Does Detroit Need a Homestead Act?

 

shutterstock_115828237An interesting suggestion from University of Georgia economist Jeffrey Dorfman, writing at RealClearMarkets:

A recent report by the Detroit Blight Removal Task Force calculated there were likely 72,000 blighted structures and over 6,000 vacant lots within the city of Detroit. Their latest estimate of the cost of addressing this problem is $850 million for the residential structures and between $500 million and $1 billion for the industrial sites. That is a lot of money for Detroit, and if they can come up with the money it would take a long time to complete the task. A better solution would be a city homestead act.

Much of the United States was settled under various versions of homestead acts. Depending on the location and time period, a settler could obtain 160, 320, or 640 acres for free subject to the requirement to live on and improve the land. From 1862 until homesteading was finally ended in 1976 1.6 million Americans gained ownership of 270 million acres, equal to about 10 percent of the entire nation’s land mass. While the U.S. gave away vacant, pristine land, Detroit can do a modern variant and give away blighted properties.

For example, Detroit could allow contractors and developers to claim up to ten acres of blighted residential land or a single blighted commercial or industrial parcel. For residential sites, in exchange for the land, people would be required to clear the site within six months and either begin construction of new homes within two years or turn the land into a publicly accessible park until they are ready to build. For industrial sites, the claimants would be required to submit a plan for remediating the site to the city and have the plan approved within two years. If claimants do not follow through on their part of the deal, the land would revert to the city.

With the claimants paying the costs of clearing away the blight and improving the properties, the city would save over $1 billion…

Well? What say you, Ricochetti?

There are 69 comments.

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  1. user_96427 Contributor
    user_96427
    @tommeyer

    That’s… that’s actually a really good idea.

    • #1
  2. Tim H. Member
    Tim H.
    @TimH

    I’m intrigued by the idea, but (at least in this excerpt) I don’t see how he proposes the city to gain title to the “blighted” properties.  By eminent domain?  Even though the Supreme Court’s Kelo vs. New London decision said that it was constitutional to condemn one man’s land to give it to another, I’m passionately opposed to this, and I’m positive they got this wrong.

    But if the current owners voluntarily sell to the city, I think it’s a fine idea in principle.  In practice, I don’t know how Detroit would get the money to buy up enough to make this work.  Perhaps they could issue bonds, betting that this will pay off enough in the long run for them to have more tax receipts in the future.  (Clearly, I don’t know much about municipal bonds.  Is this something they could do?)

    • #2
  3. WI Con Member
    WI Con
    @WICon

    It’s an intriguing and creative idea. I’d still want some assurances from that inept & corrupt local government as to tax, regulatory environment and assurances as to city service levels & costs. 

    Sure, there’s lots of property to be had but there’s a reason everyone left that town. If that isn’t corrected in some way, it’s hard to see the prospect of free land/buildings enticing people, developers and businesses in the numbers necessary to turn things around.

    • #3
  4. Misthiocracy Member
    Misthiocracy
    @Misthiocracy

    Not just Detroit.

    Homesteading never should have ended in 1976.

    http://www.nationalatlas.gov/printable/images/pdf/fedlands/fedlands3.pdf

    • #4
  5. user_138562 Moderator
    user_138562
    @RandyWeivoda

    Tim H.:

    I’m intrigued by the idea, but (at least in this excerpt) I don’t see how he proposes the city to gain title to the “blighted” properties. By eminent domain? Even though the Supreme Court’s Kelo vs. New London decision said that it was constitutional to condemn one man’s land to give it to another, I’m passionately opposed to this, and I’m positive they got this wrong.

    But if the current owners voluntarily sell to the city, I think it’s a fine idea in principle. In practice, I don’t know how Detroit would get the money to buy up enough to make this work. Perhaps they could issue bonds, betting that this will pay off enough in the long run for them to have more tax receipts in the future. (Clearly, I don’t know much about municipal bonds. Is this something they could do?)

    I think there are a lot of properties that have been abandoned.  If years go by without property taxes being paid and nobody living there, I suppose the property is considered forfeit. 

    • #5
  6. user_646010 Member
    user_646010
    @Kephalithos

    Troy Senik, Ed: For residential sites, in exchange for the land, people would be required to clear the site within six months and either begin construction of new homes within two years or turn the land into a publicly accessible park until they are ready to build.

