this type of facility will add great value.

Large-scale commercial structures

RECOMMENDATION 6-12. Immediately address most blighted large commercial structures in the tipping point geographies. The results of the Motor City Mapping survey reveal that twelve large-scale industrial and commercial structures fall within the “tipping point neighborhoods” identified in Chapter 4. Among those dozen structures, five fall within the group of “Poor Condition, Suggested for Demolition” (four commercial and one industrial). The Task Force recommends prioritizing these five structures for deconstruction and demolition, whichever is the most economically viable method based on the building content. The remaining seven have blight indicators and need further analysis.

RECOMMENDATION 6-13. Use Motor City Mapping data and geographic priority-setting to support Detroit Future City and the Detroit Economic Growth Corporation’s work in targeted primary and secondary employment districts. The Task Force suggests that the DFC/DEGC team incorporate the following prioritization process within those zones:

Determination of job creation candidates that fall within the targeted geographic zones outlined in Chapter 4 (win/win scenarios); and Use of Motor City Mapping to reveal how many of the city’s 559 large-scale industrial structures and commercial structures are located within the overlay districts (see map on opposite page) and are high target candidates for job creation opportunities.

RECOMMENDATION 6-14. Review and, if needed, change existing laws regarding property owners’ responsibility for the financial costs of environmental site contamination. Laws may need modifications to improve enforcement. The City of Detroit’s Law Department should take aggressive action in leveraging these laws to recoup any and all costs associated with environmental contamination of these sites.

Request for proposals (rfps)

From a process efficiency perspective, the current process for issuing Requests for Proposals (RFPs) is not well suited to large-scale activity and innovation of the type that Detroit now needs. In addition, this process will be the driving force behind setting the expectations for hiring Detroiters and using Detroit based firms. The Task Force recommends the following changes to the Request for Proposal process:

RECOMMENDATION 6-15. DLBA should require deconstruction companies and demolition companies to submit combined proposals (potentially through a joint-venture), working together to maximize coordinated timing and hand-off between deconstruction and demolition activities, where deconstruction is a viable option.

RECOMMENDATION 6-16. DLBA should continue to package mechanical demolition RFPs in two ways: by size of job and size of contractor. This method allows larger contractors to secure larger jobs, which should improve the ability to recognize cost savings, process efficiencies, innovation and job creation. Smaller contractors typically do not have the financial capacity to secure the necessary bonds, the experience, nor the resource bandwidth for these larger projects. Some RFPs of notably smaller size should be dedicated to the smaller contractors. The Task Force recommends RFPs in this small pool to represent approximately 10 to 50 properties each.

RECOMMENDATION 6-17. The Task Force calls on local banks and other financial institutions to grow Detroit based businesses by extending the DLBA lines of credit at three percent interest or below to aid in cash flow to contractors. These funds provide the necessary working capital for the DLBA to hire local contractors to revitalize Detroit neighborhoods. Banks should explore programs such as the Community Reinvestment Act (CRA) for this purpose. These funds should be backed by the Federal and State funding programs to allow the DLBA to pay contractors within 30-45 days of project deliverables and billing. This addresses major cash flow challenges that contractors face once they win RFPs. Since many Federal and State funding programs are on a reimbursement basis, they do not forward funding to DLBA to pay the contractors until the work is completed, which usually requires at least a 30-day turnaround. For many of the contractors, especially the smaller ones, the delayed cash flow makes it almost impossible to meet payroll.

RECOMMENDATION 6-18. DLBA should continue to prioritize Detroit based businesses when awarding RFPs. If firms outside of Detroit are needed to achieve targeted volumes they should be required to hire qualified Detroit residents to perform the work. Contracted firms should be required to work directly with the job training agencies listed in the Job Creation section of this chapter to refine employment candidate training requirements and offer employment opportunities for graduates.

