Blight blitz builds up Detroit property values

Home property values in Detroit are beginning to increase in areas where blight has been removed, according to a new report. But the development comes at time when money for demolition is drying up.

The 36-page report, commissioned by Rock Ventures and the Skillman Foundation and released Tuesday, found demolitions have increased the value of surrounding homes within 500 feet by 4.2 percent, or an average of $1,106. Citywide, that amounts to an increase in home values of more than $209 million.

The report also suggests that combined with other efforts by the city that include code enforcement and sales of public assets such as side lots, the value of homes nearby increased by 13.8 percent, or an average of $3,634. Citywide, that amounts to an increased property value of about $410 million.

“The numbers are extraordinary,” said Mayor Mike Duggan. Getting rid of blight has allowed “good homes and good vacant homes” to increase in value. “We have said this all along.”

From January 2014 until July 2015, 5,812 blighted structures in the city were demolished.

The funding for demolition comes from the U.S. Treasury Department’s “Hardest Hit” fund. In 2010 the fund made $7.6 billion available for foreclosure prevention in 18 states, including Michigan. Michigan’s share was over $498 million. Detroit ended up getting $100 million of that for demolition of blighted residential structures and remediation. Most of that money is spent and is expected to run out by December, Duggan said.

The mayor plans to travel to Washington soon to meet with White House officials and others to lobby for the next round of money. He said funding is going to come in “four- to six-month” intervals at this point.

The demolitions so far amount to about 10 percent of the blight in the city.

The city could utilize some available state money from its distress fund and tax increment financing subsidies, TIF, to help fund some of the demolitions, said Dave Boerger, who works on government collaboration issues with the Southeast Michigan Council of Governments.

“But the amount Detroit needs is far more than what most municipalities need,” Boerger said.

“We need $400-$500 million,” to remove all blight in Detroit, Duggan said. “No one can provide such funding other than the federal government.”

Removing all blight by 2020 is one of the main goals of post-bankrupt Detroit. It’s a massive problem. In 2014, an extensive survey counted 40,077 blighted structures. Another 38,429 were in danger of becoming vacant and run down in the near future. The 2014 survey was done by the Detroit Blight Removal Task Force, which brought together public, private, nonprofit, federal and state partners with the city.

“Either we are going to get this done, or we are going to die trying,” said Dan Gilbert, the founder of Detroit-based Quicken Loans Inc. and Rock Ventures. He is a co-chairman of the task force.

The extent of blight in the city is widespread and deeply entrenched. Prior to the blight program, residents often complained empty buildings could languish for years with little or no action by the city to even secure the property.

A blighted home being demolished Tuesday on Chalmers sold for $65,000 in 2006, public records show. It was foreclosed on last year and became empty and an eyesore. Several nearby homes are listed on the market for around $35,000.

Gilbert praised the newly released report on property values.

“This study is the financial proof demonstrating blight elimination is an investment in the community that has a direct and immediate financial return,” Gilbert said in a statement.

laguilar@detroitnews.com

Twitter: LouisAguilar_DN