Disposition of Publicly Owned Land in Cities: Learning from Cleveland and Detroit

CLOSUP Working Paper Series Number 10 February 2009

Disposition of Publicly Owned Land in Cities: Learning from Cleveland and Detroit Margaret Dewar, University of Michigan

This paper is available online at http://closup.umich.edu

Any opinions, findings, conclusions, or recommendations expressed in this material are those of the author(s) and do not necessarily reflect the view of the Center for Local, State, and Urban Policy or any sponsoring agency

Center for Local, State, and Urban Policy Gerald R. Ford School of Public Policy University of Michigan

Disposition of Publicly Owned Land in Cities: Learning from Cleveland and Detroit Margaret Dewar, University of Michigan

Margaret Dewar* Taubman College of Architecture & Urban Planning Urban and Regional Planning Program 2000 Bonisteel Blvd.

University of Michigan Ann Arbor, MI 48109-2069 734-763-2528 medewar@umich.edu

Abstract: Cleveland and Detroit have had similar losses in employment and population and have the same poverty rates. Both have experienced property abandonment that resulted in each city’s owning thousands of parcels of tax-reverted land. The reputations of the two cities regarding their handling of such property differ greatly. Cleveland’s land bank is credited with facilitating redevelopment while Detroit’s disposition procedures are blamed for interfering with new development. What makes Cleveland’s system apparently more successful than Detroit’s in the context of similar demand for land? Cleveland had accurate data on its property inventory; received and conveyed property with clear title; had a predictable, stable, publicly known pricing system for land; could hold land for developers as they pulled their projects together; and worked under mayors who made property disposition for new housing construction a priority. Cleveland’s land disposition system is transparent and usually routine, and city and county officials and nonprofit developers work together to implement and improve land disposition.

*The Center for Local, State, and Urban Policy, University of Michigan, provided funding for this research. The author benefited from the comments and assistance of Carlton Basmajian, Amy Brooks, Demetria Collins, Eric Dueweke, Barbara Eichmuller, Rochelle Lento, Elsa Pereira, Melisa Tintocalis, Simon VanLeeuwen, and Claire Vlach.

Paper presented at the conference of the Association of Collegiate Schools of Planning, Portland, Oregon, October 2004.

A later version of this work has been published as: “Selling Tax-Reverted Land: Lessons from Cleveland and Detroit,” Journal of the American Planning Association, 72(2), Spring 2006: 167-180.

1 In many cities of the Northeast and Midwest, loss of population and jobs after World War II reduced the demand for housing and commercial property and led to the abandonment of homes, retail districts, and industrial areas. By the 1990s many of these cities were plagued with tens of thousands of abandoned buildings, vacant lots, and publicly owned, tax-reverted properties. The cities’ experiences and their mix of these types of properties varied with the pace of population and job loss, the durability of buildings, and the laws governing foreclosure for property tax delinquency and liability for environmental contamination. Baltimore had between 12,700 (the city’s count of units unfit for habitation) and 42,480 (the Census count of vacant units) abandoned housing units by the early 2000s; the city had nearly 14,000 vacant lots (Cohen, 2001: 415-6). As of 2000, Philadelphia had 26,000 vacant houses and 31,000 vacant lots (Kromer, 2002: 6). Washington, DC, had about 3200 vacant buildings in 2004 (Nakamura, 2004). In Michigan where foreclosure laws resulted in the conveyance of property to the city until the late 1990s, Detroit owned about 36,000 parcels of tax-reverted land, most of them vacant, as of 2004 (Detroit City Property Inventory System data file, 2004).

As problems of abandoned property and derelict land drew public attention in many cities, the search for solutions grew. The Local Initiatives Support Corporation (LISC), Fannie Mae Foundation-supported projects, and others worked on identifying best practices, experimenting with solutions, and recommending changes (Alexander, 2000; Citizen's Housing and Planning Association, 2000; Keating & Sjoquist, 2001; Rao & Dewar, 2001). LISC, Smart Growth America, the International City/County Management Association, and the National Trust for Historic Preservation started the National Vacant Properties Campaign with funding from the Fannie Mae Foundation and others. The mission is “to make vacant properties a priority by building a national network of leaders and experts; providing tools to communities; raising

2 awareness through communications; and providing technical assistance and training� (National Vacant Properties Campaign, 2004). Their interest and that of others have generated many publications that recommend ways that public administrators, elected officials, and partnerships of city agencies with nonprofits and universities can prevent property abandonment and can manage abandoned buildings and vacant land in ways that restore them to productive use (Blackwell, 2003; Brophy & Vey, 2002; Kromer, 2002; Mallach & Rodriguez, 2002; Mueller, 2003a; Mueller, 2003b; National Vacant Properties Campaign, 2004).

By the early 2000s some city and county officials had succeeded more than others in finding ways to turn surplus properties into assets through reuse in new ways. In 1986 New York City owned more than 53,000 units of occupied housing and 49,000 vacant units of housing acquired through tax foreclosure (Schwartz, 1999:843). As of 1999, after billions of dollars in capital expenditures on housing, New York City owned 17,940 housing units in occupied buildings and 7,360 units in vacant buildings (Braconi, 1999; Schwartz, 1999). In Cleveland a land bank, a network of community development corporations supported with Community Development Block Grant funds, and tax abatements and other subsidies for homebuyers for purchase and rehabilitation spurred housing development (Bright, 2000: ch. 6; Site Assembly Task Force & Land Bank Subcommittee, unpublished: 2). In other instances, promising new programs were operating, but their results were unknown. For example, in New York City, changes in tax foreclosure authority allowed the city government to transfer ownership of tax delinquent properties directly to new owners and to focus foreclosure enforcement on critical buildings and blocks (Allred, 2000; Mueller, 2003b). In Flint, Michigan, the county treasurer led the creation of a land reutilization council (which later became a land bank) to manage and encourage reuse of tax-reverted property. He established a foreclosure

3 prevention program to help homeowners keep their property (Kildee, 2004). Some mayors took leadership to put ambitious programs in place to deal with housing abandonment and vacant land. In 2001, Philadelphia Mayor Street launched the Neighborhood Transformation Initiative, an effort that included demolition of dangerous buildings, rehabilitation of vacant rowhouses, construction of new housing units, and cleanup of vacant lots (Brophy & Vey, 2002: 6; Kromer, 2002: 8). Baltimore Mayor O’Malley announced Project 5000 in 2002 with the goal of acquiring 5000 vacant properties for rehabilitation or for demolition for site assembly for new development (Kromer, 2002: 8).