Clearing and maintaining vacant lots

The Mayor should communicate an urgent call to action to all Detroit stakeholders—including businesses, churches and residents—to focus their philanthropic funding and volunteer resource programming on clearing and shared maintenance of vacant lots in the city.

RECOMMENDATION 6-19. Working with the communities through community meetings, the DLBA should develop a directory of the vacant lots to be cleared. Once the MCI geographic prioritization is defined, the DLBA should be able to identify blighted vacant lots which have the greatest impact from clearing.

RECOMMENDATION 6-20. Once priorities for vacant lot clearance have been finalized, the DLBA should immediately work with local nonprofits to begin fundraising. Once funds have been raised, the DLBA should work directly with DPW and Department of Recreation to issue notices and RFPs to begin lot clearing.

RECOMMENDATION 6-21. Deploy the model for lot clearance created by the Blight Authority across the entire city in coordination with the structural intervention work of the DLBA. Neighborhood engagement for vacant lot clearing should be a joint effort between the DLBA and the City of Detroit District Managers.

RECOMMENDATION 6-22. After demolition or vacant lot clearing, the city should fully implement its plan to grade and seed newly vacant sites with specialized low-growth seed after demolition. This can either be in the form of slow-growing grass or clover, depending on the sites’ intended future use. Although these slow growing forms of seed cut down on the need for mowing, they also require more intense watering and initial care to take root than traditional grasses. Therefore, a process needs to be in place as to who will tend to these sites immediately after blight removal.

RECOMMENDATION 6-23. The city (Department of Neighborhoods) and the DLBA should work with philanthropic and nonprofit community partners to expand the existing Vacant Property Coalition of Detroit and the toolbox program at Michigan Community Resources (MCR). MCR is currently supported by the Kresge Foundation which is part of the collaborative effort to remove blight and improve Detroit neighborhoods. Since 2007, MCR has used their planning, community organizing, legal and policy expertise to inform and directly assist communities with vacant property issues. They are now focusing their vacant property-related services to decrease blight affecting residential vacant properties. This program is poised to be the central coordination for vacant property maintenance for the city. To further enhance this program, MCR should work with Detroit Future City to incorporate their vacant property management concepts.

MCR, with the support of the city and strategic partners, should create a framework for a citywide care plan for vacant lots to include:

  • Defined community leaders in every neighborhood in Detroit.
  • Defined corporate and religious group sponsors to coordinate philanthropic funding and employee/member community service programs.

Neighborhood by neighborhood vacant lot maintenance programs (including initial care of the lot post blight removal, mowing (3x’s a year), raking, shoveling, etc.)

Integrated citywide maintenance calendar that maximizes the use of the toolbox program, local business/religious group volunteers, and community volunteers (integrated into the District Managers’ regular meetings with the community).

Neighborhood toolboxes consisting of a lawn mower, rakes, shovels, extra seed (to fill in washed out areas), hedge clippers, wheel barrow, etc.

An interactive website that provides public access to vacant lot maintenance schedules and the ability for residents to provide information about activity that escalates attention to specific areas of the city.

Interaction with greening groups and university agriculture and state agricultural extension offices to assist with noxious weed and native planting work, re-treeing and blue green infrastructure.

RECOMMENDATION 6-24. The City of Detroit and DLBA should also immediately implement its new side lot sale program to actively provide property owners the opportunity to purchase adjacent lots at low cost.

In addition to this program, the Task Force also recommends that the DLBA immediately implement its new side lot program to actively provide property owners the opportunity to purchase adjacent lots at low cost.

Chapter 7: How do we get ahead of future blight?

Even the swiftest and most sweeping fight against today’s blight will accomplish very little if we don’t address the conditions that led to it. Detroit’s collapsing structures and vacant lots didn’t just “happen.” They are the physical result of dire economic and social forces that pulled apart the city over many decades. Issues such as uneven economic opportunity, poor workforce development, crime, education and spotty public lighting contribute to blight and must be addressed. While these issues clearly fall outside the scope of our report, we will address two specific focus areas which will help the city “stay ahead” in its fight against blight—property tax reform and legislative policy.

