Proposal N passes, clearing way for Detroit’s continued blight fight

Proposal N, Detroit’s $250 million blight bond initiative, has passed with a decisive margin in a show of support for Mayor Mike Duggan’s plan to fund demolition or rehab for about 14,000 homes in the city. 

With 100% of Detroit precincts reporting, the proposal was approved 70.3%-29.7%, according to unofficial election results.

It allows the city of Detroit to issue $250 million in bonds to remediate blight in the city. Most of the money will be spent on demolishing 8,000 homes, with $90 million going towards securing 6,000 homes. 

As ballots were still being counted Wednesday morning, Duggan said the apparent victory was “an enormous vote of confidence.”

“We’re going to get to work,” he said. “In the next couple weeks, we will be ready to come out with demolitions.”

Duggan said they would begin with demolishing blighted homes between two occupied homes, where they are most impactful for residents, as well as rehabbing properties. 

Blight has been a seemingly insurmountable problem in Detroit for years. Following decades of steady population loss, a tax foreclosure crisis caused tens of thousands of residents to lose their homes in the 2010s. Many of those homes ended up in the hands of the Detroit Land Bank Authority, which has proven unable to manage its enormous inventory. By and large, they’ve been in a state of steady deterioration. 

This proposal looks to deal with 16,000 of the Land Bank’s 22,000 homes. Some estimates put the total number of vacant homes in the city at 55,000. 

Duggan, who has made blight remediation a cornerstone of his administration, pushed hard for this proposal. A vast majority of voting Detroiters share his priority. Some research has found that demolitions of blighted homes lowers crime rates and increases property values. 

“If you believe, as I believe, that we’ve raised enough generations of children in this city going by these blighted houses and it’s time to say to every child: ‘You deserve to live in a blight-free neighborhood,’ I hope they’ll consider doing that,” Duggan said in July, urging voters to approve the measure.

Despite strong voter support, Proposal N’s fate appeared uncertain after facing opposition from some community groups and years of criticisms about how the city handles demolitions. 

The city’s demolition program, which spent $265 million in Hardest Hit Funds from the federal government to demo more than 15,000 homes, has been plagued by scandal. It faced issues with bid rigging, cost overruns and using contaminated dirt as backfill. A recent investigation also found that in 2018 the city approved demolitions, against its own guidelines, despite the risks of lead exposure to nearby households.

Admitting failures in oversight, Duggan transferred the demolition program from the Land Bank to a city department. City Council will now have the authority to approve or deny all demolition contracts. 

There have also been questions about the city’s plan for rehabbing some salvageable, vacant homes to resell. Proposal N’s passage will allow the city to spend an average of $15,000 on home stabilization to clean them of debris, install clearview windows (which are not made of glass but are more protective than plywood) and patch roofs. But almost all these homes are in very poor condition — an earlier version of this proposal rejected by City Council last year would have demolished all but 1,000 of them. New owners will likely have to invest between $50,000 to $100,000 to make the homes livable. 

That’s going to be too expensive for most Detroiters to afford, especially since there isn’t currently a loan product for construction projects of this type. Arthur Jemison, Detroit’s chief of services and infrastructure, told Detour that the city is working with banks to develop a financial assistance program. Jemison said it could work similarly to Detroit Home Mortgage, which issues mortgages to cover the cost of purchase and repairs, and would keep monthly payments at or below 50% of area median income rents.

The homes will likely be sold through auction with support from community development organizations. 

This investment does not come without risks, either. The city will have to pay an estimated $240 million in interest on the bonds over 30 years. The city says that its finances are in good shape and that it hasn’t had trouble paying down debt. But the COVID-19 pandemic has strained the city’s budget, with a projected $410 million revenue loss in the 16 months since the start of the pandemic forcing large cuts to the most recent budget, furloughs and withdrawals from rainy day funds.

Nathan Bomey, a business reporter for USA Today and author of “Detroit Resurrected: To Bankruptcy and Back,” told Detour that the proposal is “risky” from a budgetary perspective. “There’s no other way to look at it. But it doesn’t mean that they shouldn’t do it.”

Detroiters thought blight needed to be addressed now. In the end, they’ll be taking on that risk, too, as taxpayers.