Michigan's Economic Development Challenge (MEDC)

New Land Bank Law Creates Opportunity

Revitalife Rolls Out Property Portfolio

SoBe's (Miami) Art Deco Mystique Encourages Investment

Riverfront: Detroit Needs More Park, Not Less

Guest Column: Detroit LISC & City of Detroit Partner on Land Disposition Initiative

by Anika Goss-Foster, Detroit LISC

Michigan's Economic Development Challenge (MEDC)

In the State of the State address last week, Governor Granholm laid out her vision for Michigan in a 21st Century Economy. Beginning with her dynamic speech at last year’s Mackinac Policy Conference when she donned sunglasses and declared Michigan cool to the Creating Cool Conference in December, the Governor has been hyping the need to retain young people and using hip, urban places as the primary retention and attraction device.

However, the Michigan Economic Development Corporation (MEDC), the state’s agent in matters of economic development and growth, disproportionately focuses on industrial development. Prior to 2002, MEDC spent its entire Community Development Block Grant (CDBG) funds - nearly $40 million – on expensive infrastructure extensions that supported industrial development. Yet, as we speak of cool cities, the information age and the importance of high-tech employment growth in the new economy, MEDC has a growing pot of millions in unspent Community Development Block Grant Funds due to lack of demand from the industrial sector.

Each year, Michigan receives approximately $45 million in Federal Community Development Block Grant (CDBG) resources. This large, consistent and flexible source of funds for economic development is used by MEDC to support economic development in non-entitlement communities (entitlement communities are incorporated communities with population over 50,000 and counties of 200,000) around the state. A small portion of these funds is used by the Michigan State Housing Development Authority to support housing initiatives throughout the state as well.

The majority of these funds have been used to support infrastructure expansion, placing industrial and commercial development, in the undeveloped greenfields surrounding our cities and towns. Not surprisingly, the MEDC corporate infrastructure, drawn largely from our industrial sector supports this approach.

MEDC shouldn’t abandon our industrial sector altogether. Instead, we need to be more strategic about how the state uses our limited human and financial resources.

Only recently, has MEDC recognized the need to improve places as a tool for economic development with the creation of the Community Action Team (CAT). The CAT team assists Michigan’s downtowns and traditional centers of commerce with basic infrastructure investments and job growth strategies that focus on the new economic realities of the information age. Unfortunately, the CAT team serves over 150 Michigan’s downtowns with a staff of only 5, compared to the 75 MEDC staff members focused on the industrial development.

While slow to recognize the changing nature of economic development, MEDC needs to re-align its goals, measures, staffing and delivery systems to more fully support downtown revitalization and the rejuvenation of traditional centers of commerce. The leadership structure, with a mandate from the Governor, needs to believe in downtowns, understand how they work, and commit to providing the human and financial resources in order to realize the goal of Cool Cities.

Downtown revitalization is not a short-term strategy. Growth is incremental and measurable results only become apparent over the long-term. Therefore, we need to re-examine and re-think the statutory link between jobs creation and the use of our precious public resources. A clear shift in thinking is necessary in our state’s chief economic development agency or Michigan will be left further behind in the new 21st century economy.

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New Land Bank Law Creates Opportunity

On January 5, the Governor signed into law a package of six bills intended to create an innovative approach to the disposition of tax-reverted property. The primary thrust of this much-awaited package was to create the Land Bank Fast Track Authority. The new law empowers the State and some counties and cities with the ability to create a Land Bank and gives those Land Banks unique powers to aid in the disposition of tax-reverted property.

Returning reverted property to productive use has been a significant challenge of local and state officials and agencies in Michigan and around the country. If the primary goal of any disposition effort is to return the property to a productive use, the disposition of the property must be linked to a revitalization strategy. After three years of managing the Revitalife Program and from lessons learned from other communities, we have come to understand that absent a link with a broad revitalization strategy, the land bank will have far less value than anticipated by its sponsors. A land bank should be considered a tool in a broader urban revitalization strategy, not a complete solution.