    Eliminate the demolition requirement, and this proposal seems reasonable.

    • #6
  7. Songwriter Inactive
    Songwriter
    @user_19450

    I like the homesteading idea.  I was in Detroit last weekend.  Saw the old train station.  What a magnificent old building – and it is just falling in on itself.  I told my host as we drove thru town that somebody with some money could swoop in and own a whole lot of the city real quick.

    • #7
  8. Mike H Coolidge
    Mike H
    @MikeH

    I’d like to extend this offer to potential immigrants. If they follow through, they get a greencard.

    • #8
  9. Casey Inactive
    Casey
    @Casey

    Kephalithos:

    Troy Senik, Ed: For residential sites, in exchange for the land, people would be required to clear the site within six months and either begin construction of new homes within two years or turn the land into a publicly accessible park until they are ready to build.

    Eliminate the demolition requirement, and this proposal seems reasonable.

    I think requirement is required as some sort of proof that something is going to happen.  Otherwise the incentive would be to pick up free property and hope those around you fix up their property and raise your value.

    • #9
  10. user_252791 Inactive
    user_252791
    @ChuckEnfield

    Tim H.:

    I’m intrigued by the idea, but (at least in this excerpt) I don’t see how he proposes the city to gain title to the “blighted” properties.

    The vast majority of these properties either are, or will soon be, in tax default.  I don’t think possession by the city will be a problem in many cases.

    My skepticism derives from a bleak outlook for Detroit’s recovery, the value of the properties, and government’s inability to get out of its own way.  While these are not mutually independent, I’ll attempt to discuss them as if they are.

    On the subject of recovery, I think Detroit will recover, but slowly, and to nowhere near the same size that it once was. That means any investment will probably take a long time to pay off, and some of these properties may never pay off.  If buyers can’t predict which properties are likely to pay, the risk will make it hard to invest.  If they can predict it, the city will be stuck with the ones that won’t pay.

    Continued Below.

    • #10
  11. user_646010 Member
    user_646010
    @Kephalithos

    Casey: I think requirement is required as some sort of proof that something is going to happen. Otherwise the incentive would be to pick up free property and hope those around you fix up their property and raise your value.

    Perhaps, but the proposal, as currently written, ignores a sizable demographic: those who wish to restore. I refuse to believe that every “blighted” building is beyond repair, and I’d hate to see Detroit fall victim to 1950s-style urban renewal.

    Of course, with so few structures remaining in many areas, some rebuilding is necessary.

    • #11
  12. user_352043 Moderator
    user_352043
    @AmySchley

    Randy Weivoda:

    Tim H.:

    I’m intrigued by the idea, but (at least in this excerpt) I don’t see how he proposes the city to gain title to the “blighted” properties. 

    I think there are a lot of properties that have been abandoned. If years go by without property taxes being paid and nobody living there, I suppose the property is considered forfeit.

    The city gaining title is not as big a problem as you might think.

    As the city’s population has declined by half since 1950 to about 900,000, more than 39,000 parcels have fallen into the city’s control  Another 10,300 parcels are owned by the state or federal government, meaning that roughly 12 percent of all parcels in the city are publicly owned.

     http://www.detroitnews.com/article/20110204/METRO01/102040377

    By now, demographers and urban planners acknowledge that about 40 square miles, or close to a third of Detroit’s 139 square miles, consists of vacant land — empty, untaxed and serving no constructive purpose.

    About half of this land is owned by the city, county or state through tax foreclosure.

    • #12
  13. user_252791 Inactive
    user_252791
    @ChuckEnfield

    Continued from above.

    Regarding value, these properties only have any if the future revenue they’ll provide is greater than the up-front and ongoing costs.  Demolition, liability, and taxes all add up, and if you think it will be a long time before you can collect any revenue, it would be a difficult investment to make.

    Finally, given the current degree of meddling by governmental authorities, I wouldn’t invest one penny in a site that would revert back to government ownership if I didn’t develop it, even if only modestly, within two years.  Given zoning, construction permits, environmental reviews, etc., I have no confidence that a good project would get the required approvals in the required timeframe.  Then if my plan was to rent the property, overreaching regulation of the rental market drives up those costs too.

    To make a proposal like this work, government would have to go much farther than just giving the properties away.  It would have to give up a great deal of the control it so covets, and that’s almost certainly outside the realm of possibility.

