I watched two YouTube videos focused on Detroit neighborhood development. One video is “People Are Making Big Money Kicking Detroit Residents Out Of Their Homes” from Vice News / HBO (published 2017) and the other is “Detroit's Sacrifice For Economic Recovery” from Business Insider (published 2019). These videos each focused on separate but related issues in Detroit: the pushing out of homeowners and renters from their neighborhoods.
Major investors and real estate firms like Bedrock Detroit, Dan Gilbert’s firm, are throwing cash at Detroit’s downtown and revitalized neighborhoods like Midtown. They are buying old buildings and tearing them down to put new structures up, or remodeling them and increasing rent. This pushes out long time tenants in neighborhoods seeing increased investment. Their development of neighborhoods is increasing property values, and while this can be beneficial when selling a home, those who want to continue living in their home are just faced with higher property taxes.
City Councilmembers and Mayor Duggan are attempting to help these citizens, but it is not enough. The mayor has announced a $250 million fund dedicated to building and supporting affordable housing units, and developers provided tax benefits from the city are now also required to have 20% of their units be affordable housing units. This is not enough for many residents, however, as more people are being pushed out than can be supported in the affordable housing units being built in these developments. It also does not rectify the major issues facing Detroit renters and homeowners.
For homeowners, one of the central problems is that they pay property taxes based on an assessment of a property’s value. If the home value increases due to investment in a neighborhood, property taxes increase, sometimes to a level unsustainable for local residents. It also works in the opposite direction. In the late 2000s during the Great Recession, home values tanked, but Detroit did not lower taxes a proportional amount. Many people were overtaxed for what their homes were actually worth, then charged interest on top of being overtaxed, and could not pay. Even if homeowners were taxed an appropriate amount due to surrounding developments raising property values, they could not pay those increased property taxes. Wayne County then seized their home, allowing it to be bought and sold to investors. This practice continues to this day.
These tax foreclosures destabilize communities, force lower income residents out, and turns homeowners - in a country where generational wealth is heavily dependent on property ownership - into renters. Many of these being forced out are older residents, either retired or at the end of their careers, who are being left behind by the city they supported through incredibly difficult times. Economic development is good. Investment and development of neighborhoods is a great thing, but the city and county governments are failing its constituents and longtime homeowners. The blame should not be placed on developers trying to revitalize these neighborhoods and bring money back to Detroit. The blame is on the government who are letting down these citizens with their policy, or lack thereof. There should also be no mistake, this is a purposeful system. Since 2010 the Wayne County General Fund has received $456 million in interest and fees from the seizing and reselling of foreclosed homes. Without this system, the county would be broke. While it is great that Midtown, Downtown, Corktown, and other “on-the-rise” neighborhoods are seeing this revitalization, developers should keep in mind those they may negatively impact, and the local government needs to find suitable answers to help its most vulnerable citizens.
(The impact this has on the people's trust of their local government must be taken into consideration as well)