What happens to the remaining homeowners, their properties, and their neighborhoods in Detroit after the foreclosure crisis created a glut of abandoned, city-owned houses?
This is a rush transcript and may contain errors. It will be updated.
Jacqueline: This is Jacqueline Luqman with the Real News Network. In part one of our coverage of the massive foreclosure crisis in Detroit that was driven not just by the lingering damage from the 2008 recession, but also by the city overcharging homeowners $600 million in property taxes, we talked last with Mark Bettencourt of Reveal News about his investigation into how the city could have overcharged so many homeowners so much money. But that’s just one part of the issue, as the foreclosure crisis created a glut of abandoned city-owned houses that had a negative effect on the remaining homeowners, their properties, their neighborhoods in the majority black Motor City of Detroit. Katlyn Alo, investigative reporter for Outlier Media, joins me to explain what happens to these properties once they’ve been foreclosed and the effect this massive number of foreclosed properties have on Detroit’s remaining homeowners. Katlyn, thanks so much for joining me.
Katlyn Alo: Thank you for having me.
Jacqueline: So Katlyn, one of the results of the massive overcharging of property taxes in Detroit left the city with a huge inventory of foreclosed and abandoned homes. Now, most people in America are pretty familiar with the idea of a home or property being foreclosed and owned by the bank or owned by the city, but the scope of this issue in Detroit is unique. Can you give us an idea of just how big the foreclosed property inventory in Detroit really is?
Katlyn Alo: All of the inventory that is contained in the Land Bank Authority is not necessarily foreclosed, but foreclosure creates that cycle. It feeds it and it feeds that portfolio of real estate. There are several ways to state the scope of the issue in Detroit. The first is that the Detroit Land Bank Authority is the largest land bank in the United States. The second is that it is the biggest property owner in the City of Detroit. You can also look at the distribution and what that means for the remaining residents. About three quarters of all residential property in Detroit that is not owned by the Land Bank Authority is on the same block as at least one Land Bank Authority property. I know that that’s a mouthful, but it kind of gives you an idea of just how many Detroiters are living in close proximity to not just vacancy but Land Bank owned vacancy.
Jacqueline: Let’s get into what this means for the remaining residents and those homes. Now, the homes have sat vacant and the properties untended for years, stretching all the way back to the recession and creating, in some areas of the city, entire city blocks of abandoned houses. In some places, one or more house is abandoned in some neighborhoods, on some blocks, and there are a small number of occupied houses left on the blocks, a small number of residents still living in the neighborhood. So, what happens to those abandoned homes, and then what happens to the neighbors in the places where most of the other homes around them are owned by the city?
Katlyn Alo: The first question about what happens with the homes, a lot of that has been contingent upon whether or not the property sits in what’s called the Hardest Hit Fund zone, which means that these federal funds, that the City of Detroit decided to use for demolition, can be allocated to those zones, but not to properties that are outside of those zones. So, that can account for a lot of delays in getting demolition, even if a property has been slated for demolition, and could leave it sitting there.
Also, a lot of property wasn’t initially given to the Detroit Land Bank Authority. The authority was revamped after the bankruptcy and a lot of property, we’re talking it went from about 1500 to over 90,000 in around 2014, that sort of huge transfer was an effort to consolidate the ownership with the authority because land banks have special powers to clear title, and at the time that’s what the city thought was best.
So, as far as what happens with the vacant property, there are a slew of reasons why it could face delays, but what we hear from residents is basically not much. That if they are living next to it, we hear from folks who have boarded up the vacant properties next to them, in part because even if it is boarded up by the city, maybe it isn’t reboarded, whether because of the weather, or because of squatters, or someone who is coming in to strip the property. There are a whole bunch of reasons why the boards might come off, and the city might not necessarily reboard it.
Also, I think just overall it’s a relic of the home that it used to be and it’s a reminder of the disinvestment in the city. To live near vacancy was really my hardest task in telling this story for a national audience. I had folks ask me what the significance is. So, it’s an empty property that has boards on it, but it’s more than that, right? It’s lead paint. It’s asbestos exposure. It can harbor crime, and it often is just a symbol of what your neighborhood used to be and how vibrant it once was.