Property tax reform

RECOMMENDATION 7-1: Promote a property tax policy that encourages participation. Fewer than half of Detroit property owners are paying property taxes today. The Task Force believes it is more valuable right now to collect something in property taxes from everyone, and encourage participation, than to collect more from a smaller number of owners and allow 18 percent interest to accrue on the rest, swelling a collection gap that will never close. The Task Force urges the city to act boldly to level the playing field for property assessments over the next two years. The city’s tax reform must provide clearly stated expectations for property owners, and must improve payment systems to make them far easier to use than the clunky online interfaces and antiquated in-person payment processes that exist now. Alongside this effort, to prevent history repeating itself, state legislation should be passed that reduces the 18 percent interest rate on unpaid property taxes to six percent in distressed Michigan communities like Detroit.

RECOMMENDATION 7-2. Address the properties at risk of foreclosure. Even if property taxes are reduced moving forward, there are still 118,000 properties citywide that are on track for tax foreclosure. Detroit cannot afford to put more than a quarter of the city on the auction block. Collectively, these properties carry more than $500 million in unpaid taxes. There has to be a better way.

The Task Force urges the city to take the following steps to stem the tide of future foreclosures:

“Bundle” vacant lots and vacant structures (the properties most vulnerable to speculation and zero maintenance by predatory, private owners if auctioned off). This tool is available to the County Treasurer to make properties unattractive for sale. If one property in a bundle is purchased, all of them must be purchased.

Once protected from speculators at auction, bundled properties can be transferred to the Detroit Land Bank Authority (DLBA), where better disposition strategies can lead to removal or sale with “reverter clauses” that demand improvement and tax payment, or call for a return to public ownership if this requirement is not met. The DLBA should be funded to monitor the upkeep of these properties and act on “reverter clauses” if the buyer is out of compliance.

Fines and penalties for blight

RECOMMENDATION 7-3: Use and strengthen existing fines and penalties for blight. Until recently, Michigan’s treatment of blight offenders was among the softest in the country. That changed in March 2014 with a series of laws that empowered local blight courts with additional powers to impose penalties and punitive action.

The new legislation enables blight courts in Michigan to act against property owners that have incurred civil fines and costs of $1,000 or more, and have not paid within 30 days. The courts can now impose additional penalties, including misdemeanors punishable by jail time. The legislation also allows cities to render blight violators ineligible for zoning changes, building permits, or certificates of occupancy. The courts are permitted to garnish these property owners for unpaid fines. Last but not least, the new law makes it easier for cities to impose liens against properties involved in blight violation.

This legislation is an important step, but does not go far enough. The extra misdemeanors cited above, and the zoning and permitting provisions, do not apply to buildings taken by banks in foreclosure. The number of such buildings is significant. A blighted property taken by a bank in foreclosure is no less of a nuisance to the community than any other property. The city should push to remove this “carve out” for banks.

Scrap metal legislation

RECOMMENDATION 7-4. Strengthen the new scrap metal legislation. Stripping and theft of valuable metals and items from buildings is one of Detroit’s most corrosive contributors to the deterioration of properties. Earlier this year, Michigan approved a much-debated reform to its law on scrap metal purchases, taking the teeth out of this illegal practice. The centerpiece of the law is the requirement that scrap metal businesses mail payments to the sellers of certain frequently stolen types of scrap items to a verifiable address if the purchases are more than $25. This will help create a paper trail between scrap sellers and purchasers.

Although the legislation is an important step, the city should remain vigilant and continue to push forward for two additional reforms:

Eliminate the $25 threshold entirely. The legislation still allows for on-the-spot payments via electronic payment cards on items under $25. This is an easy loophole for thieves to exploit, because they can go from scrap dealer to scrap dealer getting multiple payouts of $25 via electronic payment card, which are easily convertible to cash. In a sense, the legislation encourages them to do so. Sellers are still going to want instant cash, and because of the $25 limit, they may actually steal more items to get the same amount of cash they are currently allowed. The city should consider at some point renewing its push to eliminate the $25 threshold entirely.