Thus far, the research on vacant properties and the presentations on possible approaches are strong on recommendations and weak on evaluation. “Best” practices may not in fact even be “good” practices when examined later as experiences accumulate (for instance, Vozzella, 2004). In many cases, creative new programs are still too young to assess. The Flint/Genesee County Land Bank for instance, has acquired thousands of parcels of property but has turned few if any to private, productive use in the City of Flint in the two-year period after tax-reverted properties were first acquired. Furthermore, the technocratic recommendations of the research and presentations assumed the will and capacity to make reforms without examining that issue directly.

Tax-reverted land disposition in Cleveland and Detroit This paper looks at activities of two cities, Cleveland and Detroit, in handling taxreverted properties, one part of a system for moving abandoned property into productive reuse and redevelopment in order to consider the following questions. How does the process of moving land back into development work? What do the experiences of these two cities suggest about how it could work better? The experiences of Cleveland and Detroit in handling tax-

4 reverted property differ considerably. As mentioned above, Cleveland set up a governmental entity, a land bank, to focus on converting tax-reverted property to new uses. Cleveland’s land bank acquired a reputation as a highly effective institution in moving land into redevelopment (Blackwell, 2003; Bright, 2000; Krumholz & Lloyd, 2002; Rosan, 2001). In Detroit, the development division of the Planning and Development Department (previously the Community and Economic Development Department) held the property that the city of Detroit received from the state through foreclosure. Disposition practices varied over time and from project to project.

Detroit’s handling of land disposition was widely regarded as a barrier to redevelopment (McWhirter & Josar, 2000; McWhirter, 2001; Rao & Dewar, 2001).

Cleveland and Detroit are a useful comparison because their economic fortunes have been similar enough that market conditions cannot offer an easy explanation for differences in land disposition or in redevelopment. As Table 1 shows, as of 1990 both cities had lost between 44 and 45 percent of their 1950 population. After 1990, Cleveland’s population loss was slower than Detroit’s, but by 2000, both cities had lost about 48 percent of their 1950 population. Both cities and regions were growing slowly, but suburban and city growth rates diverged more in Detroit as the region sprawled.

Both cities had substantial shares of their population in poverty. They became much poorer after 1969. Detroit’s poverty rate more than doubled between 1969 and 1989, from 15 percent to 32 percent (Table 2). Cleveland’s poverty rate rose from 17 percent to 28 percent in the same period. Although Detroit’s poverty rate was somewhat higher than Cleveland’s in 1989, poverty rates in both cities had declined and were substantially the same by 1999—around one-fourth of their residents lived in poverty. Poverty rates remained low in the suburbs, although suburban poverty also increased.

5 Both cities lost much of their employment in manufacturing and in retail after World War II, although Cleveland fared somewhat better than Detroit (Table 3). Detroit had lost four-fifths of its manufacturing employment by 1992, while Cleveland had lost three-fourths. Both cities’ share of metropolitan manufacturing employment fell even as their regions also lost jobs.

Detroit lost 70 percent of its retail jobs between World War II and 1992, while Cleveland fared less badly, losing about 57 percent of retail employment. Both cities lost in their share of metropolitan retail employment as the rest of their regions gained many retail jobs. By 1992 Cleveland had 18 percent of its region’s retail employment, while Detroit had 11 percent.

As population declined and the proportion of poor residents grew, both cities lost housing units. From 1970 to 1990, Detroit lost one-fourth of its housing units, while Cleveland lost onefifth. In 1990, Detroit’s housing vacancy rate was nearly 9 percent while Cleveland’s was nearly 11 percent.

The widespread belief is that more housing redevelopment has occurred in Cleveland than in Detroit since 1990. Both cities continued to lose housing units, on net. Detroit lost 10 percent of its 1990 housing stock by 2000; Cleveland’s loss was less than half that—4.6 percent (see Table 4). Vacancy rates in 2000 were higher than in 1990 in both cities—over 10 percent in Detroit and nearly 12 percent in Cleveland. However, construction produced nearly 1000 more new housing units in Detroit than in Cleveland from 1990 through 2003. In Detroit building permits were issued for 5804 new housing units while in Cleveland permits were issued for 4824. On the other hand, although the new units were a small share of the 1990 housing stock in both cities, Cleveland added a larger share—2.41 percent of 1990 housing units compared to Detroit’s 1.55 percent. Cleveland added almost one new housing unit for every one hundred 1990 residents. Detroit added new housing at only 60 percent of that rate with nearly six new

6 homes for every one thousand 1990 residents. If Detroit had redeveloped at the same pace as Cleveland, Detroit would have had about 4000 additional new housing units in the 1990-2003 period. Overall, Cleveland did experience more housing redevelopment than Detroit relative to its size after 1990.

The perception that more redevelopment occurred in Cleveland than in Detroit could also be due to the absorption of more vacant land in Cleveland, if Cleveland is redeveloping faster than Detroit. Although data do not exist to show absorption of vacant land, land use data show that Cleveland had far fewer parcels of vacant land and a much smaller share of land area that was vacant than did Detroit. In 2001, between 10 and 11 percent of Cleveland’s land parcels were vacant; this amounted to about 17,000 parcels, nearly 8 percent of the city’s land area. In the same year, nearly 23 percent of Detroit’s land parcels were “unimproved” vacant, close to 90,000 parcels of land, about 18 percent of the city’s land area.1 The widespread belief is that the land bank’s handling of tax-reverted property in Cleveland facilitated redevelopment and that in Detroit the handling of tax-reverted property interfered with development. According to Rob Curry, director of the Cleveland Housing Network, a consortium of Cleveland CDCs, the land bank has provided a “remarkable revitalization stream” of land for new housing development (Rosan, 2001). After Cleveland and Cuyahoga County worked together to streamline foreclosure and land banking in the late 1980s, the effort won a 1993 Innovations in American Government award. The announcement of the award praised the project for “generating a flood of new housing and real estate development in the city” (Innovations, 1993). In Detroit, in contrast, the only public statements about city land disposition processes were complaints about difficulties in acquiring land by everyone— churches, adjacent home owners and businesses, prospective homeowners, nonprofit developers,

7 for-profit developers. The director of a nonprofit housing organization stated, “There’s really a nightmare of real estate issues in the city. It’s a mess in its proportions” (Dixon, 2000b). The Detroit Free Press editorialized, “Now is the time to figure out how to put Detroit’s idle property to work, before its dead weight crushes redevelopment efforts” (City property, 2000; Dixon, 2000a; Dixon, 2000c).

