Detroit & North St. Louis: Slum creation, slum clearance, & the role of "investors"

[Hannah Bell]

Recently there was a DU post titled "Mayor plans to relocate poor residents to “downsize” Detroit".

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389x7874848


The mayor's plan involved buying out existing homeowners in neighborhoods with large numbers of empty properties or lots. Supposedly to "downsize" the city to make it easier to provide services to a more compact area. Unfortunately for the homeowners, their properties aren't currently worth much, even at the offered 125% of market value, making it unlikely they'd net enough to buy another home to live in a less depressed area.

Lots of posters expressed the opinion that there was "no choice" but to downsize.

These same posters pooh-poohed any notion that there might be ulterior motives involved, and sneered at the idea that there might be a property boom in Detroit's future.


I'd like to examine these propositions.

But first, let's look at North St. Louis, another old urban area with a large stock of decaying housing & empty lots:




In 2007 the St. Louis "Riverfront Times" came out with a story that bloggers & preservationists had been writing about for much longer. It was a story about how one rich developer/healthcare investor had bought up hundreds of North St. Louis properties.

http://www.riverfronttimes.com/2007-01-10/news/phantom-of-the-hood/

http://www.riverfronttimes.com/2007-06-20/news/phantom-of-the-hood-part-2/


The developer in question was Paul McKee Jr.

http://en.wikipedia.org/wiki/Paul_McKee_(developer)


He started buying N. St. Louis properties in 2003, using a variety of front companies to maintain anonymity. Once purchased, any tenants were evicted & the buildings were left unsecured & unmaintained -- which had the effect of inviting crime, vandalism & further decline in surrounding property values. And in more than a few cases, the buildings had started out structurally sound & fairly well-maintained.

"The purchases began in 2003 and continue to this day. Many of these holdings are adjacent to city-owned real estate or in the path of infrastructure projects...

Included in the inventory at least 150 historic buildings. This ownership has significantly damaged historic buildings through acute neglect, and has lowered the quality of life for many of the people who live near their purchases. Overall, the holdings have perpetuated the neglect of one of the city's most hopeful areas."

http://www.eco-absence.org/blairmont/

Here's a map of his holdings a couple of years ago: keep in mind that they're concentrated in about a square mile. They amount to around 700 properties covering about 100 acres.





So what was his master plan? This 2007 article lays it out:

http://interact.stltoday.com/mds/news/html/214

"Developer Paul McKee helped draft a $100 million tax-credit program"

"A clearer picture emerged in Jefferson City this year, when the Legislature approved a $100 million tax credit for large-scale developments in impoverished areas. McKee spurred Lt. Gov. Peter Kinder to champion the bill, hired several lobbyists to push it and gave thousands of dollars - and use of a corporate plane - to politicians who helped pass it...

Under the bill, a developer could get tax credits that would wipe out all the interest costs and half the eligible land costs, including demolition expenses and maintenance costs for five years. To be eligible, a project would have to cover 100 acres. Land already purchased but not yet developed would qualify.

Tax credits would pump cash into construction because developers could sell the credits to wealthy individuals or companies. The buyers would use the credits to reduce their taxes. The program would cost the state up to $12 million a year, and it would expire when the amount awarded reached $100 million."


That's right: McKee didn't just evict his tenants, let historically significant buildings go to ruin, & bring down existing property values in an area where a small grassroots revival movement was underway.

He also helped draft legislation designed to apply mainly to him, & bribed legislators to pass it. The legislation essentially got the public to foot much of the bill for his development project -- in the form of reduced tax revenues -- which equals tighter public budgets & possible service or job cuts.

And even when this bombshell went public, McKee continued buying properties. The McKee-designed bill passed.

Then McKee started "talking about making St. Louis a central distribution point for trade with China."

"Today, St. Louis has a new, federally funded Midwest China Hub Commission, and the area’s foreign trade zone has expanded from 11 acres to 825 acres and includes Mc­Kee’s NorthPark development, tucked close to Lambert International Airport, with a hotel and plans broached for a $20 million “China mart.” NorthSide could be another piece in the puzzle, with plenty of room to warehouse goods trucked over the new bridge from Illinois’ MidAmerica Airport...."

