UPDATE, Oct. 7: This story was updated with additional information about the number of homes that will need to be restored under the city’s plan. See the section “What repairs will be done on these homes?” for more details.
Of all the candidates and issues being voted on in the November election, perhaps none will have a bigger effect on Detroit’s built environment than Proposal N.
Part of a multi-year effort by Mayor Mike Duggan to eliminate blight in the city, the ballot initiative would allow the city to issue $250 million in bonds in order to demolish 8,000 homes and secure up to 8,000 salvageable homes so they can be resold.
We’re here to lay out the most important details of the proposal and answer the most pressing questions so you can make an informed vote on Proposal N.
What is Proposal N?
Proposal N is a Detroit ballot initiative that voters will decide in the Nov. 3 general election. Here is the language you will see on your ballot:
Proposal N Neighborhood Improvement Bond Proposal
Shall the City of Detroit issue bonds in an amount of not more than $250,000,000 for the purpose of paying the cost of neighborhood improvements in the City through property rehabilitation, demolition and other blight remediation activities? The bonds will be payable from taxes the City is allowed to levy in addition to state statutory and City Charter limits.
The total debt millage required to retire this proposed bond issue and all voted bonds of the City is estimated to remain at or below the debt millage levied by the City in 2020. If approved, the estimated millage to be levied in 2021 for the proposed bonds is 3.114 mills ($3.114 per $1,000 of taxable value) and the estimated simple average annual millage rate required to retire the proposed bonds is 2.665 mills ($2.665 per $1,000 of taxable value). Each series of the bonds shall be payable in not more than 30 years from its date of issuance.
You will be asked to vote yes (to approve the $250 million bond initiative) or no (to reject it).
Why is Proposal N on the 2020 ballot?
Mayor Mike Duggan has made blight elimination a cornerstone of his administration. The city has already spent down $265 million in federal Hardest Hit funds to demolish around 20,000 homes. And Duggan tried to get City Council to pass a different version of the ballot initiative last year that was essentially a demolition bond. It would have raised the same amount of money for demolishing 16,000 homes while rehabbing only 1,000 homes.
With strong opposition from some residents, Council rejected the earlier draft. The current proposal, which City Council approved for the ballot in a 5-4 vote this August, tries to address a similar number of homes while striking a better balance between demos and rehabs.
How much of an impact will Proposal N have on abandoned homes in Detroit?
The Detroit Land Bank Authority owns about 22,000 abandoned homes — this proposal addresses 16,000, or about 75% of them.
But parcel mapper Loveland, which aggregates data from USPS, estimates that there may be over 55,000 vacant homes in the city. That large discrepancy is likely due to how the city classifies vacant versus abandoned, as well as the fact that the city doesn’t own all vacant properties. While it’s tricky if not impossible to determine the exact number of blighted homes, this proposal won’t be able to address all of them — no matter how many there actually are.
It’s also true that the city does not currently have the resources to deal with this problem adequately. The Detroit Land Bank’s inventory is too large to properly maintain, resulting in the rapid deterioration of homes. The longer this problem isn’t addressed, the worse it will get.
What repairs will be done on these homes?
The proposal would set aside $90 million of the funds for home repair, just over a third of the $250 million. At the city’s estimated cost of $15,000 per home, that would cover repairs on 6,000. The city has identified 8,000 homes for preservation in total, but sold 489 of those in September and expects to sell about 1,500 more in the next year without first spending money on repairs.
The repairs themselves are really closer to stabilization than rehabilitation. Work will include cleaning homes of debris, installing clearview windows (which are not made of glass but are more protective than plywood), and patching roofs. The $15,000 won’t cover a full roof replacement for homes that need one. Patching is a temporary stopgap for a leaky roof, so there will be some urgency to sell these homes soon after they’re secured.
How will the homes be sold, and to whom?
Duggan has also said that he’s working with City Council to develop a policy that would give priority to buyers who live near the newly stabilized homes.
But new buyers would likely have to invest a lot of money in the homes to make them livable. Full rehabs on Land Bank homes in this condition can cost up to $100,000. That’s out of budget for most Detroiters.