Data on property disposition in both cities tell a different and surprising story, however.

Table 6 shows that the Cleveland land bank handled a much smaller amount of property than the Detroit Planning and Development Department did. As of 2003 Cleveland had disposed of nearly half the parcels the land bank had held between 1984 and 2003. Detroit had disposed of about 43 percent of the tax-reverted parcels ever owned. In most years, however, the Detroit department disposed of many times more parcels than the Cleveland land bank did. Between 1990 and 2003, the Detroit department disposed of four times as many properties as did the Cleveland land bank. As of the early 2000s, however, the Detroit department still held about 36,000 parcels (about 9 percent of the city’s land parcels) while the land bank held about 6,000 (nearly 4 percent of the city’s land parcels).

Figures 1 and 2 map the parcels the Cleveland land bank and the Detroit city department hold as of 2001 for Cleveland and 2004 for Detroit. In Cleveland the land bank held the largest number of properties on the east side of the city in Hough, Central, and Fairfax; the land bank owned at least a few properties in most neighborhoods. In Detroit areas where the city held many properties were more widespread. In areas where the city owned many properties, private owners also owned many vacant lots and abandoned homes. For instance, in an area Habitat for Humanity Detroit chose for redevelopment, 69 percent of the land parcels were vacant in 2004; one-third of these were city-owned (Bouchard et al., 2004).

8 Comparable rates of disposition do not mean comparable effects on redevelopment, but city-owned land disposition is often a precondition for redevelopment when the city government owns so much land. Redevelopment depends on the reuse of land for new purposes and nearly always involves the transfer of land to new owners, assembly of land, and reconfiguration of land parcels.

Because data do not exist to show the extent of a direct connection between each city’s land disposition and redevelopment, this paper looks first at explanations for differences in the impact of similar rates of land disposition if Cleveland’s land disposition system has encouraged more redevelopment. The paper then looks at explanations for the belief that Cleveland has encouraged more redevelopment even if Cleveland has not done more than Detroit.

Explaining Cleveland’s greater success in redevelopment through land disposition If Cleveland’s land disposition system fostered more redevelopment than did Detroit’s, as commonly believed, several conditions help to explain why this was so. Cleveland had accurate data on its property inventory; Detroit did not. The Cleveland land bank received and conveyed property with clear title; the Detroit department did not. Cleveland had a predictable, stable, publicly known pricing system for land; the Detroit department had an unpredictable, changeable, little understood approach to pricing land that resulted in much higher prices than in Cleveland. Cleveland could hold land for developers as they pulled their projects together; Detroit had a more erratic system of holding letters. In Cleveland Mayor White and later Mayor Campbell made new housing construction in neighborhoods a priority. The land bank’s provision of city-owned land was integral to this strategy. In Detroit no mayor put major emphasis on housing in neighborhoods.

9 Cleveland land bank had an accurate list of the properties in its inventory, and the list was updated regularly. No stories of problems in land sales due to inaccurate records appeared in Cleveland newspapers. Cleveland developers could rely on the accuracy of the list as they planned their projects.

In Detroit, in contrast, the Planning and Development Department did not have an accurate list of what it owned. Detroit’s computerized list of city-owned property became accessible to the public in 2001, but the list had many errors (Dixon, 2001a; Property Information System Project Team, 2000). Nonprofit developers traded stories of instances when the department sold land to them that adjacent property owners or other developers had already purchased. As one nonprofit developer dug a basement for a new home, a nearby homeowner emerged with a deed to the property. Although the nonprofit developer had also paid the city for the property, the nonprofit bought the property a second time from the homeowner to prevent the PDD error from derailing the development project. Also in 2003, a real estate speculator demanded $10 million dollars from the city for a parcel under half of a downtown public parking structure; he had purchased the property at the county auction of tax-foreclosed property in 2002.

The city had failed to pay a delinquent county property tax bill when it purchased the parcel four years before and had not paid the bill in response to a later notice. The property did not show up in the city’s property inventory because it had been combined with another parcel (Collins, 2003).

Detroit’s list was inaccurate in part because the main-frame based City Property Inventory System was difficult to use, and staff involved in land disposition kept their own paper files or data bases and did not enter new information into the central system. Although the database was created in the 1970s, few staff had computers when the Archer administration took

10 office 20 years later. Nonprofit developers had suspected the Coleman Young administration of secretly banking property for large projects during the 1980s, and Young fueled these suspicions by fighting the release of information on city-owned property (Irwin, 1990). When the Archer administration staff opened the files, however, they revealed no plot but considerable lack of information on a huge inventory.

The Cleveland land bank could have facilitated redevelopment more effectively than Detroit’s department in part because the Cleveland land bank property had clear title while the Detroit city-owned land did not. After legislative reform in 1988, the Cuyahoga County foreclosure procedures included proper notice to all persons with a possible claim on the property, and a judicial proceeding approved the adequacy of notice (Alexander, 2000:6; Sternad & Lee, 1999; Sweeney, 2003; Ohio HB603 1988). The fact that the land bank’s property had clear title meant that no one had to expend the time and funds to clear the title before the land could be acquired for redevelopment.