"In mid-May, the Post ran another front-page story about McKee and the near North Side, this time detailing what the mysterious buying, the tax-credit bill, the political connections had all been leading toward: A $5.4 billion plan to shape more than 500 acres of St. Louis—an area larger than downtown Clayton—that had suffered disinvestment for more than 60 years. In the TIF application that McEagle submitted a week later, those numbers were $8.1 billion and more than 1,500 acres..."

http://www.stlmag.com/media/St-Louis-Magazine/November-2009/Special-Report-North-Side-Story/


The graftiness continues:

03.08.2010

"Why did Paul McKee funnel $19.6 million (in tax credits) through a nonprofit public housing management company?"

http://interact.stltoday.com/blogzone/building-blocks/uncategorized/2010/03/why-did-paul-mckee-funnel-19-6-million-through-a-nonprofit-public-housing-management-company/
http://interact.stltoday.com/blogzone/building-blocks/uncategorized/2009/12/judge-denies-injunction-on-mckee-project-but-raises-some-big-questions/


There's more to the St. Louis saga, but I think you get the idea. Slums & poor people = cheap land & easy-to-displace people. And once the poor are gone, the land where "no one would want to live" magically gains value.

Detroit is still America's 11th most populous city. It has a population density of 6,800 people per square mile. Unfortunately, 80% of them are black & 22% of them are poor.

However, Detroit is quite a nice piece of real estate. It's right next to Canada (think NAFTA). It's a transportation hub. It's got several nice water features. And though it seems otherwise, there's a lot of business & a skilled workforce in the neighborhood. Plus, it's close to other major hubs.

So what could the game plan be in the case of Detroit?

It could be something as simple as Detroit pulling back its boundaries and selling off some of its land area (at sweetheart prices) to someone like McKee -- or maybe just some ordinary developer who'd plat it for suburban lots to be annexed by richer communities, e.g. Grosse Pointe, median family income $101K v. Detroit, median household income $28K.





Well, that's all for now. Next time, a look at the NYC financial crisis of 1975 & NYC's "planned shrinkage" policies that began earlier, helping to ghettoize the South Bronx, among other areas, as well as contribute to public health and safety epidemics.

We begin to see the hand of "investors" in both busts & booms, ghettoization and revival....


A couple of other economic indicators:

Artists buying cheap houses in Detroit
March 17, 2009

http://boingboing.net/2009/03/17/artists-buying-cheap.html

(PS: "Artists" often = trust funders/speculators)


The New Dork Times lifestyle folks:

RECENTLY, at a dinner party, a friend mentioned that he’d never seen so many outsiders moving into town. This struck me as a highly suspect statement. After all, we were talking about Detroit, home of corrupt former mayor Kwame Kilpatrick, beleaguered General Motors and the 0-16 Lions. Compared with other cities’ buzzing, glittering skylines, ours sits largely abandoned, like some hulking beehive devastated by colony collapse. Who on earth would move here?

Then again, I myself had moved to Detroit, from Brooklyn...

http://www.nytimes.com/2009/03/08/opinion/08barlow.html


development...

http://www.freep.com/article/20100302/COL06/3020366/1004/news02/Quicken-founder-wants-to-bring-2400-downtown

http://online.wsj.com/article/BT-CO-20100316-710179.html?mod=WSJ_latestheadlines

http://www.freep.com/article/20100318/BUSINESS04/3180360/1002/Business/Appeals-court-rejects-Moroun-bid

http://www.detnews.com/article/20100318/BIZ/3180375/1001/biz

http://www.metromodemedia.com/devnews/m1railwoodwarddetroit0155.aspx

http://www.modeldmedia.com/devnews/emkt021610.aspx

...yuppie bait...


http://www.detroiteasternmarket.com/news_page.php?id=99

Historic Detroit Venue Transforms
Published on December 19, 2009 - 10:56 am

by JOHN GALLAGHER-FREE PRESS BUSINESS WRITER


Renovated Eastern Market is a chic event destination

GM car unveiling in Shed 3 marks veggie vendor's new era, identity

The site was Shed 3 of Detroit's Eastern Market, better known as a place for buying tomatoes and eggplants than Chevrolets. But renovations of Eastern Market's historic sheds have boosted the star power of the region's largest public market.


http://www.metromodemedia.com/devnews/masstransitmetrodetroit0148.aspx

[vadawg]

1. i say let them pull back the boundaries and let the other counties take the land if they want

there is no way to revitalise detroit and you cant force people to move back... and without people the city is just going to keep dying..

