Detroit files for bankruptcy

[Eon Blue]

Here's an article from Bloomberg Businessweek where Detroit's JoCo tries to convince people (and themselves, likely) that they are not tied to Detroit. The comments following the story do a pretty good job of deflating Mr. Patterson's bubble.

http://www.businessweek.com/articles/20 ... -county#p1

[longviewmo]

Here's an article from Bloomberg Businessweek where Detroit's JoCo tries to convince people (and themselves, likely) that they are not tied to Detroit. The comments following the story do a pretty good job of deflating Mr. Patterson's bubble.

http://www.businessweek.com/articles/20 ... -county#p1

Yeah, it's pretty rich to claim everything's okay. I didn't even read the comments and I was already thinking "isn't Pontiac in Oakland County?" It and Detroit are the only two places in Michigan where both the city and school district are under the control of emergency managers.

[longviewmo]

Edit: Well this is weird. The topic ate mine and Eon Blue's posts. I guess I'll repost it here since this post is visible.

Here's an article from Bloomberg Businessweek where Detroit's JoCo tries to convince people (and themselves, likely) that they are not tied to Detroit. The comments following the story do a pretty good job of deflating Mr. Patterson's bubble.

http://www.businessweek.com/articles/20 ... -county#p1

Yeah, it's pretty rich to claim everything's okay. I didn't even read the comments and I was already thinking "isn't Pontiac in Oakland County?" It and Detroit are the only two places in Michigan where both the city and school district are under the control of emergency managers.

[FangKC]

Much like any other economic incentive there are different ways to measure it. But in any case when the cost exceeds the benefit then a team becomes a liability.

When a City has a tax base where they can support incentives for new amenities, and the voters want to spend for them, then it's okay. However, Detroit is not in the position to be offering such amenities. The City needs to go back to basics and spend what little resources it has on rebuilding the housing stock and creating a tax base to support basic services like fire, police, and street maintenance.

The City needs to start from the downtown and slowly rebuild outward. There are a lot of older buildings that would provide cheap rental space for upstart businesses. The City needs to take the vacant lots near downtown and rebuild denser housing to increase population density. That means apartment complexes and townhouses instead of single family homes.

Demographics have changed. In many large cities, 30-to-50 percent of residents live in their dwelling alone. One income per household. Thus, you need to build denser to prop up revenue streams per square block. Middle class and lower class incomes haven't been keeping pace with economic growth over the past 20 years. Since cities rely on mostly sales and property taxes, and other fees, you have to increase population densities per square mile to pay for such large physical spaces and all the attending infrastructure.

If a city has 20 houses per block, and up to half the houses are occupied by just one person, you have less people buying things to pay sales taxes. Even if many houses have two people living in them, about 25-to-30 percent of those households might be retired and on fixed incomes. Old people aren't buying as many things as younger people. A lot of their spending goes to food and health care, which usually don't have sales taxes collected on that spending.

It's a problem wealthier countries have. People can afford to live alone. However, it has real impact on city revenues. A household of one doesn't buy as many things as a household of four or five.

Many studies that track population declines in big cities don't really account for this aspect. Everyone assumes all the loss are people who have moved out of a city like Detroit or St. Louis. It's partially true. But it's also true that many of the houses in these cities are occupied by just one person now, and many of those residents might be seniors who don't buy a lot of things. They might live in a big house they shared with their family, but now it's just them. New residents with families can't take over these houses until the existing resident moves or dies.

This accounts for some of the population loss south of the Missouri River in Kansas City. It's not hard to lose 150,000 residents in this area if 30 percent of the existing houses are occupied by one person instead of two or three people (or more) who shared the house 40 years ago.

Across from my house is a two-story, four-bedroom house occupied by a single woman who inherited it from her parents. She appears to be in her late 40s and probably won't have kids. Four houses down is a three-story, five bedroom house occupied by a bachelor in his 50s. I think he inherited the house from his parents as well.

There are 26 houses on my block. Eleven of these houses are occupied by single adults. Multiply this across the city south of the river.

