Drive through almost any neighborhood in Detroit and you’ll quickly see two things: Dilapidated vacant housing and unkempt vacant fields.
This should lead you to two conclusions: First, a city that has lost 250,000 people since 2000 alone has a lot of surplus housing to demolish. Second, however necessary, demolition doesn’t revive neighborhoods. It just creates a different kind of blight.
“Once we can get that done,” Dan Gilbert explained to the Techonomy Conference about his demolition vision, “you will have open pieces of land, and you’re going to have, more importantly, hope and optimism.”
Based on its many fields of urban prairie, Detroit’s east side must be literally bursting at the seems with optimism.
What Detroit neighborhoods need as much as, perhaps more than, “open spaces” for developers is modern infrastructure and efficient public services at a rational price. Otherwise those open spaces will simply remain undeveloped weed farms.
The street lights need to work, the cops need to come, and the public transportation system should accommodate commuters rather than commuters accommodating the system. Those things need to be provided at a reasonable tax rate relative to other communities.
A major impediment to making that happen is a broken tax system that creates—forgive the overused cliché—two Detroits. The first Detroit pays inordinately high local taxes for inordinately poor public services. Its taxes don’t pay for city services so much as it funds tax expenditures for the second Detroit—the powerful and well connected. People like Dan Gilbert, basically.
Stephen Henderson at the Free Press once calculated the effective tax rate for Detroit homeowners at 97 mills, and 114 mills for non-homestead property owners. The statewide average is 31 mills for homestead and 47 for non-homestead.
That's what someone living in Brightmoor has to pay. If Gilbert builds on the Hudson's site, for example, it will be exempt from most local and state taxes for 15 years. Presumably, the Detroit Fire Department won't be exempt from calls to the property.
We’ve been told for decades that tax abatements and subsidies are necessary to stabilize and jump-start Detroit’s economy. Yet from Poletown and Riverfront Apartments to subsidized loft development and ballparks to Compuware and Quicken these tax expenditures haven’t forestalled the bleeding of population or the decline of the city’s neighborhoods. Nor have they jump-started a significant local retail economy on par with comparable cities.
The late Ken Cockrel Sr. was right: Tax Max [Fisher] and his pal, Al [Taubman]. Throw in Mike Ilitch, Emmett Moten, Dan Akerson, Gilbert, and all the rest.
We shouldn’t tax them just for the sake of feel-good, soak-the-rich populism. Although, let’s just say this out loud: If these interests didn’t receive such generous public subsidy, maybe they wouldn’t have to donate police cars to a bankrupt city. It's like pre-revolutionary France where the middle-class Third Estate paid the tax bill while the First Estate offered a gratuit--a tip.
Downtown business interests, developers, and all the assorted other influential people need to be taxed the same way an East English Village resident or Fred’s Key Shop is taxed because then maybe Detroit will be forced to meaningfully reform its tax system.
It’s like Sean Connery said in “The Hunt For Red October:” "When he reached the New World, Cortez burned his ships. As a result his men were well motivated."
As it stands now, the people who fund campaigns for Detroit politicians—at least those who win elections—don’t need to worry so much about the city’s 5% utility tax. Even if they have to pay it, they’ll likely make it up on the back end with some other tax expenditure.
Nor do they particularly care about police response time because they can just hire their own security—OCP says what?—to patrol their 7.2 mile fiefdom.
Detroit requires a conversation about how much government it can afford, and what essential services that government can and will provide. Otherwise, no one is going to move to Detroit’s hopey open spaces to pay mills for lousy public services. And the tax abatements (see Brush Park, circa 2001) required to lure a developer to those fields of optimism? Such policies only ensure the city’s tax burden continues to be only the responsibility of long-time residents and small businesses. That dynamic isn't sustainable.
Reform will only happen when all the players approach the issue on equal footing, facing the same challenges with service delivery and tax burden.