In contrast, the City of Detroit had acquired most of its property from the State of Michigan, which in turn obtained the property through tax foreclosure. The state, in the process of foreclosing on property, had often failed to give proper notice of the tax foreclosure to parties with a recorded interest in the property. Some of the property had been foreclosed upon using a procedure that later had been ruled unconstitutional (Dow v. State of Michigan 1976). The result was a "cloud" on the title that meant that a previous owner might still have a claim to the property. Title companies were unwilling to insure the clouded title unless the lack of notice was satisfactorily addressed. Addressing the notice was often expensive and time-consuming, which caused delays in acquiring city-owned land and stalled development projects. Because the Planning and Development Department conveyed land through a "quit claim" deed, without

11 warranty of title, the burden of clearing title was on the developer. In some instances, the cloud on a title could not be cleared, and a title insurance company would therefore not insure. Under such circumstances, developers were unlikely to acquire the property because they could not obtain financing for a development project and would also not be able to re-sell the land.

Developers stated repeatedly that the city’s greatest need was for clearing title to city-owned property so that new development could take place more easily (Community Legal Resources, 2003; Rao & Dewar, 2001).

Cleveland’s system for pricing land may have encouraged development more effectively than Detroit’s system. Both cities were subject to state laws that required them to receive fair market value for property (Ohio Revised Code, Sec. 5722.07; Michigan Constitution, Art. VI, Sec. 26). In Cleveland, the land bank adopted the view that land that had been abandoned and was sitting vacant had nominal value. The land bank set prices at $1 per parcel for nonbuildable lots (less than 4800 square feet), $100 for buildable lots (measuring at least 4800 square feet or 40 feet by 120 feet), and the appraised value for commercial and industrial property (Sternad, 2003). Because the prices were predictable, developers could work out financial plans for redevelopment projects with certainty about the cost of the publicly owned land. The prices were also low enough to help encourage redevelopment.

In Detroit, in contrast, prices for city-owned land were unpredictable and much higher than the Cleveland prices. Both the uncertainty and the high prices could deter redevelopment.

During the Archer administration, the fair value of land was to be determined based on prices received for comparable properties, but Planning and Development staff never showed the comparables in explaining the prices they set. Careless procedures added to the uncertainty that purchasers faced. For instance, discrepancies often existed between the legal description and the

12 Planning and Development records of the square footage of land parcels. Because property was priced per square foot, differences in square footage affected the city's asking price. Purchasers of land discovered the department staff’s math errors or mistakes in square footage records only through close questioning. The price for a parcel of residential land usually ranged from $1500 to $3000 but could be higher. In 2001 the Archer administration and the City Council defined a new pricing policy that would lower the land price based on consideration of economic benefits to the city from the new development. Although the Archer administration implemented the new policy, few projects were affected before the new mayor took office in January 2004 and the department discarded the new pricing system. During the Kilpatrick administration, pricing policy became even less predictable. For instance, a nonprofit developer who asked for reconsideration of the price of land to be purchased from the city was delighted to receive a reduction of $50,000 in the price but had no idea why this had occurred (Rao & Dewar, 2001).

Cleveland’s land bank could encourage redevelopment more effectively than Detroit’s system in part because of the capacity of the land bank to “bank” property as developers worked to assemble property. For instance, Fairfax Renaissance Development Corporation asked the land bank to hold 131 parcels in their target area until the organization was ready to redevelop them. When other parties were interested in redeveloping some of these parcels, the land bank manager consulted the development corporation before selling the parcels to others (Sternad, 2003). Nonprofit developers could identify property in their target areas that became tax delinquent and ask the land bank to place priority on acquiring and holding the property (Yin, 2003).

In Detroit, the Planning and Development Department long issued holding letters to developers who proposed projects. When projects died, however, no one removed the holds so

13 that by 2004, close to two-thirds of the parcels in the city’s inventory were subject to holding letters. Instead of facilitating disposition, the holding letters ultimately interfered with land acquisition. At the same time, the Planning and Development Department sometimes inadvertently sold property covered by a holding letter to a different developer (Teasdale, 2000: 25).

In Cleveland Mayor Michael White campaigned on a promise to deal with neighborhood problems. He made new housing construction a major goal of his administration. Efficient disposition of city-owned land for redevelopment was an essential part of making new housing possible. “Our redevelopment strategy begins with the reutilization of vacant land, particularly for new housing construction,” White said (White, ca.1990). Rob Curry, director of the Cleveland Housing Network, remembered that White said, “I’m going to create a building boom in Cleveland,” the most powerful signal of revitalization, in Curry’s view (Curry, 2003). White’s successor, Mayor Jane Campbell, set a target of 1500 new units of housing per year to increase Cleveland’s population to over 500,000 by 2010 (Site Assembly Task Force & Land Bank Subcommittee, 2003: 1). She appointed committees to work on getting rid of barriers to housing production and facilitating development. She supported strengthening and streamlining land bank operations.

In Detroit, in contrast, no mayor led a major initiative for redevelopment in residential areas of the city. Mayor Young took pride in major development initiatives such as a new “Poletown” Cadillac manufacturing plant and the Jefferson Chrysler assembly plant that he saw as having a major impact on the city. Mayor Archer focused development attention on casinos, stadiums, and the theater district, all downtown initiatives. Although Archer’s Planning and Development directors worked to improve land information and disposition systems (Bernard,

14 2001; King, 1998), they did not have the level of support that Cleveland administrators had. City officials and staff who oversaw land disposition and the information to facilitate disposition saw land as an asset that could bring money into the city’s coffers through sale, not through redevelopment. The director of the development division of the Planning and Development Department touted the revenues from sales of property, needed in helping address the city’s financial problems, but could not say what the impact on neighborhoods had been (Moore, 2004).

Explaining Cleveland’s better reputation in land disposition for redevelopment If Cleveland’s land disposition system does not facilitate redevelopment better than Detroit’s system does, what accounts for the difference in the reputations of Cleveland’s land bank and Detroit’s department? The difference in reputations is especially striking given that the Detroit department has disposed of so much more land than the Cleveland land bank has. One explanation is that Cleveland’s land disposition system is transparent and usually routine while Detroit’s is opaque and changeable. Another reason is that in Cleveland, city and county officials and nonprofit developers work together to implement and improve land disposition. In Detroit the officials and developers do not work together.