If we had historic levels of occupancy in existing houses south of the river, when people were having more children than they are now, and fewer homes were single occupant, the population south of the river would no doubt be a lot higher.

This is why cities need to take another look at population density levels per block. Single people don't need big yards like families do. We need to be building more dense housing. Probably rowhouses, or traditional townhouses with a small back yard. City populations are also aging. Many seniors can't take care of yards.

I suggest brick townhouses, or row houses, that don't have common homeowners association fees like condos require. Many people don't want to pay $200 a month in association fees. Everyone is responsible for their own property maintenance, and the dwellings share two walls and back fences. Brick row houses are fairly low maintenance and energy efficient.







https://maps.google.com/maps?q=30th+and ... 3,,0,-5.18

[FangKC]

Geography: The Latest Front in the Class War

At the heart of today's political gridlock is a sense of disconnect. Too many Americans feel disconnected from their government, their economy, and even their fellow citizens.

Gone is the collective bond that united us in war and in peace, the sense that we rise together and fall together. In its place is a deeply divided America.

We talk a lot about the partisan divide in this country, but we don't talk enough about the geographic divide. The citizens who feel the greatest disconnect from collective institutions are often the ones who live farthest away from them.

The latest evidence of this fact comes from a new study by the Equality of Opportunity Project, a team that includes some of the most celebrated young economists in the country. They found that one of the greatest enemies of economic advancement was sprawl.

The more concentrated a city was, they discovered, the more likely its citizens were to climb the economic ladder. Conversely, the lower and middle classes had fewer opportunities to advance in cities that were more spread out.

The release of their findings just happened to coincide with the bankruptcy of Detroit, an episode that illustrated their point quite tragically. Detroit is one of the most spread out cities in America -- and one of the most economically segregated. At its core, the average household earns an income that's half of what suburbanites earn just outside the city's borders.

http://www.huffingtonpost.com/anthony-w ... 34971.html

[aknowledgeableperson]

The bankruptcy of Detroit had many causes, and I would imagine some had a more dramatic effect than sprawl. As Time states 60 years ago Detroit was one of the richest cities in the country and the world. But then there were the riots, white flight, political corruption and incompetence, collapse of the auto industry a couple of times, and labor issues. I would think it was these issues that lead to the sprawl, along with the normal growth of metro areas. In other words the sprawl is more of an end result of Detroit's problems, a symptom rather than a cause.

[FangKC]

The sprawl didn't help. Miles and miles of infrastructure for a low-density population, and now not enough tax revenue to cover the costs of such a large physical city. The result is Detroit is thinking of abandoning blocks and paying the owners of one or two remaining houses on them to move, so they can de-annex, or decommission the block from the grid.

[aknowledgeableperson]

But to focus on sprawl makes you lose sight of the cause. Much like with a human body that has a fever. OK, treat the fever but if it is caused by an infection and you ignore the infection you can have a more serious problem.

Miles and miles of infrastructure for a low-density population, and now not enough tax revenue

We can go on-and-on and not come to an agreement but over half of Detroit's property owners don't pay their taxes for one reason or another. Yes, not enough revenue but because of a lack of payment. It is not a density problem but an economic problem.

[FangKC]

Opinion: Despite Detroit bankruptcy, architects must imagine better built environment

Developers are seeing the demand for ur ... are ready.

http://www.modeldmedia.com/features/frankarvan713.aspx#

[FangKC]

But to focus on sprawl makes you lose sight of the cause. Much like with a human body that has a fever. OK, treat the fever but if it is caused by an infection and you ignore the infection you can have a more serious problem.

Miles and miles of infrastructure for a low-density population, and now not enough tax revenue

We can go on-and-on and not come to an agreement but over half of Detroit's property owners don't pay their taxes for one reason or another. Yes, not enough revenue but because of a lack of payment. It is not a density problem but an economic problem.

Well, it's easy to say that. However, are you aware that the entire city of San Francisco would fit into the unoccupied land in Detroit? If Detroit was physically the size of San Francisco, and had similar density, it would not have so much physical infrastructure to maintain.