But Arthur Jemison, Detroit’s chief of services and infrastructure, says the city is working on several strategies to get as many of the homes as possible into the hands of Detroiters. That includes working with banks to develop a loan product — similar to Detroit Home Mortgage, which issues mortgages to cover the cost of purchase and repairs — with monthly payments at or below 50% of area median income rents. Jemison has also been in discussions with Community Development Organizations to include them in a loan or gap-funding program that they can deliver directly to residents in their neighborhoods.
“We’re a loan product away from having a real bank of houses to grow homeownership in our city,” Jemison says.
Donna Givens, executive director of the Eastside Community Network, is part of a group of community development organization leaders that has been meeting with the city weekly to work through these issues. But she would like more assurances that the homes will benefit Detroiters.
“We haven’t figured out a way to leverage the city’s vacant properties to address our affordable housing crisis,” she says. “With the blight bond, it’s not clear if we’re moving in that direction at all.”
How will demolitions be handled?
Many have criticized the city’s management of its demolition program. While under the purview of the Land Bank, the program 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.
This ballot proposal would fold the demolition program into a new city department, the Detroit Vacant House Management Department. The move is intended to increase the program’s transparency, as City Council would have oversight over all demolition contracts. The new department will also submit quarterly reports on its progress.
Jemison also says that the Hardest Hit funds forced the city to concentrate demolitions in only a handful of neighborhoods determined by the federal program. Without those constraints, they would have more discretion and a broader reach.
What will be done with the vacant land?
Large swaths of Detroit are already vacant, and this initiative will only increase the city’s vacant parcels. The Land Bank, which has been criticized for not selling these parcels to nearby buyers, has an estimated 66,000 empty lots in its inventory.
While there is no comprehensive plan for all this empty space, the Land Bank recently announced an update to its Land Use policy, which will allow homeowners to buy a vacant lot on the same block for $250 if it goes unclaimed by an adjacent property owner for six months.
The City Planning Commission is also working on updating its old zoning ordinance to allow for more creative uses of vacant land, like solar arrays or more expansive urban farms.
Is the Proposal N plan the right way to go about blight elimination?
Homes that aren’t salvageable will need to be demolished at some point. But not everybody feels that the plan outlined by Proposal N is the best way to deal with blight.
Givens says blight’s root cause needs to be attended to first. “Before we eliminate blight, we have to stop the bleeding,” she says. “Figuring out the blight problem begins with keeping people in their homes.”
She would like to see more emphasis on reducing or eliminating foreclosure, grants for home repair, ending predatory lending practices and repaying residents who were overtaxed by $600 million between 2010 and 2016.
How does the funding work for Proposal N?
The initiative will be funded through municipal bonds, a fairly common method that cities use to raise money for major projects. According to a city memo outlined by the Detroit Free Press, the city plans to repay the bonds over 30 years with interest rates between 3.64% and 6.58%.
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.
Moreover, the ultimate cost of the bond won’t be $250 million. The city could have to pay an additional $240 million in interest over the years. But Jemison said that there won’t be a better time to issue these bonds because interest rates are at “historic lows.”
Will Proposal N increase taxes?
Duggan has stressed that residents’ property taxes won’t go up if Proposal N is approved. Technically, he’s right. But that’s only because the tax rate was going to drop by three mills (about $57 per year for the median home value in Detroit) in the next fiscal year.
So, Detroiters were going to see their taxes go down slightly, which won’t happen if Proposal N passes.
Anything else I should know?
The city has stated a goal of using Detroit-based contractors for at least 50% of all demolitions and rehabilitations. Detroit Employment Solutions Corporation and Detroit at Work are going to do recruitment and training.
Proposal N is pretty complicated. Can you break it down for me?
Blight has been a persistent problem in Detroit. With thousands of vacant or abandoned properties in a rapid state of deterioration and no money left to deal with them, it’s clear something has to be done.
But there are still plenty of legitimate concerns you might have about Proposal N:
- Does it strike the right balance between demos and rehabs?
- Will the rehabs be adequate to preserve the homes long enough to be sold?
- Will they actually get into the hands of Detroiters?
- Is there a decent plan to deal with all the new vacant land that will be created?
- Can the city be trusted to properly administer the program given the problems it’s had with demolitions in the past?
- Should the city take on additional debt when its budget is currently strained?
These are hard questions to answer. Ultimately it may come down to how much faith you have in the city to carry out Proposal N’s plan.
Do you have additional Proposal N questions before you make your decision? We’ll do our best to answer them. Email email@example.com.