Enforcement. A law is ineffective without concerted enforcement that sends a “zero-tolerance” message. The city should be diligent in policing to enforce the new law.

Repurchase of tax foreclosed properties at auction

RECOMMENDATION 7-5. Crack down on real estate “buy-backs” by speculators. Michigan is currently considering SB 0295 to discourage real estate speculation and predatory purchases of tax-foreclosed property. Under current law, a land speculator may buy a house at auction for $500 and never pay taxes on it. Then, when the municipality forecloses on the property, the speculator can simply buy it back for another $500, and not have to pay the taxes owed. Allowing speculators such free rein keeps property vacant and contributes to blight in urban areas.

The proposed law would prevent a bidder from bidding on foreclosed property if the bidder had unpaid fines for violating local blight or nuisance ordinances. This legislation should be supported, with appropriate provisions to close loopholes made possible by the fact that most property owners own their properties in distinct single-purpose entities over which they retain complete control. At the same time, the legislation should not inadvertently ensnare legitimate homeowners who have lost their primary residences due to unpaid property taxes, and are now trying to buy another home as their primary residence.

Fire insurance escrow fund

RECOMMENDATION 7-6. Broaden and strengthen the applicability of fire insurance escrow fund. Michigan’s current Fire Insurance Withholding Program (also known as the Fire Insurance Escrow Fund, or simply the Fire Escrow Fund) has required insurance companies to give municipalities 25 percent of the insurance proceeds for each burned-out house within their boundaries, but only up to $6,000. If an owner razes a fire-damaged house, the owner can access that money. But if the owner fails to raze the house, the city can access the money to do so. The $6,000 cap, however, is rarely enough for demolition, so the money remains in the account and fire-damaged structures remain blighted. About $20M was sitting in the Fire Escrow Fund unused until April 2014, when the city began to use those funds to supplement the demolition of their designated structures.

The Task Force recommends that the State of Michigan take two actions to remedy this bottleneck:

Reallocate funds. Michigan should amend its Fire Escrow laws to provide that when an eligible structure has been demolished but funds deposited for it remain in the Fire Escrow Fund, the escrow funds should be reallocated to a general fire demolition fund, to be used to demolish other fire-damaged structures.

Increase the amount to be withheld. Michigan should amend the current program to increase the amount withheld from the insured to $15,000, or an amount sufficient to actually cover the cost of demolishing a residential structure, including the costs of environmental abatement. If the actual cost is below $15,000, then any remaining funds should be released to the insured only after renovation or proper demolition of the structure, as well as grading and seeding of the lot.

RECOMMENDATION 7-7. Although the city can and should take actions to streamline utility disconnects to abandoned properties, as described in Chapter 6, the State has a potentially supportive role. The Task Force recommends that the State, through the Michigan Public Service Commission, allow DTE Energy and other regulated utilities to amend their tariffs to include free utility disconnects for blight removal.

RECOMMENDATION 7-8. In addition, Detroit needs stronger anti-dumping laws. The dumping of trash and large objects such as cars and boats is a major source of blight throughout Detroit. Clearing of such dumped materials becomes an exercise in futility if people are allowed to dump without repercussion. The laws against dumping need to be reviewed and strengthened, and enforcement of such laws must become a priority.

Chapter 8: Who is leading the fight on blight?

The responsibility for blight, and the consequences of its persistence, rest ultimately with the City of Detroit. The Mayor’s office, in collaboration with the Emergency Manager’s office, must lead within the framework of the settled bankruptcy terms to address blight head-on. The centerpiece of this work will be the newly enhanced Detroit Land Bank Authority, working in concert with the Mayor’s office.