Geographic area is a bit harder to automate, but there are plenty of surprising examples there as well. Did you know, for instance, that the unoccupied section of Detroit is actually the size of the entire city of San Francisco.

http://www.theatlanticcities.com/arts-a ... ally/1444/

The city is 139 square miles, which includes approximately 40 square miles of unoccupied land (an amount equivalent to the area of San Francisco), and roughly 90,000 abandoned or vacant homes and residential lots, according to the non-profit Data Driven Detroit. Thirty percent of the city's housing stock is currently vacant

.

It's hard to collect property taxes on unoccupied houses and vacant lots. It's also hard to collect property taxes when, "as of 2009, 36 percent of the people in Detroit live below poverty level." That number has probably increased since.

Another statistic I read recently is that Michigan has lost 50 percent of its' industrial jobs in the last 10 years. Seeing that Detroit is the biggest city in Michigan, I imagine a big percentage of the state job losses happened there. So you are also losing a lot of sales taxes.

[aknowledgeableperson]

Even when the economy was going good, and had more density, Detroit still had its problems, much like any other old NE industrial city. The recession just compounded the problem.

If density alone was the solution when why is North Dakota showing a budget surplus?

Detroit is an old city. It does have a few things going in its favor but it has more than a few not going in its favor. Creating density happens over time. Even if they build what you propose doesn't mean people will move there. Afterall, where are the jobs. Detroit needs something now. One article I came across stated the city has an art collection valued over $1B - sell it. Have vacant or near vacant areas - bank the land by turning it back into a natural state. One can get an armed forces reserve units or the National Guard to come and tear down buildings during their two week or weekend training like KCMO did years ago to tear down drug houses and also take out streets, curbs, and sidewalks.

[chingon]

If density alone was the solution when why is North Dakota showing a budget surplus?

Aside from the fact that N. Dakota, due to the oil boom, is denser than it has ever been before in history, you are kind of intentionally glossing over the fact that the jobs that account for that growth in North Dakota are low and moderately skilled, blue-collar, industrial jobs that pay well. Just like the jobs that lead to Detroit's boom. You also failed to mention that those low-skill, high pay, blue collar jobs are in an industry that is heavily subsidized by the government at every level.

[aknowledgeableperson]

And that is why Detroit doesn't have a density problem that is a cause. The lack of density has more to do with the long term declining job base in Detroit.

[FangKC]

If You Build It, They Will Come: How Cleveland Lured Young Professionals Downtown

When the Maron family decided to redevelop an entire city block in downtown Cleveland, the area was so blighted no restaurateur would lease space there. A decade later, the East Fourth neighborhood is home to Food Network personalities, a House of Blues, and free Saturday yoga classes. Café-style seating spills into the pedestrian-only street. Apartments on the block are fully leased, and a 100-unit building under construction across the street has already reached full capacity. to be.
...

In Cleveland, there's now a broad consensus that mixed-use, urban neighborhoods will give the city a future, says Edward Hill, dean of the college of urban affairs at Cleveland State University.

...

Today, nearly 12,000 people live in the two square miles that make up downtown Cleveland—the largest number in 60 years—and residential occupancy rates are over 95 percent. In 2011, MRN developed new office space for Rosetta, an area marketing agency that relocated downtown. Cleveland has been able to persuade major employers like Amtrust Financial Services and Ernst & Young to expand their downtown operations. They were sold, Warren says, on Cleveland's ability to attract talented professionals

.


http://www.theatlanticcities.com/jobs-a ... _263068678

[FangKC]

Cleveland's Downtown Rebound

While Cleveland’s outer core neighborhoods (green) and outer suburbs (turquoise) have declined steadily—in fact, the city has lost 17 percent of its population over the past decade, nearly one in five of its people—its inner core neighborhoods (red) have grown steadily and its downtown (darker blue) has boomed.

...

A story in The Cleveland Plain Dealer painted a vivid picture. “Twentysomethings are creating a new and potentially powerful housing pattern as they snap up downtown apartments as fast as they become available. ... Neighborhood life is blossoming on blocks once dominated by office workers and commuters, and people are clamoring for dog parks.”

