I am one of millions who call themselves ‘Detroiters’ but who live away from the city. For us, the city of Detroit is about 15 miles away. A 25 minute drive and we’re there, though sometimes it feels like a million miles away. Increasingly, that type of separation is now happening within the city itself. Detroit neighborhoods continue to suffer while the downtown area thrives.
If you’re not from Detroit, you may have missed on a lot of great things happening in the Downtown area of Detroit. And a lot has been happening.
Over the past fifteen years or so, the riverfront has and continues to be completely transformed. Many industrial sites used to line the river, but largely that is being transformed. There’s a miles long river walk that has been devloped for walking and biking, and parks, housing, and other river friendly development has largely unleashed the potential that many saw for decades, but never come true until now.
Old buildings getting new life
Downtown Detroit was once home of dozens of old skyscrapers that had once been dazzling, but now sat completely empty and in various states of disrepair. In the early 2000’s, with a break at the end of the decade due to the great recession, interest started growing and some of these buildings started getting attention. Most had good bones and could be transformed. Dan Gilbert, the owner of Quicken Loans as well as the Cleveland Cavaliers basketball team, took a very big interest a few years ago, and started buying building after building and transforming them. Recently, he proclaimed that ‘there aren’t many buildings left’ to redevelop. Walking downtown a few weeks back, you could see the transformation underway as cranes are everywhere and buildings are getting new life.
Rents are increasing
For both residential and office space, rents have been steadily increasing, practically doubling over the past few years alone. People who were here before the rapid rise aren’t happy, but many realize that this is a good thing as it shows that demand is up. In fact, rents are near a rather important tipping point. See, most of the development taking place right now also includes tax subsidies, either from the state or city or both. At this point, the subsidies are largely required for the developer to turn a profit. However, the rents are near the point where they could be self-sustaining, meaning tax subsidies would no longer be required. This is a huge step.
This all sounds well and good, but the problem is that the downtown area only comprises a small area of Detroit. While there are other areas adjacent to downtown that are seeing some improvements (such as the areas around the Wayne State University campus, and the areas around some of the big hospitals in the area), the vast majority of Detroit remains in trouble.
The Neighborhoods of Detroit
Neighborhoods in Detroit have taken the worst brunt of the long decline seen by the city, and unfortunately the decline here hasn’t slowed down much. This is bad news, because as much as it’s great to see things change and people move into the downtown and surrounding areas, the fact is that a majority of people and a majority of land that makes up the city are tied to the neighborhoods. It’s also where the poorest live and they are not seeing the signs of improvement that are being seen just a few miles away.
What are some of the causes?
Old housing stock
Many of the neighborhoods that make up Detroit were built when Detroit was booming and growing and was one of the largest and most important cities in the United States. The problem: That all happened 70-80 years ago. The fact is, many of the houses are old and simply haven’t been able to stand up to the elements.
Little value makes it hard to fix up houses
Houses in Detroit are not worth much. While the media recently latched onto stories where homes could be had for $100, those were not anywhere near move-in ready. They basically had four walls, a roof, and hadn’t been set on fire. They were homes that nobody wanted. A home in Detroit can be purchased for a few thousand dollars, however it’s likely going to need improvement, but therein lies the problem. A house might only appraise for $5,000 but need $20,000 just to do things like replace the wiring, plumbing, and roof. No bank is going to offer a loan, so nobody moves in and the houses continue to deteriorate in condition.
Decades of blight
People have been leaving Detroit for decades. This means a need for a lot less homes than once existed. However, what usually happened with homes after they weren’t needed is they fell into disrepair and often were burned down. And there they sat for years, exacerbating the decline of the nearby houses and often creating a ripple effect. No matter how many homes were torn down, it seemed more blighted homes popped up. Over the past few years, federal money has actually accelerated this, and some neighborhoods are seeing a clear-out of blight, which is at least leveling things off. This is a start, though there’s a long way to go.
This might be the biggest factor that needs to be corrected. The Detroit Public School district is a mess. Every year more buildings close because more people are leaving. For years, the district attempted to shore things up, often taking on new debt, hoping that the tide of people leaving would stop. It didn’t, so eventually the debt grew while revenues continued to shrink.
It has led to the Detroit Public School district becoming one of the worst performing districts in the
state country. It’s a mess and it’s now a cycle of doom that seemingly has no end in sight. About 10-15% of the state funding provided per student goes to service debt. It’s awful.
The state is looking at ways to scrap the entire district. They would write a check for the debt, and let the district start over, debt free. This would be on scale with the city of Detroit bankruptcy a few years back, but while there is a lot of resistance (people are concerned over who would run the new district, and also what assurances could be made that the spiral wouldn’t just start all over again, not to mention people throughout the state who don’t want their tax dollars to erase this debt), it’s clear that something has to be done.
Hoping For Detroit Neighborhoods To Transform
It’s pretty sad and I hope things improve soon. In order to get to the city, you have to drive through some of the neighborhood areas. This can be a pretty sad drive. I spent a lot of time in Detroit when I was a kid. My grandparents lived there and I spent some weekends over at their house. Their neighborhood has held on but does have problems.
I root for Detroit. It’s great to see downtown and the business districts turn around. But the transformation will not be complete until the neighborhoods follow.
It has to start somewhere, and sometime. I hope it starts soon.
Readers, have you heard any of the positive stories about Detroit? Or is the perception the same as it’s always been?Copyright 2017 Original content authorized only to appear on Money Beagle. Please subscribe via RSS, follow me on Twitter, Facebook, or receive e-mail updates. Thank you for reading.