In the wake of sprawl and disinvestment in central cities like Detroit, property owners have simply abandoned large quantities of land as the complicated, convoluted and seemingly long foreclosure process begins. In 1999, the General Property Tax Act was amended and shortened the three-year tax delinquency period to one year, making Counties the primary players in the disposition process.

For the last couple of years, the Wayne County Treasurer has been auctioning property (known as “New Law Property”) to the highest bidder, a process formerly used by the State of Michigan. Like the auctions the State conducted in the late 90’s, the County’s auction is disconnected from any specific community revitalization effort. While the auctions function essentially as a de facto disposition strategy for a land bank, the best examples of successful land banking from around the country use community-based organizations as the primary conduit for the disposition of land in a way to meet revitalization goals.

In Atlanta, the Fulton County Land Bank Authority’s mission is to transfer property to those who are bringing new life to struggling communities. In Cleveland, the Land Bank serves as the primary vehicle for acquisition and disposition of tax-delinquent properties to community based organizations and in Indianapolis, the City is working cooperatively with Marion County to return unproductive land to revenue-generating status while advancing the redevelopment efforts of community development organizations.

Since 2001, Juergensen & Associates has been managing the Revitalife Program – the State’s primary mechanism for disposition of the state-owned tax-reverted property (known as “Old Law Property”) in the cities of Detroit, Hamtramck and Highland Park. Our primary consumer has been community development organizations committed to revitalization of their neighborhoods and by almost every measure, the program has successfully transferred over 3,000 properties to nearly 500 community development organizations with a vested interest in the neighborhoods where the properties are located.

As the State and qualifying local units begin to organize their Land Banks for disposition of their tax-reverted property, we hope they’ll learn from our experience managing the Revitalife Program. At the same time, they should also borrow a page from the playbooks of their colleagues in Cleveland, Atlanta and Indianapolis and link the disposition of tax delinquent land to community revitalization goals and the organizations fostering investment in our neighborhoods.

Revitalife Rolls Out Property Portfolio

Revitalife, the program for state held tax reverted property, is rolling out the available property for the 2004 year. The new list and the application, can be
downloaded directly from the Revitalife website, just follow the link below or click on the Revitalife image.

With Revitalife set to cease operations on July 1, 2004, we are encouraging non-profits, individuals and others interested in obtaining property to submit applications by April 1, 2004.

Click for PROPERTY LIST and APPLICATION

South Beach's (SoBe) Art Deco Mystique

For the past two years, I’ve used the holiday break to get away to the warmer climate of Florida. Both trips included stops in Miami’s South Beach or SoBe, for the hip and abbreviation inclined.

Beginning in the late ‘70s, an enlightened group of community activists that understood the value of the historic properties in South Beach organized to promote historic preservation. The effort evolved into the Miami Design Preservation League, which continues to promote the history of the area and its unique collection of historic assets.

Nearly 30 years later, the efforts of the early activists continue to bear fruit and demonstrate the long-term sustainable economic value of historic districts as the cache of SoBe, while not complete, has caught on and continues to spawn investment and activity.

Despite the efforts of the Preservation League, parts of SoBe are still challenged with vacancies and marginal tenants. Don’t get me wrong, the weather is great, the people are beautiful and the restored art-deco boutique hotels are amazing. But, I expected Washington Avenue, the primary commercial corridor to be more energetic. The interesting juxtaposition of wealth (and excess) just a few blocks from distressed buildings, vacancies and some “marginal tenants” is a strong lesson that despite the perceptions, revitalization efforts must be ongoing.

Despite some vacancy, at night, the street life was alive – actually packed – with people making their way to and from the various clubs that lined Washington Avenue, while certain areas, especially the Collins and Ocean Avenue corridors of art deco hotels seemed fully alive, yet more sedate.