[Hannah Bell]

2. purposefully killed. oh, & the counties wouldn't "take" the land.

they'd pay an intermediary. i.e. the dispossessed property owners of detroit would pay for the profits of the intermediary.

plus detroit city proper is still the 11th largest city in the US. with a couple more million in the surrounding suburbs.

[Gaedel]

4. Yes, there are vultures

Hannah, I agree there are vultures who try to feed on the situation and get an edge in here and there.

I do not think that is the reason that Detroit is dying, that is just a symptom of the disease. Slumlords don't create slums, they just take advantage of them.

I grew up in Detroit and went to public schools there. I lived there when Detroit had 1.8-plus million folks living there. With a population less than half of that now, there are going to be a lot of empty and abandoned buildings. I am familiar with the neighborhood you displayed on your aerial photo from Google. All of those partially occupied blocks on the Detroit side of the line once were completely filled with homes with viable families living in them.

I don't think that Detroit was "purposefully killed" so much as it was abandoned by individual people making decisions (both rational and emotional) on what was best for themselves and their families. My parents made that decision in 1954. Seeing my childhood home boarded up and abandoned in Google "street view" (10681 Nottingham) makes me sad, but I do not blame my parents (both long gone) for their decision to sell out and go.

[Odin2005]

3. Maybe I'm not getting the point but comparing McKee's BS and what is happening to Detroit...

...is like comparing apples to oranges.

[mstinamotorcity]

8. maybe the word profit

should ring a bell. At one time Detroit had more single family homes then some cities that were larger. A lot of the homes in Detroit were seventy five years old or better. Most of them were brick. Good brick home no need to build. Put drugs,liquor stores, and thieving churches on every corner and what do you get.Land real cheap. What do you sell? Cheap land to the city or developers for not so cheap.So if you compare apples to oranges you still get fruit. Thanks Hannah good post and good looking out.

[Romulox]

11. The problem here: nobody is getting rich on land deals in Detroit ('cept Monica).

Reality simply does not mesh with the OP's fever dreams of a gentrified Detroit.

[Hannah Bell]

16. nobody knew what mckee was doing until years in. st louis didn't look

like a trade center for china in 2002, either.

[Romulox]

17. Detroit isn't St. Louis. Maybe you should visit before attempting to lecture us about ourselves?

:shrug:

[Hannah Bell]

19. that's all you got. "detroit isn't st louis". it isn't central falls, rhode island, either, but

the same game plan is operative in both.

[Romulox]

20. What do you want me to do? Refute the unreality of your posts on the subject?

There is no land boom in Detroit. In the your last thread, you told me that you'd been observing Detroit "since before I was born". Then you said we should watch out for "the next Detroit land boom".

So I asked you when, in your estimation, the last "Detroit land boom" had taken place. Radio silence. You simply don't have any applied knowledge of Detroit, and cannot answer simple questions about your assertions. It's not necessary for me, therefore, to draw a Venn diagram for you, when you run away from any critique. :hi:

[Hannah Bell]

22. uh, i occasionally have to go to work. i don't monitor each & every one of your posts.

you don't live in iraq, it doesn't prevent you from commenting on it.

please explain what the relevance of the date of detroit's last land boom has to the issue of a possible future one.

[Romulox]

23. OK, so answer the question NOW: when was the LAST "land boom" in Detroit

to which you alluded in your previous thread?

"you don't live in iraq, it doesn't prevent you from commenting on it. "

Right. But I do have a 313 area code (look it up.) And I was in Downtown Detroit yesterday. And I do read the Detroit papers every day.

And yet, everything I know about Detroit is wrong, and all this nebulous crap you've posted is right? When you can't answer simple questions? Gimmeabreak. :hi:

edit: Edit to point out that I welcome the poster's "concern" about Detroit. But there's a point at which disinformation is not to the benefit of anybody, under the guise of "concern" or no. Dave Bing is a Democrat, one of the least tainted polticians in the recent history of Detroit, and has an interesting plan. Why the histrionic accusations about what "may" be his agenda, then?