The Cleveland Land Reutilization Program has a written disposition policy, application forms for buildable and non-buildable lots, clearly stated qualifications required of applicants, written policies for what an applicant must agree to do with property, and publicly stated procedures (Sternad, 2003; Land Reutilization Program, 2003a, b). Figure 3 shows the land bank’s process of proposal evaluation and land disposition. The city council votes on the disposition of the land. Council members defer to the opinion of the council member whose ward includes the property. Therefore, anyone seeking to acquire land knows he needs to assure

15 the approval of his council representative (Curry, 2003; Yin, 2003). If the personal relationship between community development corporation staff and their council member is strained, the council member can delay or deny the request for land (Sternad & Lee, 1999: 12). As of 2003, nonprofit developers could acquire land through the land bank in about 180 days, and a task force was working on ways to speed the process (Site Assembly Task Force & Land Bank Subcommittee, 2003). Community Development Department staff shepherd applications for many lots involving proposals for a large number of new housing units through the review process more quickly, but proposals that will lead to construction of a handful of new housing units can take much longer (VanLeer, 2003).

In contrast, in Detroit the land disposition process is opaque and changeable. When Mayor Dennis Archer took office in 1994, no public list of city-owned land existed, and no procedures or systems were in place for individuals or developers to acquire city-owned land.

Nonprofit developers told of their trial-and-error attempts to purchase land over periods of years.

A new director of the Planning and Development Department in 1998 made the improvement of systems for handling and disposing of city-owned land a high priority (Bernard, 2001; King, 1998). He and his staff worked with consultants to improve and document the concept plan and site plan review processes involved in disposition of land for development projects and to produce a development manual (Planning and Development Department, 2001a; Planning and Development Department, 2001b; Planning and Development Department, 2001c). In fall 2001, the department selected a consultant to help reorganize the Real Estate Division to improve the handling of city-owned land that would not be used for development projects but could be sold to adjacent property owners or auctioned for rehabilitation of housing. A CDC-led effort to document the de facto procedures for city land disposition in a manual received no support from

16 city staff, however (Teasdale, 2000). By the end of the Archer administration, these many efforts had made the steps for acquiring city-owned land much better known and more routine (Rao & Dewar, 2001). The system remained very complicated. Figure 4 shows the procedure for site plan review, just one of several major stages in acquiring city-owned property for a development project (Teasdale, 2000:20-32).

When the Kilpatrick administration took office in 2002, the existing procedures were abandoned, the instructions were removed from the city website, and efforts to document new procedures were rebuffed even three years into the mayor’s four-year term because the systems were under revision. Although no one knew exactly what the new disposition procedures were, some developers, both for-profit and non-profit, were pleased with the Kilpatrick administration’s approach because they received quick personal attention in meeting their requests for purchase of city-owned land (Moore, 2004). Many other developers, however, usually ones without records of significant housing development, complained that they could not get a response to their efforts to purchase city-owned land for projects.

The perception that Cleveland’s land bank did better than Detroit’s department in land disposition to encourage redevelopment, even if it may not have done so, was also related to the way city and county officials and developers worked together, cooperation that continues. In Cleveland, city officials interested in encouraging redevelopment and county officials interested in collecting taxes and preserving the county’s bond rating saw a common interest in facilitating the movement of land from foreclosure to redevelopment when they reformed procedures and obtained state legislative changes in 1988. The Community Development Department, the home of the land bank’s operations, worked with community development organizations to advance the interests of neighborhoods and to make the land bank serve development needs. Leaders of

17 community development networks now serve on task forces to improve the land bank’s operation. Many of those involved in foreclosure and land disposition processes were part of the “old school,” in the words of the director of the land bank, and they remain committed to working together (Fields of Dreams, 1993; Sternad, 2003; Sweeney, 2003). The cooperation that includes all the actors in the process from foreclosure to development means that everyone understands the challenges in the land redevelopment process. Because they are partners and see each other’s efforts, the different actors tend to work together to improve systems rather than criticize each other and the procedures publicly.

In Detroit, in contrast, state, county, and city officials rarely cooperated, although all were involved in city land foreclosure and disposition. City officials intermittently included community development advocates in their efforts to improve the disposition of city-owned property, but no tradition of working with nonprofit developers existed, although they were the developers most interested in neighborhood redevelopment. Officials at every level of government took advantage of opportunities to make others look bad, and they likely could not have chosen a collaborative approach to working together if they had wished to do so because of the tradition of conflict. For example, in 1997 the Republican governor stopped conveying foreclosed property to the city of Detroit with its Democratic electorate and Democratic mayor, with the message that state auctions and a state-appointed organization could do better at handling the property than could Detroit. In 2001 the governor announced a program for conveying state-owned, tax-reverted property in Detroit to nonprofit developers for nominal fees (Dixon, 2001b), on its face a positive step but again an action taken without cooperation. For another example, in 2002, the legislature considered a bill to establish a Detroit land bank that would give the Detroit mayor most of the say over disposition of tax-reverted property, as the

18 mayor desired, and would remove the city council from its traditional role of reviewing and approving land sales. The mayor and the governor would appoint the members of the board of the land bank authority, and the city council would have no say over appointments. The city council successfully prevented the bills from passing in the legislature (Collins, 2002; McWhirter & Cain, 2002; McWhirter, 2002). Beginning in 2002 under state foreclosure legislation passed in 1999, the county treasurer foreclosed on and auctioned thousands of parcels of Detroit land without consultation with city officials about their interest in the land, although the foreclosure legislation allowed procedures that could have helped advance city interests in encouraging development and in preventing homeowners from losing their property (Elrick & Bello, 2004; Michigan 1999 PA123). Because so little cooperation occurred, most were also willing to criticize systems, often publicly. Few sympathized with or necessarily understood what different officials faced in the complex foreclosure and disposition processes or the enormous task of handling 36,000 parcels of property.

Changes in the Detroit and Cleveland land disposition systems Land disposition systems in both cities were in transition as of 2004 and could be quite different in a few years. In Cleveland, the county treasurer sold tax liens to Georgia Lien Services with the objective of getting immediate payment of some delinquent taxes. By 2003, these sales had removed 3200 parcels from the county foreclosure process and from potential use for redevelopment in the city, prompting a leader of Cleveland community development efforts to speak of the land bank success in the past tense (Site Assembly Task Force & Land Bank Subcommittee, 2003; Warren, 2004). Nonprofit developers said that the land bank was running out of land that they could use for development; only 1000 of the land bank’s lots were buildable (Land Bank Subcommittee, 2003; Perkins, 2002). The “choice� land was gone, the land bank

19 director said, and “the stuff that needs to get done but takes more work and imagination” is left (Sternad, 2003). This threatened to prevent Mayor Campbell from reaching her goal of substantially increasing the pace of new housing construction in the city. A task force recommended additional ways to bring tax-delinquent property into the land bank and to streamline procedures for disposition of the land bank’s land (Land Bank Subcommittee, 2003).