See the complete listing of roles and responsibilities see Chapter 8.

Chapter 9: how do we fund this mission?

Detroit will need as much as $850 million just to address neighborhood blight in the next few years. Addressing the larger-scale industrial sites across the city could add an additional $500m - $1B because of the sheer scale in size and their potential for greater environmental issues, and there may be cost escalation over time.

RECOMMENDATION 9-1. The City of Detroit should allocate at least $8 million of CDBG funds annually to the Detroit Land Bank Authority (DLBA)for use on demolition activity.

RECOMMENDATION 9-2. Maximize the impact of the Plan of Adjustment blight-focused Reinvestment Funds by deploying them in ways that increase the potential for future revenue, and by expanding their range of uses, including elimination of blight for commercial structures, vacant lot clearing, and rehabilitation in neighborhoods.

The contingencies associated with blight funding from the Plan of Adjustment further reinforce the need to prioritize blight removal in geographic areas where there is an opportunity to improve reinvestment and stabilization of the neighborhood (see chapter 4 for more information about the Maximizing Community Impact tool). This methodology directly prioritizes the preservation, and potential increase, of the tax base in these neighborhoods to better position the city to allocate the maximum level of funding. In order to fully transform Detroit’s neighborhoods, these funds must be used in a way that offers a full range of interventions, not just residential demolition. Neighborhood-level commercial structures in dangerous condition have a significant impact on a neighborhood’s viability for economic recovery, neighborhood stabilization, and quality of life for its residents. Structures that can be saved and reoccupied must also have solutions to address the deferred maintenance and rehabilitation needs. Private-sector funding for rehabilitation cannot sufficiently address this need, and is often inaccessible due to the low value of properties. The Plan of Adjustment Reinvestment Funds offer a rare opportunity to reduce the barriers to financing rehabilitation and to significantly open up private-sector financing. Rehabilitation assistance could be structured in a number of different ways, such as a loan loss reserve, forgivable loans, or low-interest loans.

RECOMMENDATION 9-3. The DLBA should require a $15,000 cash payment per structure from banks that transfer title of properties for the necessary intervention required to rehabilitate or remove the structure. Further, if an individual owner has stopped making mortgage payments and has abandoned a property, the city should work with partners like banks and the National Community Stabilization Trust to expedite the transition of that property, accompanied by $15,000 in funding, to the DLBA.

RECOMMENDATION 9-4. The city and DLBA should advocate for more flexible Fire Escrow funding. Recommended changes to existing legislation are discussed in Chapter 7.

RECOMMENDATION 9-5. The DLBA should advocate for the allocation of additional HHF funds to Detroit, after demonstrating success in deploying current Hardest Hit Funds. In addition to State of Michigan requests, our congressional delegation should propose that Detroit be able to apply for any unused program dollars, not already assigned to Michigan. Beyond additional funding, HHF-eligible uses should also be expanded to allow the city to address the full spectrum of blighting influences that continue to destabilize neighborhood markets, specifically nonstructural and commercial blight.

RECOMMENDATION 9-6. The Michigan Economic Development Corporation, in partnership with the Michigan Department of Environmental Quality should contribute the $6 million needed to attract and build the two recycling facilities in the City of Detroit.

RECOMMENDATION 9-7. Incorporate the funding for Phase III of Motor City Mapping into the City of Detroit’s Chief Information Officer’s new information technology strategy and transition plan. As such, this strategy should include funding for the $2.5 million needed to build the citywide, comprehensive parcel management dashboard and database.

RECOMMENDATION 9-8. The city should strengthen the enforcement of the Vacant Property Registration Ordinance, particularly targeting absentee owners. Not only does the city need stronger enforcement to assist in dealing with the blight pipeline, any revenues resulting from this effort can immediately be used to support operational needs.