Written many scathing critiques of Kwame Kilpatrick and Monica Conyers, have you? Do you even know who they are? :wtf:

[Hannah Bell]

24. explain the relevance. dave bing is a democrat -- whoop-ti-doo.

of course i know who kilpatrick & conyers are. how could one *not* know, given they've been all over the news for years.

i believe they were democrats too.

[Romulox]

25. You still owe me answers from several days ago. What a surprise that you still can't answer...

"i believe they were democrats too."

And both black, too. Still fine tuning that "racial cleansing" theory? I will take your refusal to answer my question as a tacit admission of ignorance, at any rate. Hope this thing works for "bye", too: :hi:

[Hannah Bell]

26. it's not that i can't answer. but i'm waiting for you to explain the relevance.

is there some rule that *i* must answer *your* questions, but you don't have to answer mine?

I take your lack of an answer as a tacit admission that there *is* no relevance.

i also note that in fact, i *did* know who kilpatrick & conyers are, despite your assertion i didn't.

i also note that though you say "nothing like that is happening in detroit," when i say "in 2002 it didn't seem like anything like that was happening in st louis, either," you negliged to concede the point.

"planned shrinkage" has a long & ignoble history, rom.

[Romulox]

27. Your game is tiresome. Answer the poster below with what your alternative is. Or duck some more.

And attempt to stir up racial animus with your bizarre "racial cleansing" theories.

[Hannah Bell]

28. your game is tiresome. answer the question -- relevance of date of last land boom to possibility of

future boom?

i'm not only obliged to answer *your* questions, but the questions of anyone you order me to?

alternatives are pretty obvious to anyone with a functional brainstem.

[Romulox]

29. It's relevant to testing your prediction of the "next Detroit land boom". QED.

Now, you turn--when was the LAST one? :hi:

[Hannah Bell]

30. how is it relevant? you didn't answer the question, you just gave a circular definition.

[Romulox]

31. This is childish. You demonstrably have no insight into Detroit. nt

[Hannah Bell]

32. you just keep saying it, maybe someone will believe it. that's all you got, is your opinion:

"she doesn't live here."

well, shut up about iraq & everything else outside the suburbs of detroit, then.

i'm not answering your question until you answer mine. & since you refuse to answer mine, i'm never answering yours.

i'll continue to post information as i see fit. you're welcome to post something that refutes it -- if you have anything besides "detroit is DIFFERENT! from st louis!" "she doesn't live here!"


which = contentless spew.

[Romulox]

38. How about answering any post in this thread other than ones made by me then?

Or is it my fault that you can't answer any of those posts, as well? :silly:

[Hannah Bell]

39. I answered: alternatives are obvious to anyone with a functioning brainstem.

you want to keep pretending slums are created by accident, be my guest.

[Romulox]

41. What a joke! nt

[Hannah Bell]

43. nyah nyah nyah nyah hey hey goodbye

[Hannah Bell]

44. & kick

[Starry Messenger]

5. Just checking in quick

I really need to get read for work. I don't know anything about Cope, but he's definitely no starving artist. He seems to be an artist entrepreneur type. He's a local boy, maybe you can sniff out more about his family.

http://www.detroitmakeithere.com/article/20080825/DM01/16549234

Too much money there for him to have started from scratch. All the artists I know who have this kind of career arc at this age group (he's 3 years younger than me) age are trustafarians.

[hobbit709]

6. 2010 version of 60's & 70's "Urban Renewal"

[Waiting For Everyman]

40. Exactly. This same thing happened before, after the 60's riots.

Poor neighborhoods end up "gentrified" into overpriced yuppie ones. And/or commercialized. Then, at the end stage, any of the original poor homeowners who are holding out, eventually are forced out because of a hefty spike in property taxes. End of the old neighborhood.

I saw it firsthand in Baltimore, where I lived, but it happened in all the cities that burned during the riots. For years those properties were left burnt and boarded up. And then the "urban renewal" started. The result was much as described above. "It's deja-vu all over again."

:sarcasm: Well at least it opened up more upscale housing for the yuppies employed in the high-rises in the inner city - mostly in banking (as well as law, medicine, and other overpaid professions).

Thanks, HB. I find this story very interesting. I'm not surprised though. But it IS worth "being up on" specific information as to what's going on where... and by who, and how, and for how much.