Jacqueline: There has been an interesting effect on the residents who remain in some of these neighborhoods where as much as the abandoned properties are neglected by the city, so are some of the neighbors, the residents who are left still living in occupied properties. What did you find in those instances?
Katlyn Alo: Detroit was built for, at its peak, close to 2 million, just under 2 million people. Today it’s under 700,000. It lacks the tax revenue to maintain its infrastructure. One woman that we spoke to, Sherry, had her water disconnected for something unrelated to the Land Bank. Really, it had to do with a leak in her property. We spoke to a spokesperson at the Water Department who said that the only time the city would basically foot the bill for that repair is if the whole water main for that block were getting replaced to remove lead. In those instances they would foot the bill for fixing the service line for individual properties.
But Sherry’s the only person on that block. Actually, she’s one of two on that census block, but on just her side of the street, she’s the only one there. So the rest of them, the rest of the parcels, are owned by the Detroit Land Bank Authority. So, it clearly wasn’t going to be a priority for anyone to remove and replace that water main. And so, Sherry was just kind of stuck. She did end up getting her water replaced because of media coverage-
Katlyn Alo: … and because some readers of Bridge Magazine donated their services and their money and made it happen. But, yeah, I think that is sort of a really unusual case-
Speaker 3: Ten minutes, Jacqueline.
Katlyn Alo: … but it really represents, I mean, what it’s like to just not be made a priority. When you live near to so much vacancy, that is something that Sherry said in her interview, that being the only one there, they like to forget about her. We heard a lot from folks who don’t get regular garbage pickup service, mail delivery, who are plowing the snow by themselves, and just generally a feeling of being alone because they physically are.
Jacqueline: These are our residents, again, residents who pay their property taxes. They pay their property taxes and they’re not able to get the services from the city in the home that they pay their property taxes on. Detroit implemented, and you brought this up, the large-scale demolition program to tackle the urban blight that these properties created. Now, the $1 billion, $1 billion with a B, project was welcomed by some Detroit residents, and there’ve also been some criticisms and problems with the demolition program that you mentioned. Can you go into a little bit more detail about how that demolition program has fallen short, or hasn’t met the needs of the remaining residents, and hasn’t tackled the problem, especially considering its scope, the way that Detroit hoped it would?
Katlyn Alo: The demolition program has been fraught with varying criticisms. Part of it is federal investigations and that’s something that I don’t feel like I can speak to because I didn’t cover those in step-
Katlyn Alo: … as they happened.
Katlyn Alo: But in the piece that we did with Reveal from the Center for Investigative Reporting and PRX, I touched on this meeting, right? The story opens and closes with this meeting, just to impress upon people that it was packed. It’s a huge auditorium, and it was packed because Detroiters care about housing and they care about demolition. That also speaks to the scope that you asked about earlier.
The demolition, the first half of these funds, right, have been exhausted. That goes back to the federal dollars that I was talking about earlier, where if you live in a specific HHF zone, you can have these federal funds that the city elected. That’s important. The city chose to use these funds for demolition. Today, well, last year, the mayor started asking for this bond proposal and he needed City Council to approve it to be on the spring ballot. He was asking for another $250 million in bonds to carry out more demolition that would not be constrained by these zones. And so, that’s important for folks like Jackie and Kelly in the story who are not in an HHF zone, who certainly could have benefited from these funds, perhaps.
What we found, or what I found, sitting and listening to public comment for many hours in a really overheated, packed auditorium was that people just didn’t trust the city to be good stewards of their their tax dollars. That they don’t understand where the money went, which makes sense. If you’ve lived on a block with high rates of vacancy and therefore your block was not prioritized for demolition, what you see is that millions of dollars has allegedly been allocated to it, but it doesn’t feel like it has had much impact in your neighborhood.
Katlyn Alo: And so, to go to voters and ask for more money feels like salt in a wound. Right?
Jacqueline: Right, right.
Katlyn Alo: Especially for folks like Jackie who have been inquiring about a demolition for a decade. Right? So, to ask to foot another bill just further down the line, and also coming off of a bankruptcy, asking to create more municipal debt is a hard sell, I think. The City Council ultimately voted not to put it on the ballot. I spoke to one council member who said that this felt like voter suppression, that they were rushing this issue to the spring ballot, which historically has really low turnout, and that they just didn’t have their ducks in a row. The current demolition program is not completely out. We don’t know if it’s still under active investigation for misappropriating funds, and in the end, I mean, at least that particular bond issue has become dead in the water because City Council said no.