RECOMMENDATION 9-9. The challenge of capacity building presents an important opportunity for partners of all kinds to step up to the plate and support Detroit’s renewal. Private donors, in-kind contributions, and especially bank and corporate foundations engaged in workforce development opportunities should identify and support their part of the ramp-up effort.

RECOMMENDATION 9-10. The city should aggressively pursue possible funding, resources and partnership opportunities with the Department of Homeland Security (including Federal Emergency Management Agency), U.S. Environmental Protection Agency, and other federal agencies, as well as Michigan Department of Environmental Quality, and the Southeast Michigan Council of Governments and Detroit Water and Sewerage Department, to remove blight and create sustainable green infrastructure.

With the scale of structure removal needed, the city will significantly increase the amount of permeable surface in the city. This will allow for more natural stormwater infiltration and will reduce some burden on the city storm sewers, with the added benefit of increasing the amount of open and green space. Additionally, with the elimination of structures in areas with repetitive flooding, the city is reducing the risk of future flood damage and claims. All of these factors open up the potential for new, creative sources of funding for demolition and site treatment.

RECOMMENDATION 9-11. A central fund should be established to receive both corporate and private monetary donations to support blight removal work. This fund could use incentives like philanthropic or public matching to generate additional funding and should be well coordinated with nonprofit blight elimination work.

RECOMMENDATION 9-12. Nonprofit organizations should continue to play a vital role in bringing resources and manpower to the removal of neighborhood blight, including clearing and maintaining vacant lots, and securing open properties. These organizations can more easily leverage private and philanthropic donations and volunteer resources for these activities. The corporate sector should be tapped to provide funding, donations, and volunteers to address blight affecting the communities in which they operate. Businesses throughout Detroit already have existing traditions of supporting their neighborhoods, or would be very motivated new supporters in the fight against blight. In addition to working with large employers headquartered in the city’s core, who may support blight elimination or capacity-building efforts through their philanthropy, the city should pursue partnerships with the many companies and firms in the various employment districts throughout Detroit, to engage their support through cash, in-kind contributions, and employee volunteers.

RECOMMENDATION 9-13. The city should identify strategic blight elimination opportunities that will result in future revenue sources, for example through increased property tax revenue, which could be leveraged to mobilize local bond financing.

Although significant funding is currently dedicated or budgeted to support blight elimination, many of these sources are available only on a reimbursement basis. If the entity does not have cash on hand or an accessible line of credit, payment to contractors is delayed which impedes the pace of demolition activity. Additionally, many sources are not immediately available, as they are allocated over a period of time. In order to achieve the aggressive timeline outlined in this report, funding must become available immediately.

Bank financing--and municipal bonds, as Detroit’s economy recovers—can play a role in blight removal and subsequent redevelopment efforts.

The DLBA is a source of local bonds that should be explored. Beyond local bonds, the city could advocate for the County or State to float a bond to cover portions of blight elimination. Bonds at the County or State-level could cover additional jurisdictions and allow for more cross collateralization, thereby reducing the risk in repayment.

RECOMMENDATION 9-14. The city should bolster and coordinate with a CDFI investment in neighborhood-based redevelopment. Creation of a Real Estate Investment Trust for strategic blight elimination and rehabilitation should also be explored as an opportunity to bring additional capital to neighborhood-based redevelopment.

RECOMMENDATION 9-15. In addition to receiving donated property and associated demolition funding, the city should appeal to banks to use their Community Reinvestment Act funding to support blight elimination work, particularly for projects that also have an investment component as with rehabilitation or redevelopment.

RECOMMENDATION 9-16. Creative investment strategies should also be explored particularly to support residential rehabilitation and development. Structure removal alone will not be enough to fully transform Detroit’s neighborhoods. There must be a concentrated reinvestment in Detroit’s neighborhoods, which will allow for the rebuilding of value. Access to traditional financing sources is seriously constrained. As previously mentioned, public and philanthropic sources of funding should be used to open up and or supplement private financing through loan loss reserves and forgivable or low-interest loans.