    • #13
  14. Guruforhire Member
    Guruforhire
    @Guruforhire

    Detroit needs to be unincorporated first.

    The let the various population clusters reincorporate as new towns, cities, etc.  There could even be a functional detroit on what is left of downtown.

    But the city boundaries need to be reconsidered.

    • #14
  15. Frank Soto Contributor
    Frank Soto
    @FrankSoto

    Jimmy Gault:

    Continued from above.

    Regarding value, these properties only have any if the future revenue they’ll provide is greater than the up-front and ongoing costs. Demolition, liability, and taxes all add up, and if the if you think it will be a long time before you can collect any revenue, it would be a difficult investment to make.

    Finally, given the current degree of meddling by governmental authorities, I wouldn’t invest one penny in a site that would revert back to government ownership if I didn’t develop it, even if only modestly, within two years. Given zoning, construction permits, environmental reviews, etc., I have no confidence that a good project would get the required approvals in the required timeframe. Then if my plan was to rent the property, overreaching regulation of the rental market drives up those costs too.

    To make a proposal like this work, government would have to go much farther than just giving the properties away. It would have to give up a great deal of the control it so covets, and that’s almost certainly outside the realm of possibility.

     This.

    • #15
  16. Fredösphere Member
    Fredösphere
    @Fredosphere

    Guruforhire:

    Detroit needs to be unincorporated first.

    The let the various population clusters reincorporate as new towns, cities, etc. There could even be a functional detroit on what is left of downtown.

    But the city boundaries need to be reconsidered.

    Yes. But I’m afraid this and other truly systemic proposals (which is to say, proposals with even a shred of a chance of succeeding) all suffer from being perceived by the existing Detroit power brokers as humiliating. Detroit is still not willing to give up its pride. You’d think, at this point, pride is a luxury good that Detroit can no longer afford, but there it is.

    • #16
  17. user_1152 Member
    user_1152
    @DonTillman

    I’ll claim it’s a bad idea.  Here’s why:

    The blight isn’t Detroit’s problem, it’s an indicator of Detroit’s problem.  And fixing the indicator won’t fix the problem itself.  Detroit first needs to get rid of its city government, and do something to keep a similar city government from reforming.

    After that, sure, homesteading is completely workable.

    That’s my theory.

    • #17
  18. user_352043 Moderator
    user_352043
    @AmySchley

    Don Tillman:

    I’ll claim it’s a bad idea. Here’s why:

    The blight isn’t Detroit’s problem, it’s an indicator of Detroit’s problem. And fixing the indicator won’t fix the problem itself. Detroit first needs to get rid of its city government, and do something to keep a similar city government from reforming.

    After that, sure, homesteading is completely workable.

    That’s my theory.

     Reminds me of the smart aleck Air Force mechanic.

    Issue log: Evidence of oil leak in landing gear wheel well.
    Resolution: Evidence removed.

    • #18
  19. user_138562 Moderator
    user_138562
    @RandyWeivoda

    Guruforhire:

    Detroit needs to be unincorporated first.

    The let the various population clusters reincorporate as new towns, cities, etc. There could even be a functional detroit on what is left of downtown.

    But the city boundaries need to be reconsidered.

    Exactly.  And when these new cities form, keep the payroll small by contracting out to private companies to provide services instead of having a large staff of unionized government employees.

    • #19
  20. AIG Inactive
    AIG
    @AIG

    You need to pay companies and people to take property in Detroit. Free is far from good enough, if you have to spend money tearing stuff down, building parks, and paying taxes, on land which has no hope of turning into something useful in the next decade, or two, or 15. 

    • #20
  21. Guruforhire Member
    Guruforhire
    @Guruforhire

    Don Tillman:

    I’ll claim it’s a bad idea. Here’s why:

    The blight isn’t Detroit’s problem, it’s an indicator of Detroit’s problem. And fixing the indicator won’t fix the problem itself. Detroit first needs to get rid of its city government, and do something to keep a similar city government from reforming.

    After that, sure, homesteading is completely workable.

    That’s my theory.

    Yes, it is a symptom of something deeper, but it is also a barrier to progress.

    • #21
  22. MisterSirius Member
    MisterSirius
    @MisterSirius

    At first glance it looked better, at least cosmetically, than my own notion that “missionaries” and colonists are required for Detroit.