In Detroit some developments offered promise of improved land disposition systems. In early 2004 local foundations committed $1.5 million through LISC to help the Planning and Development Department correct its property inventory database and improve its land information systems with the ultimate goal of streamlining the city’s land disposition and redevelopment strategy (Local Initiatives Support Corporation, 2004). In the words of the director of Detroit LISC, “This is a bigger deal than the Super Bowl” for Detroit’s future economic development (Goss-Foster, 2004). Also in early 2004 the Michigan governor signed legislation setting up a state land bank and enabling certain jurisdictions to establish land banks.

MOSES, a grassroots organizing, Gamaliel-affiliated organization, made the creation of a planning-oriented, transparent, equitable land bank for Detroit a major initiative of its “Fix-itFirst” agenda, an effort to encourage reinvestment in already developed areas of the metropolitan region. The mayor and city council members responded favorably to MOSES’s requests that they support a land bank. Community Development Advocates of Detroit (CDAD), the trade association of community development organizations, also pushed for a land bank for Detroit (Community Development Advocates of Detroit, 2004). By October 2004, an administration task force and a city council committee were working on proposals for a land bank. The mayor and the city council were unfortunately not working together, so conflict promised to delay creation of a land bank. Furthermore, no cooperation existed between the county treasurer

20 charged with foreclosing on property with delinquent county taxes and (as of the beginning of 2004) responsible for foreclosure on property with delinquent city property taxes. The treasurer did not work with the city in his auctioning of property, and the city had no control over new property entering foreclosure (Moore, 2003; Turner, 2003). Even though many obstacles remained, reform of Detroit’s land disposition system seemed more possible than ever before.

21 Notes 1

The Center for Local, State, and Urban Policy, University of Michigan, provided funding for this research. The author benefited from the comments and assistance of Carlton Basmajian, Amy Brooks, Demetria Collins, Eric Dueweke, Barbara Eichmuller, Rochelle Lento, Elsa Pereira, Melisa Tintocalis, Simon VanLeeuwen, and Claire Vlach.

2

Vacancy numbers were determined as follows. Cleveland: Cuyahoga County Auditor, “Characteristics (appraisal inventory) file,” edited by Center for Housing Policy Research, Cleveland State University. Alternative counts using tax district and city name and land use codes for vacant parcels and land bank parcels yielded similar estimates. Detroit: Detroit Tax Assessors file, 2001, obtained from the Detroit Planning and Development Department. Vacant parcels were those with land use codes for “unimproved” property. Total parcels were the number of parcels in the file. Land areas were calculated by summing the parcel size information for vacant and total parcels.

22

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23 Brophy, P. C., & Vey, J. S. (2002). Seizing city assets: Ten steps to urban land reform. Retrieved 10/8/04 from http://www.brookings.edu/dybdocroot/es/urban/publications/brophyveyvacantsteps.pdf Citizen's Housing and Planning Association. (2000). Back on the roll: A report on strategies for returning tax title property to productive use. Retrieved 7/17/03 from http://www.chapa.org/resources_publications.htm City property: Detroit needs to clean house on the mess it owns. (2000, December 4). Detroit Free Press.

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24 Dixon, J. (2001a, February 5). City gives developers new tool to reclaim land: Computers help track abandoned Detroit lots. Detroit Free Press.

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25 Kildee, D. T. (2004). Reusing forgotten urban land: The Genesee County urban land redevelopment initiative. Housing Facts and Findings, 6(2), 3.

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Planners' Casebook, 41(Summer).

Land Bank Subcommittee. (2003). Final Recommendations to the City of Cleveland: Tax Foreclosures. Cleveland, Ohio: Land Reutilization Program (2003a). Disposition Policy of the City of Cleveland Land Reutilization Program (Land Bank). Community Development Department, Cleveland, Ohio.

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Mallach, A., & Rodriguez, Z. (2002). Property acquisition and disposition strategies: An overview of issues for the August 15th roundtable. Retrieved 10/8/04 from http://policy.rutgers.edu/cupr/cdi/pdf/overviewpaper%20final.pdf McWhirter, C. (2002, June 7). Land bank measures put on hold after objections. Detroit News.

26 McWhirter, C. (2001, February 15). Detroit banks on empty lots. Detroit News, pp. 1.

McWhirter, C., & Cain, C. (2002, June 5). Council's opposition delays land bank bill. Detroit News.

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Moore, N. Y. (2003, September 18). Foreclosures in Wayne soar: 3,000 properties to be auctioned, up from 900 last year. Detroit News.

Mueller, L. (2003a). Atlanta case study: Model practices in tax foreclosure and property disposition. Retrieved 2/6/03 from www.liscnet.org/resources/2003/01/foreclosure_1066.shtml?Planning+&+Land+Use Mueller, L. (2003b). New York city case study: Third party transfer initiative: A solution to property abandonment. Retrieved 2/6, 2003 from www.liscnet.org/resources/2003/01/initiative_1064.shtml?Planning+&+Land+Use Nakamura, D. (2004, January 15). Eyesore disputes still taking years to resolve: Officials cite progress despite sluggish pace. Washington Post, p. DZ10.

National Vacant Properties Campaign. (2004). Home page. Retrieved 9/30/04 from www.vacantproperties.org

27 Perkins, O. (2002, Oct. 27). Housing boom might run out of room: Construction spree gobbles up prime spots in city's land bank. The Plain Dealer.

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Rao, N. B., & Dewar, M. (2001). Streamlining Acquisition of City-Owned Land for Affordable Housing Development: A Case Study from Detroit. Urban and Regional Planning Program, University of Michigan, Ann Arbor.

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Housing Facts and Findings, 3(1), 3.

