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Anchor Incentives Provide Stability for Detroit Residents, Neighborhoods

Written by Amanda Maher


It’s a tale we’re all familiar with now: Detroit, once among the wealthiest cities in the world, has suffered extreme loss since the fall of its auto manufacturing economic base. As Detroit’s businesses left, so did hundreds of thousands of its residents. Now, Detroit has just 700,000 residents – the same number it had in 1910, and less than half its 1950s peak of 1.86 million.

The decrease in population has left Detroit with deteriorating and abandoned neighborhoods. In Brightmoor, a working-class neighborhood once home to auto workers, more than 34% of the buildings are unoccupied today. The Grixdale Farms neighborhood hasn’t fared any better: 36.9% of its buildings are unoccupied, and some streets, like Robinwood and Goldengate, are more than 80% abandoned. These neighborhoods have become hotbeds for crime, arson and vagrancy.

And yet, while neighborhoods like these continue to deteriorate, a multi-pronged anchor effort has resulted in an increased population in neighborhoods like Midtown. Indeed, a “Buy, Live, Work” Detroit initiative has drawn more than 1,000 people to Midtown, now one of the City’s most desirable neighborhoods.

Midtown’s three largest anchor institutions, Detroit Medical Center, Henry Ford Health System and Wayne State University, are working together to provide their employees with a host of “Live Midtown” incentives, including $20,000 toward the purchase of a primary residence or $5,000 to existing homeowners toward property improvements. Renters also qualify for $1,000 to $2,500 in assistance depending on whether it’s their first apartment in the Midtown area or whether they are renewing a lease. The program is managed by Midtown Detroit, Inc., a nonprofit planning and development organization.

The relatively modest $3 million in direct subsidies from the anchors to date has proved to be a wildly successful economic development strategy. Since 2010, the median residential sales price in Midtown has increased from $140,000 to $195,000, versus a stagnant median sales price throughout the rest of the city. With residential growth, business growth has followed: more than 40 new businesses have moved to Midtown since November 2012. The Midtown vacancy rate is down to 1-3%, which has sparked new development: an additional 20 construction projects are now either underway or in the pipeline. The success of the initiative has led the anchors to re-draw the Live Midtown barriers to spark growth in adjacent neighborhoods, as well.

“This expansion not only opens up an array of quality housing stock, but also supports the Detroit Future Cities Framework Plan which identifies this area as an important district to stabilize,” said Susan Mosey, in a statement prepared by Midtown Detroit, Inc.

This live-where-you-work strategy has made Midtown one of Detroit’s most desirable neighborhoods. Other Detroit-based employers are following suit. In 2012, five downtown Detroit employers pooled $5 million in resources to launch “Live Downtown,” a program also managed by Midtown Detroit, Inc. This opened similar incentives for the 16,000+ employees of DTE Energy, Compuware, Quicken Loans, Blue Cross Blue Shield of Michigan and Strategic Staffing Solutions.

But perhaps more importantly, it’s helping some of Detroit’s residents build assets.

Anthony Leo, an employee of Wayne State University, explains that buying his $150,000 loft in Midtown’s Canfield neighborhood was a no-brainer. “The price, incentives and historically low interest rates make this a great deal,” he said. “I consider this to be an investment in my future and my city.” Mr. Leo leveraged nearly $20,000 in down payment incentives through the Live Midtown initiative.

Studies indicate that higher rates of homeownership typically tend to benefit communities, as residents have a vested interest in the neighborhood’s vitality. A slew of absentee landlords can devastate a neighborhood in no time. Meanwhile, homeowners can leverage their property to borrow money in case of emergencies or for things like home improvements or going back to college. Federal tax policy also favors homeowners through the mortgage interest tax deduction. In many cases, owning a home is a major step in helping someone move from lower- to middle-income, and provides long-term security.

The Live Midtown initiative shows that by using the right incentives, it is possible to attract residents to a downtown corridor and draw significant new business and economic growth in the process.

 

Read ICIC’s What Works for Cities case study on the “Buy, Live, Work” Detroit initiative.

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