The significance of Cleveland’s population shift cannot be exaggerated. As Jim Russell puts it: “the urban core is a net importer of young adults and a net exporter of old adults. That's the antithesis of a dying city."

http://www.theatlanticcities.com/jobs-a ... ound/1917/

[FangKC]

Don't Let Bankruptcy Fool You: Detroit's Not Dead

Detroit's downtown urban core is seeing more investment, economic activity and an influx of talent than it has in decades. This revitalization is concentrated and spotty and it is far from inclusive, but it is certainly something positive, generating jobs, revenue and much-needed hope and optimism that provide a foundation to build upon.

The broader metropolitan region is home to huge assets – truly great research universities, world-class research, development and design capabilities, abundant musical and creative talent, a great global airport, and, after years of neglect, a massive effort to invest in and revitalize its downtown core.
...

The ingredients for long-run economic recovery are already present in the region.

As a metropolitan region, Detroit has the assets needed to underpin economic recovery. While the decline of the auto industry left it reeling, the region has strengths that enable it to reposition for the knowledge economy. The broad region is home to more than 5 million people and produces nearly $200 billion in economic output.* Its economy is larger than New Zealand's and not too much smaller than that of Hong Kong or Singapore. There are substantial concentrations of talent: about 34.5 percent of the entire metro area's workers are members of the creative class, slightly above the national average. Its older suburbs like Birmingham, Royal Oak and Ferndale – which stand as textbook examples of mixed-used walkable communities – have concentrations of of talent and human capital that rival creative centers like San Francisco, Washington D.C., and Boston. The Greater Detroit region has also shown a persistent ability to attract global talent in the form of new immigrants – another big asset that differentiates it from many other economically hard hit metros.

...

Detroit's urban center is seeing substantial reinvestment, spearheaded by private investors. Earlier this year I wrote about a report highlighting the revitalization of Detroit's Greater Downtown Corridor, a 7.2 square mile region stretching north from the city's old riverfront. The corridor includes the central business district; the trendy Corktown neighborhood; the Cass Corridor arts and cultural district; Midtown, home to Wayne State University; and Tech Town. As has been widely reported, Dan Gilbert, moved the headquarters of Quicken Loans from the suburbs to downtown in 2007. (Gilbert has invested about $1 billion dollars in Detroit real estate, including a major effort to revitalize parks and stimulate real place-making downtown). Smaller creative and tech firms are coming back to the city, many of them setting up shop at The M@dison, where venture funds, tech companies, a small Twitter office and an accelerator are located. The construction of new light rail along the corridor, with $100 million in local funding from non-governmental sources, promises to galvanize this revitalizing core and in time hopefully connect it the older, mixed use suburbs along the Woodward spine.

...

This area is more affluent, better educated, and more racially diverse than the rest of the city of Detroit, as I explained The Financial Times this past April:
More than 40 per cent of the young adults living there are university educated, according to a recent report, compared with 11 per cent for the city as a whole, 29 per cent for the state of Michigan and 31 per cent for the nation. The urban center is home to more than 600 new companies and draws 10.5m visitors to its leisure attractions each year.

This revitalization is powered by a new model of public-private partnership backed by local entrepreneurs, city-builders and philanthropic foundations, in tandem with community groups that are pumping billions of dollars into the urban center.

Bankruptcy is likely to have little, if any, effect on this flow of investment capital back to the core. As Detroit Venture Partners chief Josh Linkner told Venture Beat on Friday, “I’m proud to say Detroit is my hometown,” Linkner said. “It will still be my town tomorrow, the day after, and in the years to come.”

...

But, today's technology-intensive knowledge economy requires centrality and density. The suburbs can no longer prosper without the city. As I noted back in April:

One of the things that nearly killed downtown Detroit was the misguided notion that its function as a location for offices and headquarters could be transplanted to its suburbs. The region can no longer afford the outmoded and incorrect notion that it can build an alternative "downtown."
Many of Detroit's new generation of investors and city-builders moved their activities back to the city because they realize true regional prosperity can only come from a strong, revitalized core.

