SPECIAL PRIVILEGE: Detroit offers home discount to city workers

1/27/2015
Matt Helms

Mike Duggan, Mayor of Detroit  (photo: EPA, Erik Lesser)

City of Detroit employees, retirees and their immediate families will receive half off homes sold in a city auction designed to save fixable homes in stable neighborhoods as part of a new incentive Mayor Mike Duggan's administration is to announce this morning.

Current city workers — those on the city payroll or working on contract with the city — and retirees will be eligible for 50% off the final auction price of homes put up to bid through the Detroit Land Bank, spokesman Craig Fahle told the Free Press.

Factoring in immediate relatives — which include siblings, children and parents of the city's current and retired work force — adds a potential pool of buyers far beyond the city's current workforce of about 9,000, along with 23,000 retirees.

The incentive is designed as both a reward to city workers, past and present, and as a way to lure more people back to the city through one of the Duggan administration's signature efforts to arrest blight.

"They're some of our biggest boosters," Fahle said.

The auction program, which started in April, targets salvageable homes in stable neighborhoods. The city takes negligent owners to court to force them to repair the homes and get them reoccupied or hand the deeds over to the city, which then auctions them at www.buildingdetroit.org.

Buyers have six months from the date of closing to have the homes repaired and occupied.

Noting that the state in 1999 barred cities such as Detroit from requiring employees to live within city limits, Fahle said the city is taking a different approach to encourage municipal workers to stick with the city that employs them.

"You can't force employees to live here," he said. "The best you can do is to create reasons they want to live here, and this is a way to do that."

Duggan, members of the Detroit City Council and the land bank are to make the announcement at 10 a.m. today at news conference at city hall. They'll be joined by city employees and retirees. Duggan will submit the proposal to the council for approval.

Fahle said the administration also has approached city union leaders with the proposal, and they're supportive.

Ed McNeil, special assistant to the president of the American Federation of State, County and Municipal Employees Council 25, the city's largest union, said the idea isn't new, and would be welcomed by unions and city workers.

McNeil said he and other union leaders proposed offering discounted housing sales to city employees in exchange for $100 million in pay cuts and other concessions negotiated with then-Mayor Dave Bing's administration in 2012, as the city tried to prevent the state from appointing an emergency financial manager.

Gov. Rick Snyder's administration rejected the concessions as insufficient, and ultimately appointed emergency manager Kevyn Orr, who shepherded Detroit through the nation's largest-ever municipal bankruptcy.

McNeil said Sunday that he's urging the city to include as eligible for the discounts former city workers who are now working for agencies no longer run by the city, including the Eastern Market, the Detroit Institute of Arts, the Michigan Science Center and the city's two private trash haulers.

Fahle said the city is working to include those workers, as well.

The land bank housing auctions by year's end had sold just short of 400 homes with prices as low as the minimum $1,000 bid to as high as $97,900, depending on the size, location and condition of the property.

Fahle said sales have closed on 150 of the auctioned homes, and cited difficulties in getting mortgages in the city.

Banks have been concerned about high loan-to-value ratios and getting accurate appraisals, even as Detroit is in the midst of a lowering tax appraisals citywide to better reflect market values after the foreclosure crisis, fueled by subprime mortgage lending, began hammering the city in 2008-09.

The sale process has been a learning process for both the city and buyers, Fahle said, and the land bank has begun offering home-buyer education programs so that purchasers are better prepared to finance homes that, in most cases, need significant repairs.

Detroit Housing Auction

Houses that are currently available through the Detroit Land Bank Authority Auction to any buyer, can be found at www.buildingdetroit.org

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