It's as I read somewhere... "wherever the carcase is, the vultures will gather". I guess we know pretty easily ahead of time, which places to look for this sort of thing to be popping up soon...

And unfortunately, I'm sure it will be to some degree, everywhere. Nowhere is unscathed (by this economy), or actually strong, anymore.

[blue_onyx]

7. What do you think should happen?

The city was built for 2 million people and there's now 900,000. Something needs to change. Relocating people from areas that have been primarily abandoned to populated areas seems necessary.

If there were so many investors waiting to exploit the abundance of vacant land...why are they waiting? There's tons of vacant land now. I highly doubt that Detroit land will be "annexed by richer communities."

[JNelson6563]

9. I remember the thread you reference

While I appreciate the information you share in this OP, I don't see what it has to do with the decline of Detroit. Also, in relation to the referenced thread in your OP, I took issue with your endless criticisms of all comers in that thread and asked about what your ideas were on how best to address the situation in Detroit. I see this unrelated situation you post about from St. Louis, your mention of Detroit's plight and the inference there's a link but....no clear claim much less evidence and still silence on any alternative ideas on how to address the problems facing Detroit.

Julie--who can only wonder "where ya goin' with this?"

[Romulox]

10. Unrec. Poster's previous threads on Detroit have betrayed absolutey NO specific knowledge of the D.

Still waiting to hear about "Detroit's next land boom" (as referenced in the OP's "racial cleansing" thread about Detroit.) :hi:

[proud2BlibKansan]

12. K/R #5

[Name removed]

13. Deleted message

Message removed by moderator. Click here to review the message board rules.

[benld74]

14. The guy doing the project in St. Louis got millions,,,

from the state in tax deferrments. He took the money and paid off banks with it on his loan monies.
Taxpayers assistance once more,,,

[starroute]

15. Housing has been a massive focus of illegality for years

I suspect nobody is willing to look closely at it because Democrats have been as complicit as Republicans -- there were a number of major HUD scandals in the Clinton administration, as I recall.

But housing has been a major racket, a way of paying off financial supporters, a means of money-laundering, and a haven for organized crime.

I've run into pieces of the story in a lot of places. But nobody has ever put it all together -- and there's a major scandal there ready to break wide open if anybody ever did.

[bullwinkle428]

18. The North St. Louis situation sounds exactly like "disaster capitalism"

to me!

[Romulox]

21. What it doesn't sound anything like is what's happening in Detroit.

[Gaedel]

33. Not in Detroit Yet

If someone in Washington decides the U.S. really needs to "save" Detroit and there are a lot of government programs, tax incentives/credits, or dollars floating, then Hannah's grifters and con artists will come out of the woodwork and start buying up stuff in Detroit. Right now, any potential for greed to be rewarded in Detroit real estate is so remote as to be almost nonexistent. If the SE Michigan economy turns around, there are plenty of real estate ventures in the suburbs that have more potential for profit.

[Romulox]

37. Thanks for this post. Insightful. nt

[Hannah Bell]

42. not at these prices. not at this location, not this much potential open space.

[Greyhound]

34. K&R.

[PassingFair]

35. Dave Bing has significant real estate holdings in Detroit.

http://www.detroityes.com/mb/showthread.php?t=3980

He has invested in new construction homes in Detroit as well.

[cbdo2007]

36. Interesting - I was just reading about the MDFB tax credits given for

contributions in Missouri this morning and was wondering what was in it for a company.

Essentially they can take a 50% tax credit by making a donation to the state for bonds or something? Don't know but it's interesting to see some of the people who have gotten these tax credits historically over the past few years. Here is a link to the 2010 list:

http://mapyourtaxes.mo.gov/MAP/TaxCredits/Categories/Customer.aspx?cat=G&year=2010&prog=46

I searched through quite a bit of Missouri State material this morning after hearing about them wanting to cut the budget so much. I'm sure anyone with enough detail and knowledge into accounting could find Millions of $$$ misused and misappropriated but that is just slipped under each of our noses every day.

[rampart]

45. add new orleans to your list of target cities

katrina blight makes the accumulation of property easy.

the "transportation hub" concept also applies.

[Hannah Bell]

46. all urban centers are targets, imo. & the takeover of urban schools is related, i believe.