Detroit’s downward spiral has been legendary. Once the fourth largest city in the nation, and home to its largest industry, Detroit’s population has been cut in half, from 1.5 million in 1970, to less than 700,000 in 2012. Median household income is $27,862 compared to the state median of $48,669. The poverty level is 36.2 percent compared to a statewide level of 15.7. The murder rate is 11 times that of New York City, and the unemployment rate is above 18 percent, more than double the national average. Detroit Public Schools (DPS) have been under emergency management since 2008. In late February, the state review board revealed that the city faces a short-term cash $327 million budget deficit and an estimated $14 billion in long-term debt, primarily driven by unfunded pension and retirement health care obligations.
As a result, the city can’t provide basic services. The Detroit Fire Department is so short of critical resources, rotating ”brownouts” of fire companies are required. Forty percent of the city’s street lights are broken. For the past two years, the Bing administration has slowly adopted a city “triage” system, best described by the Detroit Free Press. “Infrastructure improvements, demolition activity, outdoor maintenance and development incentives will henceforth be concentrated in a relatively small number of neighborhoods that boast the high numbers of owner-occupied homes and little evidence of residential and commercial blight,” it reports.
To accord with this plan, the city’s 139 square miles have been broken down into four categories by Detroit’s Planning and Development Department: “steady,” as in little blight and a high number of owner-occupied homes; ”transitional,” as in a neighborhood on its way up or down; “varied” as in some streets are stable and others are not; and ”distressed” as in large amounts of blight, and few amenities, such as grocery stores.
Detroit residents have responded in kind. A staggering 47 percent of the owners of Detroit’s 305,000 properties didn’t pay their property taxes in 2012. Homeowner Fred Phillips illuminated the frustration many of those residents feel. ”Why pay taxes?” he asks. “Why should I send them taxes when they aren’t supplying services? It is sickening….Every time I see the tax bill come, I think about the times we called and nobody came.”
Yet it’s even worse than that. Detroit has some of the highest big city property taxes in the nation, and property assessments remain overly inflated, amounting to as much as ten times the market price of the property, according to recent research compiled by two Michigan professors.
This has led to another phenomenon. Property owners are allowing themselves to be foreclosed upon, and then re-buying the same property at a reduced price, legally eliminating their outstanding debt in the process. Six hundred properties were repurchased in this manner in 2012, triple the number that occurred in 2010.
In short, Detroit is a city on the brink of ruination.
~ Arnold Ahlert