As journalist and Cities contributor Micheline Maynard pointed out Friday, this is an opportunity for Detroit's boosters who live in the suburbs to step up. Suburbanites like to claim Detroit's great assets: its arts and cultural institutions, its fabled music scene, its sports teams. But they haven't wanted to pay for it. Without the city, the suburbs will have much harder time surviving and thriving.

http://www.theatlanticcities.com/jobs-a ... dead/6261/

[FangKC]

New Thirst for Urban Living, and Few Detroit Rentals

Abandoned houses with overgrown yards may be the image most people associate with Detroit, but the city’s downtown and midtown neighborhoods have the opposite problem: a shortage of rental apartments to meet a growing demand for an urban lifestyle.

Developers say occupancy rates in these areas are at least 96 percent, spurred by young professionals, students and empty nesters who want an easy commute to school or work and a short walk to local cafes and bars.

“To us it feels like there’s an insatiable demand,” said Fred Beal, manager of Motown Construction Partners, which led the recent renovation of the 124-unit Broderick Tower downtown.

Built in the late 1920s, the 34-story building near Comerica Park had been vacant for decades, but is fully leased after opening in November. Penthouse units that are 2,300 square feet command $5,000 a month, Mr. Beal said, though most of the studios and one- and two-bedroom apartments rent for $2,000 or less.

...

A factor that has helped draw people to live in apartments either in midtown or downtown is up to $3,500 in rental rebates available to employees of companies like Quicken Loans and Blue Cross Blue Shield of Michigan, which have brought jobs back to Detroit.

....

Mr. Jackson said many of the current efforts began in preparation for the Super Bowl Detroit hosted in 2006, with improvements along downtown streets that led to a more robust night life and an opportunity to persuade suburbanites to live closer to where they work and go out. “You build an entertainment district — all of a sudden people are not going home at 5, they’re sticking around until midnight or beyond,” he said. “Next they’re saying ‘Why am I driving 20 miles back home?’ ”

http://www.nytimes.com/2012/12/12/reale ... .html?_r=0

[FangKC]

Vacancy for Detroit office space at 8-year low

The vacancy rate for downtown Detroit office space has hit an eight-year low, according to a report by a commercial real estate advisory firm released Friday.

During the second quarter of 2013, the vacancy rate in Detroit’s central business district dropped to 27.1 percent with 52,000 square feet of newly occupied space, according to Newmark Grubb Knight Frank, NKGF.

“That’s a remarkable turnaround,” John DeGroot, NGKF vice president of research in Detroit. The vacancy rate had been as high as 33 percent two years ago, he said.

Year-to-date, the central business district has posted just below 200,000 square feet of absorption, with Title Source, Inc. being the biggest contributor. The central business district is defined as the area between the freeways. Another way its defined is anything within the 48226 zip code.

Much of the activity is due to to major suburban companies moving downtown.

“Quicken Loans and its related companies have brought 7,000 new office employees into the downtown, and other companies are following,” said Fred Liesveld, executive vice president, managing director of NGKF’s Detroit operations

For the past two years, downtown Detroit has been the dominant submarket in southeast Michigan, with both large and small tenants moving operations downtown, in terms of square footage that is now occupied.

...

The improving downtown office space market began with Blue Cross Blue Shield, DTE Energy and Quicken Loans in 2011. Combined, the companies leased more than 750,000 square feet. In 2012, Title Source, Chrysler, PricewaterhouseCoopers, Metro-West Appraisal Co. and Agency 720 followed suit, leasing just under a half million square feet, combined.

The momentum shows no signs of abating, DeGroot said, pointing out national ad agency Campbell-Ewald’s recent announcement to move 600 employees from Warren to the Ford Field Office Complex.

“When the move is complete at the beginning of 2014, it will take roughly 120,000 square feet of vacant space off the market,” DeGroot said.