Jacqueline: Another issue is that the properties held in the Detroit Land Bank have also fueled a greater interest by private investors, hasn’t it? So, I mean, there’s been this gentrification. There’s been a big deal made about the gentrification in Detroit that was dying, as it was described in the media for a long time. So Katlyn, is it fair to say that this massive inventory of properties and the management or the lack of good management of the properties by the Land Bank was part of the engine that has been driving this gentrification in Detroit, welcoming new residents with new money, but also pushing out Detroit residents, poorer residents who had no access to the properties and no access to affordable housing, even though there were literally tens of thousands of abandoned houses the city owned?
Katlyn Alo: I spoke with Arthur Jemison, who works in the Housing and Revitalization Department for the City of Detroit, and essentially asked him if this was this Land Bank inventory. He brought up eminent domain, which is restricted in Michigan. Eminent domain, it has a fraught history in Detroit and Hamtramck in particular, and it’s restricted so the government cannot take land for private development in the same way that some other states allow their cities to.
The mayor has said something about being able to leverage, well, basically being able to facilitate redevelopment without eminent domain. I asked if the Land Bank inventory was essentially a work-around for that. If you hold and sit on all of this property, is that a way to get around the fact that you can’t take it from private owners? Mr. Jemison said, “No. It is not a work- around,” but it is the hand that they’ve been dealt, and they are trying to be opportunistic.
I think that we see that in a degree of responsiveness. We have folks like Jackie who have been trying to get the same property torn down for a decade. In 2014 it was transferred to the Land Bank Authority and she hasn’t been able to get it torn down still. Then we have the Fiat Chrysler deal that involved the transfer of over 150 Land Bank properties, and the whole facilitation of land acquisition was done in about 60 days.
Katlyn Alo: You hear that, and I think in some ways it’s unsurprising. I don’t think that people are surprised when the Fiat Chrysler’s and big corporations of the world can can get a city to respond faster than an individual. Obviously, there’s power there and there are more resources, but it’s frustrating. To position those two truths side by side, that the Land Bank could move 150 plus properties for this deal very quickly, but this property we’ve been getting sort of vague answers about, it just being delayed because we can’t get a contractor and it’s not in a specific zone, that’s a frustrating reality. Those are truths to reconcile.
I think that what you mentioned about us having basically a shortage of affordable housing and yet there’s an incredibly vast stock of vacant properties, also two truths that are very difficult to reconcile. Part of it is that a lot of these vacant properties are not livable. They have gotten to a point of disrepair where it would not be safe to occupy them, and that’s true as well. We hosted a forum as a publication, Outlier Media. We hosted a forum to bring in advocates, residents and other just interested parties to come in and ask a question: if you were to propose a $250 million bond, what would it be for? Not one of them said, “Just for demolition.”
Jacqueline: Wow. So Katlyn, final question. In the light of all of these different and opposing truths that Detroit residents are facing, what is the outlook for them? Where do they go for help, and where do our viewers go to find out more information, especially if they’re in the Detroit area or they are interested in finding out more information on this issue in the Detroit area?
Katlyn Alo: Christine MacDonald, one of the reporters for the Detroit News that did the first segment of the piece, has a lookup tool online now so people can see if their properties were over-assessed and by how much. We are working to incorporate that data into Outlier’s texting system, which is SMS because a lot of low income Detroiters don’t have consistent access to internet.
So that’s part of my job, is maintaining the data that feeds that system. People can text Outlier to 73224 in order to learn more, or they can text Detroit to 73224 and enter an address and get information like whether the owner is behind on taxes, and also information on recourse, like who to call if you are in a particular situation. There’s always an option to reach out to a reporter if you have questions or need help getting answers if you’ve gotten the runaround with any sort of city program. That’s what we do.
Jacqueline: I really want to thank you, Katlyn, for joining me today to talk about this issue, to explain its depth and its scope in this one aspect of just foreclosed or abandoned in particular, vacant rather, properties in Detroit.
Katlyn Alo: Thank you for having me, and thank you for the questions. Yeah.
Jacqueline: And thank you so much for watching. This is Jacqueline Luqman with the Real News Network in Washington D.C.