DETROIT – There’s a basic and glaring contradiction to Detroit’s much-ballyhooed comeback. The downtown is indeed booming, and in better shape than it has been in decades.
So is the area stretching several miles north along Woodward Avenue, past Wayne State University up to the Fisher building. Twenty years ago this was known as the Cass Corridor, a once-bohemian area that was transitioning into a skid row.
Today, known as “Midtown,” and is mostly a land of expensive restaurants and upscale apartments that have waiting lists. Things have definitely improved in 7.2 square miles of the city.
But as for the other 132 square miles of Detroit … not so much.
Detroit’s population, now about 672,000 is still decreasing, though at a much slower rate, than before, and while some young, mostly childless professionals are moving in, not many families are.
But John Mogk, a law professor who has been deeply involved in city affairs for nearly half a century, thinks he may have a solution.
“The city should not require residential homeowners — those who own and live in their homes — to pay property tax.”
“This would have all sorts of positive effects,” said Mogk, now 80, who twice ran for mayor in the 1970s, once was active in trying to revitalize Brooklyn’s Bedford-Stuyvesant neighborhood and has been deeply involved in trying to improve Detroit ever since.
“Middle-class homeowners would be motivated to stay in the city. Buyers would have much more incentive to move into Detroit.
“Neighborhoods would be stabilized, and there would be far fewer foreclosures,” he said – noting that homes abandoned because their owners were forced out are often quick to bring on blight.
Study after study has shown that home ownership is one of the biggest factors in keeping a neighborhood stable and preventing decline. Detroit was long known as a city of homeowners, and a place where a majority of African-Americans owned their own homes.
But Kurt Metzger, the area’s best known demographer, says that’s no longer the case. “Black home ownership fell considerably during the Great Recession, and has never recovered,” he said. That may be partly because many African-Americans buying homes worked in the auto industry, which lost thousands of jobs.
Now, the latest available numbers (from 2016) show African-American home ownership rates hovering just above 41 percent.
That, Metzger noted, is the lowest they’ve been “since it was illegal to discriminate on the grounds of race.”
That’s what John Mogk’s proposal is designed to reverse – but how could Detroit afford to lose the property tax revenue?
Though Detroit has now been out of bankruptcy for several years and is balancing its budgets, the city has little cushion,
“True, but you might be surprised to learn that the city gets relatively little money from property tax paid by homeowners, Professor Mogk said. “All property tax revenues combined add up to about $133 million, or only about 13 percent of the city’s budget.”
And considerably less than half of that comes from residential property tax. Mogk did not have a precise figure. But he told me that in one recent year, one-fifth of Detroit’s property tax revenue came from the three legal casinos, Chrysler, General Motors, DTE Energy and Marathon Petroleum Corporation.
Tax revenue from homeowners who occupy their homes is probably a mere fraction of the rest. Mogk would not allow speculators or absentee landlords to share in the tax amnesty.
His plan would only apply to owner-occupied homes – one to a customer. Still, whatever the figure, that is revenue Detroit desperately needs – as do the various schools and community colleges that get a share of all property tax revenue.
The shortfall would have to be replaced, and “there are a number of ways you could do that,” the professor said.
Seeking permission to impose a local sales tax would be one, though he admitted that might require a state constitutional amendment, which would be difficult and expensive. The city could levy a heavier tax on industrial and commercial property – thought that might risk driving more jobs and business away.
A better method might be a shift in how property tax revenue in Detroit is used. Since the 1970s, any increase in tax revenue from downtown development has been kept downtown and used to flight blight and help support private development in the city’s core.
But now that downtown Detroit is booming, Mogk thinks a serious shift in how that money is used may be in order, “giving the great need for spending outside the city’s core.”
Whether anything will come of his suggestion is unclear. Mogk knows Mayor Mike Duggan, but hasn’t yet approached him; “the mayor has a lot on his plate,” he said.
What is clear is that unless Detroit can attract and retain middle-class families, it can be, at best, a combination of boutique city for young urban professionals and older, affluent retirees –and rundown neighborhoods with desperate poverty and crime.
Winning back a middle class will likely require vastly improved public schools and affordable car insurance rates. But being able to buy an affordable, decent house without having to worry about property tax could be a big plus: One that’s definitely worth a try.
