Every dark cloud has a silver lining — or so we need to hope. One thing we know is that we’ve got so many dark clouds these days in Michigan, that it is vitally important to seek out any silver linings which might help balance out the gloom and doom.
And one has been discovered shining proudly in … Flint, of all places. For the last few years, there has been a horse race between Flint and Detroit for the title of Michigan’s Grimmest Urban Area. If anything, Flint might be in worse shape. According to statistics from the U.S. Department of Labor, unemployment in the Flint Metropolitan Area is 9.5 percent, nearly tops in the nation and worse than Detroit’s 8.2 percent.
Unemployment just in the city of Flint was far worse still — 16.6 percent in January. Not surprisingly, the city has had persistent trouble balancing its budget. Things got so bad in 2002 that the state had to take over the city and send in a receiver, or Emergency Financial Manager to resolve the accumulated $35 million deficit.
These days, things are not much better.
Enter Dan Kildee, the Genesee County Treasurer. At 46, he’s still an imposing but youthful figure who looks very much like the big kid who used to be a defenseman for his high school hockey team.
The Kildee family is prominent in Genesee County politics. His uncle, Dale, has represented the area in the U. S. Congress since 1977. Dan started early — very early. He was elected to the Flint Board of Education at age 18, and then served as chair of the Genesee County Commission until he was elected county Treasurer in 1996.
He’s also become something of a national celebrity for having managed a remarkably successful “land bank” to control Flint’s vacant properties, flight blight and stimulate urban redevelopment. The credit crunch and mortgage meltdown hit distressed communities especially hard. In Genesee County there are around 5,000 homes in foreclosure, out of a total of 170,000 houses.
National statistics suggest that when a house is foreclosed, other houses on the block lose one percent of their value each month and the neighborhood crime rate goes up by around two percent.
Unoccupied homes don’t pay taxes to sustain city services, while they cost taxpayers money to board them up against vandals and cut and clean up overgrown yards.
Enter local land banks. They buy distressed properties on the cheap and either demolish them or rehab and resell them. According to Kildee, “The properties that are foreclosed are often perfectly good houses. Left to their own devices, the mortgage companies and the banks often will chose to dump them on the market, liquidate their investment and walk away from a damaged community.”
Kildee says his land bank has negotiated to buy 184 Fannie Mae (Federal National Mortgage Association) owned houses under foreclosure in Flint for $34,000. But their appraised value is $3.8 million. “If we take a long-term view, we can rehabilitate and resell these properties, returning them to the city’s housing stock and fighting the kind of blight that comes with lots of foreclosures.”
Profits from the resold houses are used to finance further land bank activities. And putting such a long-term player into the local real estate market prevents speculators from buying and “flipping” houses and perpetuating neighborhood blight.
This is not penny-ante stuff. Since it was started in 2002, the Flint land bank has demolished 800 run-down houses and built 200 single-family homes and apartments. This year, it will spend around $30 million, much of it from private investors, in renovating two historic hotels in downtown Flint.”If this kind of stuff works in Flint, which has to be one of the worst-off real estate markets in the country, it can work anywhere,” Kildee said.
More to the point, Kildee’s land bank represents an innovative way for government to solve problems by aligning what it does with market forces. “The land bank represents a better way government should operate,” according to Kildee. “Too often, governments are only interested in increasing tax revenues. Instead, we’re interested in restoring equity value for home owners, in stabilizing the local real estate market, in reducing blight and redeveloping the community.”
Kildee has received a fair amount of notoriety for his work with the land bank. He was featured in a recent article in the Wall Street Journal, and he’s been invited to teach at Harvard and MIT and advise communities all around the country.
There are already rumblings from Democrats statewide that he might be a formidable candidate for governor in 2010. For now, however, he wants to stay focused on the enormous task before him.
“At the end of the day, we’ve got to realize that government needs to work with the economic system rather than against it,” Kildee says. “A land bank like ours is a terrific, common sense way to help communities.”
And when it works as well as his apparently does, it represents an innovative and much-needed glittering silver lining in the storm system that has been pounding Michigan for years .
Editor’s Note: Former newspaper publisher and University of Michigan Regent Phil Power is a longtime observer of Michigan politics and economics, and a former president of the Michigan chapter of the Nature Conservancy. He is also the founder and president of The Center for Michigan, a centrist think-and-do tank which publishes the Michigan Scorecard. The opinions expressed here are Power’s own and do not represent the official views of The Center. Power welcomes your comments at ppower@thecenterformichigan.net.