That could drop the downtown vacancy rate of 25 percent in 2014 — a rate not seen since 2002, DeGroot said.

http://www.detroitnews.com/article/2013 ... /307260081

[FangKC]

While companies move into Downtown Detroit, suburbs continue to suffer

DETROIT, MI - It seems kids these days just don’t want to work in the suburbs. Campbell Ewald knows this. Dan Gilbert knows this. The idea of driving to corporate islands away from the vibrancy and amenities of downtown life may have been appealing to someone at some point, but for years now the trend has been that young American professionals want to be downtown.

In many metro areas, that’s not much of an issue. But in Detroit, the suburbs are already suffering from remarkably high vacancy rates.

The suburban office market had a 26.9 percent vacancy rate in the fourth quarter of 2012, according to a report from C.B. Richard Ellis. The downtown Detroit market also has a large, 24.3 percent vacancy rate, but how often do you see news of companies moving hundreds or even thousands of employees from downtown Detroit to Troy?

...

Campbell Ewald was only the latest company to move from the suburbs to downtown, and plans to relocate its 600 employees there by the end of this year or early 2014.

...

Last July, Title Source, one of Gilbert's companies under the Rock Ventures umbrella, announced it was moving its 1,500 employees to downtown Detroit. Quicken Loans, too, was based in the suburbs until Gilbert moved its headquarters to downtown Detroit in 2010, setting off a series of investments in the city's core that so far show no sign of slowing. Around the same time Quicken Loans decided to move, Blue Cross Blue Shield announced it was moving 3,400 workers from Southfield to downtown Detroit.

Companies moving into inner Detroit may have a slight hit on the suburbs’ vacancy rate, but in the long run a strong Downtown Detroit will benefit the entire region, Gutman said.

“A healthy Detroit is a very positive thing, companies that will go there will strengthen the entire area,” he said.

http://www.mlive.com/business/detroit/i ... _down.html

[FangKC]

Downtown Detroit rents go through roof

Residential rent prices in the gentrifying neighborhoods of Detroit are steadily marching upward, climbing in some cases by $3,000 more per year for the same place, and landlords are pushing them higher at every opportunity.
...

But the demand to live in Corktown, downtown, Midtown and along the riverfront is red hot — nine of 10 rental units in those neighborhoods are occupied, according to studies.

So the cat-and-mouse game is on, as landlords hike rents and renters scramble to come up with more money or find alternatives. Rising rents are changing who lives in the 7.2-square-mile swath of the city that’s gentrifying, attracting a growing number of affluent professionals as well as 20-somethings willing to live with roommates.

...

It’s not uncommon to see rents start at $1,000 or more in Detroit’s hot areas, and penthouses can command $5,000 a month. The renovated Broderick Tower in Grand Circus Park, which opened six months ago, is raising rents by 12 percent in new leases, said Stewart Beal, one of the owners. Residents at the Detroit City Apartments say their rent has gone up 15 percent annually the past two years.

...

Tenants soon will start moving into the restored Beaux Arts building designed by Albert Kahn with relief stone carvings by Corrado Parducci. The seven-story building at 735 Griswold is a block from Campus Martius. Rent starts at $1,275 for a 850-square feet unit and tops out at $2,500 for a 1,440-square-foot unit. Based on the square footage, that’s about $500 a month more than almost anyone in the area would have charged two years ago.

Rising rent is a good thing, city officials contend. It means more people are willing to live in Detroit, despite its financial troubles. .

More investment is pouring in. Last week, the first stage of $5 million in renovations was unveiled at the Alden Towers on East Jefferson Avenue near the east riverfront. The historic apartment complex had been so run down that squatters had taken over part of a building. The Alden was recently bought by Denver-based Triton Group.

The Merchants Row loft apartment complex on Woodward Avenue downtown announced a $10 million expansion, essentially by renovating an adjacent empty building and adding 42 apartments. And there’s more of that kind of activity, just waiting in the wings.

“If, or when, we get to $2-a-square-foot,” Beal said, “that’s when things could really take off.”

http://www.detroitnews.com/article/2013 ... /306180020