    But on second thought, no, I don’t think homesteading fits here. As I understand it, homesteading is based upon farming, which is a sort of “making something out of nothing through raw materials and labor.” So farmers are the folks out there lifting themselves up by their bootstraps, each farm a little factory unit producing surplus that can be sold, and the townies come along to support them through supply chains, goods and services. Because homesteading works off of “nature’s factory” system, that is how it is possible at all, but even then it isn’t a guaranteed success.

    Unless I’m misunderstanding this, and the idea is to literally farm up the urban wasteland.

    • #22
  23. AIG Inactive
    AIG
    @AIG

    Build a cupcake store in those ruins, and watch the hipsters come. They’ve fixed up worst places than Detroit.

    • #23
  24. Frank Soto Contributor
    Frank Soto
    @FrankSoto

    I’m still on board with the plan to wall it off and sell it to Canada for it’s scrap metal value.

    • #24
  25. Misthiocracy Member
    Misthiocracy
    @Misthiocracy

    Michigan is a state with a population of just under 10 million people.

    That puts it on par with countries such as Belgium, Greece, Czech Republic, Portugal, Hungary, and Sweden.

    None of those countries have massive ghost cities akin to Detroit.

    The number one best thing the federal government of the United States could do for Detroit would be to get out of Michigan’s way.

    Eliminate all federal regulations, programs, mandates, and meddling, and simply leave Michigan with the freedom to govern itself.

    Forgive me if I do not hold my breath.

    • #25
  26. Misthiocracy Member
    Misthiocracy
    @Misthiocracy

    Frank Soto:

    I’m still on board with the plan to wall it off and sell it to Canada for it’s scrap metal value.

    We don’t want it.

    (I attended the University of Windsor, and I lived right across the river. As such, I feel I speak with some authority. ;-)

    Maybe you can give it back to France? Call it a partial refund on the Louisiana Purchase?

    • #26
  27. Spin Coolidge
    Spin
    @Spin

    Misthiocracy:

    Michigan is a state with a population of just under 10 million people.

    That puts it on par with countries such as Belgium, Greece, Czech Republic, Portugal, Hungary, and Sweden.

    None of those countries have massive ghost cities akin to Detroit.

    The number one best thing the federal government of the United States could do for Detroit would be to get out of Michigan’s way.

    Eliminate all federal regulations, programs, mandates, and meddling, and simply leave Michigan with the freedom to govern itself.

    Forgive me if I do not hold my breath.

     Well, duh.  Isn’t that pretty much the answer to any problem, anywhere?

    • #27
  28. Frank Soto Contributor
    Frank Soto
    @FrankSoto

    Misthiocracy:

    Frank Soto:

    I’m still on board with the plan to wall it off and sell it to Canada for it’s scrap metal value.

    We don’t want it.

    Maybe you can give it back to France? Call it a partial refund on the Louisiana Purchase?

     I guess it’s escape from Detroit time then.  Wall it off and throw all repeat offenders inside.

    • #28
  29. St. Salieri Member
    St. Salieri
    @

    Security.  Police protection from thieves, vandals and murderers.

    That would the one big thing

    I also think the proposal should read that structures are to be remodeled, restored, repurposed or demolished.  There are many wonderful buildings, some still in good or salvageable condition, that destroying them seems criminal and possibly counter productive.

    However, crime is the only thing, keeping me and friends from buying land in Detroit about five years ago before our various marriages and at a period when several of our careers were up in the air.  Historic luxury homes, some in move in or nearly so condition, were available for pennies on the dollar five years ago.  We talked about pooling money, buying land and moving a company my friend owns and operates there.

    Governmental issues, regulation issues, finding enough skilled employees, tax issues, Michigan issues all were on our list of negatives.  We thought they might be able to be overcome with the low costs involved, at least potentially.

    Crime control came out number one, and we let the whole thing go back to fantasy land.

    I suspect that the others would have quickly swamped the boat without any issues of crime control.

    Daydreaming is nice though.

    • #29
  30. Tim H. Member
    Tim H.
    @TimH

    Mike H:

    I’d like to extend this offer to potential immigrants. If they follow through, they get a greencard.

     YES.  Oh, for goodness’ sake, YES!  That would be an attraction to the kind of people we’d like to attract to our country the very most.  The frontier may be closed, but the entrepreneurial spirit can do a lot with a similar kind of opportunity.

    • #30

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