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28 Site Assembly Task Force, & Land Bank Subcommittee. (unpublished, 2003). Accelerating New Housing in the City of Cleveland: Proposed Strategic Initiatives. Cleveland, Ohio: Sternad, E. (2003). Land Bank Manager. Cleveland, Ohio: Department of Community Development.

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Sweeney, M. (2003). Administrator. Cleveland, Ohio: Tax Department, Cuyahoga County Treasurer.

Teasdale, J. T. (2000). Land Acquisition Procedures Manual: A Guide to Acquiring Real Property in the City of Detroit. Ann Arbor & Detroit, Michigan: Legal Assistance for Urban Communities, University of Michigan Law School.

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29 Yin, J. (2003). Assistant Professor, Western Michigan University. Ann Arbor, Michigan:

1

Vacancy numbers were determined as follows. Cleveland: Cuyahoga County Auditor, “Characteristics (appraisal inventory) file,” edited by Center for Housing Policy Research, Cleveland State University. Alternative counts using tax district and city name and land use codes for vacant parcels and land bank parcels yielded similar estimates. Detroit: Detroit Tax Assessors file, 2001, obtained from the Detroit Planning and Development Department. Vacant parcels were those with land use codes for “unimproved” property. Total parcels were the number of parcels in the file. Land areas were calculated by summing the parcel size information for vacant and total parcels.

-409.2 830.7 421.5

914.8 505.6 478.4 765.9 1,596.6 1,669.7 1,680.7 2,102.2 2,148.1 0.54 0.24 0.22

-44.7% 108.5% 25.1%

-44.4% 147.3% 29.7%

-27.2 73.1 45.9

-76.7 207.5 130.8

-5.4% 4.6% 2.2%

-7.5% 7.2% 3.3%

-436.4 903.8 467.4

-898.3 1925.6 1027.3

-47.7% 118.0% 27.8%

-48.6% 165.1% 34.1%

Population (000) Change % Change Change % Change Change %Change 1950-1990 1950-1990 1990-2000 1990-2000 1950-2000 1950-2000 -821.6 1718.1 896.5

2000

1,849.6 1,028.0 951.3 1,166.6 2,884.7 3,092.2 3,016.2 3,912.7 4,043.5 0.61 0.26 0.24

1990

Metropolitan areas defined as: Detroit- Macomb, Oakland, & Wayne; Cleveland- Cuyahoga, Geauga, Lake, Lorain, & Medina Co. Sources: Population Abstract of the United States. Ed. by Donna Andriot. Documents Index. McLean: Virginia, 1993.

"DP-1. General Population and Housing Characteristics: 1990. Summary Tape File 1 (STF 1) 100-Percent Data." American FactFinder. Bureau of the Census. <http://factfinder.census.gov>.

"DP-1. Profile of General Demographic Characteristics: 2000. Census Summary File 1 (SF-1) 100-Percent Data." American FactFinder. Bureau of the Census. <http://factfinder.census.gov>.

Detroit City Suburbs Metropolitan area City share of metro Cleveland City Suburbs Metropolitan area City share of metro

1950

Table 1. Population Change in Detroit and Cleveland, 1950-2000.

30

328.5 191.4 519.9 0.63 142.2 101.0 243.2 0.58

221.8 130.7 352.5 0.63

128.4 75.0 203.4 0.63

1989

122.5 104.0 226.5 0.54

243.2 198.9 442.1 0.55 13.8 26.0 39.8

106.7 60.7 167.4

10.8% 34.7% 19.6%

48.1% 46.4% 47.5%

-19.7 3.0 -16.7

-85.3 7.5 -77.8

-13.9% 3.0% -6.9%

-26.0% 3.9% -15.0%

Persons in Poverty (000) 1999 Change %Change Change %Change 1969-89 1969-89 1989-99 1989-99

17.1 4.8 8.8

28.1 6.3 11.6

32.0 6.6 13.3

25.6 6.2 10.5

25.6 6.4 10.9

11.0 1.5 2.8

17.3 1.8 4.9

-2.5 -0.1 -1.0

-6.4 -0.2 -2.4

Percent Population in Poverty 1989 1999 Change Change 1969-89 1989-99

14.7 4.9 8.4

1969

Metropolitan area defined as: Detroit-Macomb, Oakland, & Wayne Co.; Cleveland-Cuyahoga, Geauga, Lake, Lorain, & Medina Co. Sources: "DP-4. Income and Poverty Status in 1989: 1990. Summary Tape File 3 (STF3) - Sample Data." American FactFinder. Bureau of the Census. <http://factfinder.census.gov>.

"QT-P34. Poverty Status in 1999 of Individuals: 2000. Census Summary File 4 (SF4) - Sample Data." American FactFinder. Bureau of the Census. <http://factfnder.census.gov>.

Detroit City Suburbs Metropolitan area City share of metro Cleveland City Suburbs Metropolitan area City share of metro

1969

Table 2. Poverty in Detroit and Cleveland, 1969-1999

31

47.5 317.7 0.15 833.4 0.06 44.4 189.9 0.23 984.2 0.05

62.2 401.1 0.16 916.8 0.07

223.6 59.4 303.7 213.6 0.74 0.28 1,194.6 1044.4 0.19 0.06

338.4 555.8 0.61 973.7 0.35

-12.6%

-73.4% -29.7%

-5.8%

-81.6% -27.8%

68.9 97.1 0.71 406.7 0.17

29.9 163.0 0.18 837.9 0.04

114.0 33.0 157.3 300.73 0.73 0.11 305.6 706.81 0.37 0.05 15.5 118.8 0.13 630.1 0.02

17.9 216.4 0.08 529.4 0.03

106.0%

-56.6% 67.9%

131.3%

-71.0% 91.2%

Retail Employment (000) % change 1948 1992 1997* 1948-92

"Table 1. Statistics by Economic Sector. 1997 Economic Census." American FactFinder. Bureau of the Census. <http://factfinder.census.gov>.

U.S Census of Retail Trade, 1992: Geographic Area Series. Washington: Bureau of the Census, 1994.

U.S. Census of Manufactures, 1992: Geographic Area Series. Washington: Bureau of the Census, 1995-1996.

U.S. Census of Manufactures, 1947: Volume III: Statistics by State. Washington: Government Printing Office, 1950.