The Governor, in her state of the state, opined the need for walk-able, vibrant “cool communities” to attract a young workforce. With SoBe as an example, we must remember that vibrant communities are not an end, but part of an ongoing, long-term effort to revitalize and sustain our communities and historic preservation is a critical ingredient in that equation.

Detroit Needs More, not Less Riverfront Park

In December, the Detroit Riverfront Conservancy, the entity responsible for planning and implementing the Tri-Centennial Park, Harbor, & Riverwalk, unveiled the most recent revisions to the plan for our waterfront park and it appears the vision for our waterfront is only as narrow as the smallest blocks of streets that currently define the former industrial land.

At its narrowest, the portion immediately east of the Renaissance Center to Rivard, will be 60' wide, the width of only its RiverWalk component. For comparison, it will be approximately the width of a traditional street and smaller then the width of most suburban lots. And while it was almost 40 acres a year ago, the Tri-Centennial Park and Harbor has had a huge chunk taken from it and is now down to nearly 30 acres. Compare that to over 90 acres highlighted last month in St. Louis’ Gateway Park.

In examining the newest design (click here for the most recent design), I wonder whether the celebration of an international boundary and our 300th Birthday is worth an extra 10 acres or more? Things like the Tri-Centennial Park can help us create the much-hyped world-class city, and while we yearn for the amenities of other cities, we regularly compromise on these quality of life features found in abundance in New York, Chicago, Boston, and San Francisco.

Some advocates believe everything south of Jefferson should be green. Such an approach would quantum leap the importance of our waterfront and value of the adjacent real estate. Everything south of Atwater seems like a more realistic approach and would restore the 10 acres lost, while also adding a strategic portion of land, widening the narrow and less useable 60’ swath.

At the same time, what happens adjacent (north) of the park will be critical. A part of what weakens the impact of the Gateway Park in St. Louis is its lack of connection to the downtown, because of the inhuman chasm across I-70 and parking decks that face it. In order to avoid the same pitfall, GM must moderate its parking requirements and it will be essential that the treatment of that space be a pedestrian friendly experience.

The National Recreation & Parks Association suggests a community should have 10 acres for every 1,000 citizens. A few years ago, research indicated that Detroit had only 40% of that national standard, so a few extra acres in an imperative location like our precious waterfront would be a good thing and who knows, it might help our standing with Men’s Health Magazine, that recently ranked Detroit as the 96th healthiest city out of 101 large U.S. cities.

Detroit LISC & City of Detroit Partner on Land Disposition Initiative

Detroit LISC is pleased to start the year off with the official announcement of the Land Disposition Initiative, in cooperation with the City of Detroit. With an infusion of $1.5 million of private investment through Detroit LISC, the City of Detroit is launching an ambitious effort to restore nearly 40,000 of its abandoned or vacant residential properties to productive use. The parcels -- acquired over the years through tax foreclosure and other means -- represent significant public assets and liabilities.

These assets are opportunities because by bundling the parcels, the City can more effectively support deals that are attractive to local community developers interested in converting them to residential or commercial use. The issue of liabilities is of critical importance because the parcels under City ownership are properties that generate no tax revenues and have no productive use.

Ultimately, the goal is to streamline the City of Detroit’s redevelopment strategy for each of the ten Community Reinvestment Strategy neighborhood clusters, aimed at redeveloping groups of six parcels or more; and speeding the disposition of smaller groupings of parcels (five and less) that are not needed for larger development projects.

As a first step, the City plans to use the LISC funds to hire the consulting firm of Deloitte & Touche to develop a property disposition strategy to: identify the current business process for property disposition; analyze the existing database of city-owned properties; and fill in whatever informational gaps exist regarding parcels in the City’s inventory.

The result should reap tremendous benefits for Detroit neighborhoods and residents. By making large numbers of parcels available to developers – and eliminating much of the red tape they previously had to endure – the process of land distribution will be smoother and faster.

Anika Goss-Foster, Program Director

Detroit LISC