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Lay of the Land, Part 1: How Detroit's Housing Crisis Got Worse

As I mentioned earlier this week, I sat down with Deborah L. Younger, the executive director of Detroit LISC, for a conversation about Detroit and our seemingly intractable land issues. Younger has also been appointed treasurer of the newly formed Detroit Land Bank Authority by Mayor Dave Bing. If anyone knows what it'll take to get a better handle on our land woes, it'd be her.

She held forth on a number of topics, including previously horrendous city planning, how racism and neglect combined with the economic meltdown to devastate our housing market and how the city appears to finally be getting more serious -- and realistic -- about managing its 138.77 square miles of terra firma.

It's lengthy, which is why I'm posting in two parts, but I also think her diagnoses are especially important since Younger is expected to play such an instrumental role in city policy going forward. In the first part of the discussion, she explains why our land crisis has gotten much worse in recent years. In part two, which I'll post tomorrow, she explains how we can really turn Detroit around.

So check it out when you can – and let me know your thoughts on her ideas and perspectives...

So is downsizing our best hope in Detroit?

DEBORAH L. YOUNGER: I don't like to use words like downsizing. Because we're not giving any land back. We're not going to say, ‘Here, Southfield, take some of this.' So what we really have to do is what I like to call re-imaging, re-imagining. That's really what we have to do. I think it's better to really figure out how we're going to return land to productive re-use. That doesn't mean becoming the Detroit of old. Most people talk about bringing people back to Detroit and all of that. Well, I don't think that that's immediately in our future.

What's immediately in our future is figuring out how we can be the best city of 800,000 to 600,000 people that we can be. We've got 139 square miles of land, so we have the land mass that can support 8 million people. And we maybe have 800,000 people. Hence we speak of the infrastructure and all. Well, we don't have the population base to support the infrastructure that we have. And then (that's) combined with us undergoing some of the worst economic times of the last 20 years. So not only do we not have the numbers, but sadly, the socio-economic status of the population that is left can't support the infrastructure as well.

How do we start?

DLY: There are critical tools (to help) – the land bank is one that's just up and getting going.

We have a land bank in Detroit??

DLY: Detroit is the only city in Michigan that is allowed to have its own land bank. There is a state (land bank) and there is a county (land bank), but the city's land bank has been operational since August. This is an organization that is building up from ground zero. It's a brand-new organization. The members are appointed three by city council, three by the mayor and one joint appointee. I am member of the land bank. I was appointed by the mayor. And I serve as the treasurer, go figure, the one who has to raise money for the land bank. So while the mayor and other leadership will set the vision for how the land bank operates, really the policies that the land bank implements around the management of property will be critical to the city's future. Certainly there has to be a vision, and we're hoping the mayor will articulate a vision that will lead our work.

But the mayor doesn't appear to have laid out any vision for land management or the land bank.

DLY: I think he does have a vision. We've met with him. I don't think he's ready to articulate it. I certainly don't want to speak for the mayor, but he has talked about master planning.

Even though the city just approved a master plan – finally – after eight years, it's antiquated. The plan was developed over eight years ago. And it took the city council eight years to approve it. So it's certainly not relevant, although it does allow for revisions. One of the things about planning in general: Most schools of planning teach you to plan for growth, not planning for shrinkage. And that's pretty much what this plan looked like. It does not plan for shrinkage. A new master plan would have to look at that.

We wait eight years for a plan and then it's outdated? Figures. What's changed in the time since the plan was conceived until now?

DLY: Foreclosure. We have just as many tax foreclosures as mortgage foreclosures. A lot of time it's people who have been in their house 30 years and can't pay the taxes and are losing their homes. We already had an economic crisis, and then came the foreclosure issue. For those of us who work in the field, we always hear about the irresponsible consumer who went out and over-mortgaged his home. In Detroit, that wasn't the case. It was, for the most part -- and I'm not saying that (irresponsibility) wasn't the case in some instances --- it was mostly predatory lending.

Detroit is not banked by traditional lenders. Seventy percent of the loans that were made in Detroit were made by brokers. When you look at the statistics, many people who got into these loans had scores of 700. They didn't need these types of loans. And because this community has not been banked by traditional bankers…they're here but only about 30 percent of the loans were made by them, by the B of As and by Chase.

Why do you think that is?

DLY: Why do you think? (Chuckles) I think it's the reasons we'd all think. There's redlining and racial bias. Detroit has had a strong history of that.

So it's a situation where banks are just turning people away, turning them down?

DLY: It's two things: Minority communities are typically word-of-mouth communities. If you hear your cousin Jo-Jo got a loan from so-and-so, you're like, ‘I make more money than Jo-Jo.' So smart brokers came in, worked communities, worked neighborhoods. So it was a combination of traditional banking not being aggressive, not really reaching out to those markets. I'm not going to say they turned down clients, but they didn't make a presence in these neighborhoods; they didn't work them in a way. So brokers are smart. They come in; they know it's a word-of-mouth community. They have outreach everywhere, so they are able to make in-roads into these markets. So you had a combination of redlining. And some of it was sheer neglect. There certainly was redlining and racial profiling, but it was a combination of all those things. And like I said, we have as many tax foreclosures as we do mortgage foreclosure in this city.

So you had a combination of all those forces: brokers who were unscrupulous, but aggressive and smart; banks who were redlining and even those who did want to lend didn't know how to reach out.

A perfect storm, eh?

DLY: Exactly. You had all those things that made us just ripe for this. The numbers are staggering. We have a team from Detroit. We're self-appointed, self-anointed. We call ourselves "The Vacant Property Leadership Team." LISC is a member of this. We've been trying to tackle all the issues that are going on, from appraisal problems to all the things that are keeping us from moving vacant property back to productive reuse and trying to develop the infrastructure and system, including trying to stimulate capital. There's no capital in Detroit right now. Nobody will lend in Detroit – or Michigan, not just Detroit.

Because of the employment situation?

DLY: Yes. When the state housing agency can't sell its bonds, it's bad. Those are always seen as safe.

So it's pretty tough. There's no investors. They don't want to come into Michigan. We have more foreclosures than 16 other cities combined. We heard some people complaining: ‘We have 5,000 foreclosures.' We're like, ‘Stop your whining.' We're approaching 100,000, which would be close to 30 percent of the houses.

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