In the Media

Are there two Detroits? A new report says yes, but…

September 12, 2017

Joel Kurth, from Bridge Magazine, discusses Detroit’s tax subsidies and investments, and highlights population data from Detroit Future City’s 139 Square Miles report.

Are there two Detroits? A new report says yes, but…
By: Joel Kurth
Bridge Magazine

Turns out, there could be something to perceptions about “two Detroits” after all.

The Urban Institute, a nonprofit Washington D.C. think tank, issued a report Tuesday that concludes tax subsidies in Detroit have disproportionately favored downtown and Midtown. Those areas received 57 percent of state, federal and local tax subsidy investments from 2013 to 2015, even though they only contain 46 percent of the city’s 245,000 jobs, the report found.

“This combination of growth downtown and more limited investment in outer neighborhoods … can make Detroit appear to be a ‘tale of two cities,’” the report said.

But Brett Theodos, the lead author of the report, told Bridge there’s a good reason for the discrepancy. Private investment and tax subsidies follow jobs. And they’re clustered in downtown and Midtown, particularly white-collar ones.

“If you look at the amount of investment per job per neighborhood, it doesn’t look like downtown is getting outsized levels of investment. That’s the one hand,” Theodos said.

“On the other hand, jobs are not equally located across the city .. and Detroit is especially sprawling. There’s a stark divide between who is working downtown and who is working in neighborhoods.”

In any other year, and perhaps any other city, the finding may not get much attention. Much of the report focuses on how Detroit’s revival was aided by mission lending, loans with a social purpose, often backed by philanthropies when traditional ones aren’t available.

But the “two Detroits” narrative is so controversial –  and a theme in the campaign between Mayor Mike Duggan and challenger Coleman A. Young II –  that the tax subsidy breakdown is sure to spark conversation.

Theodos said that was his intention.

“We want to feed into larger discussion about whether resources have been overly spatially concentrated,” he said.

“That’s a very salient point of discussion right now. We just wanted to acknowledge, yes, by some measures. But by other measures, not especially. It depends on what (point of view) you take.”

For Young, there’s no debate.

“Nobody who lives in neighborhoods could be surprised by this report,” he told Bridge.

“City Hall doesn’t give a good goddamn about them. … There’s no reason we should have all the tax breaks downtown while the neighborhoods aren’t getting opportunities.”

John Roach, spokesman for Duggan, said Monday the report only “tells part of the picture” because it doesn’t include other significant investments to neighborhoods, such as demolitions of some 11,000 dilapidated homes.

Even so, the findings validate the city’s strategy that led to the Midtown comeback and will be replicated in neighborhoods such as Livernois in Northwest Detroit, said James Arthur Jemison, director of housing and revitalization for the city.

“In any marketplace, financing goes to places where there’s an ability to repay,” Jemison said. “When people come to the market for the first time and don’t understand the pent-up demand and credit worthiness, they gravitate to one place. It’s our job as a city to show them other areas.”

Uneven investments
The Urban Institute is studying Detroit as part of finance giant JPMorgan Chase’s $100 million, five-year investment in the city following the nationwide real-estate crash.

The report also found:

The city’s central business district received a majority of overall investment from 2013 to 2015: 53 percent of traditional commercial, industrial and multifamily loans and 62 percent of mission lending.

Discrepancies in traditional lending intensified since the Great Recession. From 2004 to 2006, Midtown and downtown received 21 percent of private commercial loans in Detroit; the amount doubled to 42 percent from 2013 to 2015.

During that period, local, state and federal subsidies contributed $518 million to redevelopment of commercial, industrial and multifamily projects in Detroit.

A new report from the Urban Institute shows that most tax subsidies and mission investment flowed heavily into Detroit’s downtown and Midtown neighborhoods from 2013 to 2015. (Courtesy photo)

The report underestimates the total amount of subsidies.

It’s limited to federal low-income housing tax credits, federal and state historic tax credits, programs from the Michigan Economic Development Corp. and city tax increment financing. It doesn’t include a handful of federal subsidies, including Community Development Block Grants, and its city data was limited.

Work remains before revival spreads

The Urban Institute report is the latest in recent weeks to fuel a “two cities” narrative that Duggan told the Detroit Free Press in August is a “fiction” created by the media.

Last month, the nonprofit Detroit Future City released its “139 Square Miles” report that found that blacks, who comprise 80 percent of the city’s residents, hold only 33 percent of the city’s jobs. The report also found that job growth in Detroit is fueled by an uptick in jobs paying $40,000 or more per year, which are “concentrated along Woodward Avenue in Downtown and Midtown, as well as the city’s core industrial areas.”

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