U.S. Census of Business, 1948: Volume III: Retail Trade-- Area Statistics. Washington: Government Printing Office, 1951.

Sources:

* New industrial definitions.

Metropolitan areas defined as: Detroit- Macomb, Oakland, & Wayne Co.; Cleveland- Cuyahoga, Geauga, Lake, Lorain, & Medina Co.

Detroit City Metropolitan area City's share of metro area Michigan City's share of Michigan Cleveland City Metropolitan area City's share of metro area Ohio City's share of Ohio

Manufacturing Employment (000) % change 1947 1992 1997* 1947-92

Table 3. Employment Change in Detroit and Cleveland, 1947-1997.

32

8.8% 4.3% 5.5%

10.9% 4.1% 5.9%

7.5% 5.7% 6.5%

2.8% 27.0% 15.2%

% Change Vacancy 1990-2000 rate, 1990

-4.6% 8.9% 5.5%

-10.1% 12.0% 6.4%

% Change 1990-2000

11.7% 4.7% 6.4%

10.3% 4.0% 5.5%

Vacancy rate, 2000

<http://factfinder.census.gov>.

"GCT-H6. Occupied Housing Characteristics: 2000. Census 2000 Summary File 1 (SF1) 100-Percent Data." American FactFinder. Bureau of the Census.

U.S. Census of Housing, 1990: General Housing Characteristics. Washington: Bureau of the Census, 1992.

U.S. Census of Housing, 1970: Housing Characteristics for States, Cities, and Counties. Washington: Bureau of the Census, 1971.

Sources:

Metropolitan area defined as: Detroit-Macomb, Oakland, & Wayne Counties.; Cleveland-Cuyahoga, Geauga, Lake, Lorain & Medina Counties.

Table 4. Housing Change in Detroit and Cleveland, 1970-2000 Number of Occupied Housing Units (000) 1970 1990 2000 Change % Change Change 1970-1990 1970-1990 1990-2000 Detroit City 497.8 374.1 336.4 -123.7 -24.9% -37.6 Suburbs 768.8 1,082.0 1,212.3 313.1 40.7% 130.4 Metropolitan area 1,266.6 1,456.0 1,548.8 189.4 15.0% 92.7 City's share of metro 0.39 0.26 0.22 Cleveland City 248.3 199.8 190.6 -48.5 -19.5% -9.1 Suburbs 474.9 608.6 662.5 133.7 28.1% 53.9 Metropolitan area 723.2 808.4 853.2 85.2 11.8% 44.7 City's share of metro 0.34 0.25 0.22 Number of Vacant Housing Units (000) 1970 1990 2000 Change % Change Change 1970-1990 1970-1990 1990-2000 Detroit City 31.3 36.0 38.7 4.7 15.0% 2.7 Suburbs 22.0 48.3 51.0 26.3 119.5% 2.7 Metropolitan area 53.3 84.2 89.7 31.0 58.1% 5.4 City's share of metro 0.59 0.43 0.43 Cleveland City 15.8 24.5 25.2 8.8 55.5% 0.7 Suburbs 12.9 26.0 33.0 13.1 101.2% 7.0 Metropolitan area 28.7 50.5 58.2 21.8 76.0% 7.7 City's share of metro 0.55 0.49 0.43

33

34

Table 5. Number of New Housing Units for Which Permits Were Issued, 1990-2003

Number of new units Detroit City Metropolitan area City's share of metro Cleveland City Metropolitan area City's share of metro

% 1990 occupied units

5,804 209,916 0.03

1.55% 14.42%

4,824 99,907 0.05

2.41% 12.36%

Metropolitan area defined as: Detroit-Macomb, Oakland, & Wayne Co.; Cleveland-Cuyahoga, Geauga, Lake, Lorain, & Medina Co. Source: "HUD State of the Cities Data System," http://socds.huduser.org/permits/index.html?, accessed 9/16/04.

Table 6. Disposition of City-Owned, Tax-Reverted Parcels* Year 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

Cleveland 122 174 216 438 497 449 556 775 525 357 326 496 374 452 NA 0 5757 5982 3.7% 6177 3.8% 12159

35 Detroit 954 1368 558 597 264 211 3175 610 1263 1712 2916 2629 2533 1965 623 400 21155 27109 7.0% 36364 9.4% 63473

Detroit/Cleveland 7.8 7.9 2.6 1.4 0.5 0.5 5.7 0.8 2.4 4.8 8.9 5.3 6.8 4.3

No date Total, 1990-2003 3.7 Approximate total parcels ever disposed**: 4.5 As % of 2003 total parcels in city: Total parcels now held***: 5.9 As % of 2003 total parcels in city: Approximate total parcels ever held**: 5.2 NA not available. * Cleveland: All parcels are tax-reverted or donated to the land bank to avoid foreclosure.

Detroit: Almost all parcels are tax-reverted. CPIS data include all parcels ever owned by the city.

Parcels known not to be tax-reverted were deleted: those with CI status code (city sites such as fire stations and parks), with UP source code (acquired for an urban development project), with ownership by public housing commission, and where specific acquisition circumstances were known. Some parcels that were not tax-reverted undoubtedly remain. ** Cleveland: 1984-2003; Detroit: 1973-2004. ***Cleveland: 2003; Detroit 2004.

Sources: Cleveland: Land Reutilization Program (2004): 1990-2003; Cuyahoga County Auditor (2003b): parcels for which property code indicated Land Bank was seller, 1984-1989; Division of Redevelopment (2003); Cleveland City Planning Commission (2003).

Detroit: Detroit Planning and Development Department (2004); Detroit Tax Assessor (2001).

Figure 1. Cleveland Land Bank Properties, 2001.

Sources: Cleveland Planning Commission, 2003; Cuyahoga County Taxbilling data files, 2001.

36

Figure 2. Detroit City-Owned, Tax-Reverted Property, 2004

Sources: Detroit Planning and Development Department, 2002; Detroit City Property Inventory System, 2004.

37

Figure 3. Cleveland land bank proposal evaluation.

Source: Sternad and Lee 1999.

38

39

Figure 4. Detroit Site Plan Approval Process for Purchase of City-Owned Property.

Source: Planning and Development Department (2001a).