I blogged [1] about Detroit (I grew up just north of 8 mile for a time) recently and my solution to the overarching problem of the city was/is: a tax holiday for residents of Detroit.
The biggest problem Detroit has is declining population of income-producing people. Yes, there are issues of businesses for people to work at being in the city, but let's face it, people will drive to work wherever they are, at least until there's much better public transport there.
Businesses get tax breaks to locate in particular areas - why don't residents? Michigan could/should introduce a 10 year state tax holiday for residents of Detroit. If you live in Detroit the city, you pay 0% state income tax (or... a reduced sliding scale or something like that).
People will move there. People will relocate there. Supporting businesses will follow - more restaurants to serve local residents - residents who are earning, not the left-behind/leftover residents of a hollowed out city. Almost everyone who can get out of Detroit has already.
Efforts of entrepreneurs to turn things around are good and should be applauded, but the problem is of a bigger scale than most people realize, and imo should be tackled at a state level via tax incentives (a great social engineering tool). One rebuttal I got to this is many in surrounding areas (Royal Oak, Ferndale, Easpointe, etc) would object because they'd be losing residents to Detroit. It probably would happen some, but the entire area has lost a lot of population as more people leave the region (and state) than move in.
As companies try to lure people back - I've heard from more than a few people that Ford is hiring aggressively - "no state income tax if you live in Detroit" would be a nice extra incentive.
In my opinion MI income tax is low a tax holiday will not move the needle for most people but if Federal taxes are eliminated that may be effective. Also i am not sure its constitutionally legal for our federal govt to give tax preference to some states/cities.
The median US household income is something like $50k/year. Probably lower in Michigan, but we'll call it $50k. Michigan has a 4.25% income tax, so eliminating that would be a savings of $2,125. But you have to pay federal tax on that. Let's just say you're paying 15%. So now we're talking a savings of about $1,800. $1,800/year isn't chump change, but it's also not a life altering amount of money. For me personally, it's nowhere near enough money to put up with all the negatives that come with Detroit.
People that earn more would save more, and would have more incentive to move there, especially if you can get larger tracts of land to have a bit of privacy.
Yes there are negatives, but the solutions are going to need to come from getting larger numbers of working/earning people living there day in and day out. Adding another casino or ballpark will do pretty much 0 for Detroit as a whole - it'll make the few square miles in downtown prettier, but people will just continue to drive in and out, nothing more.
People jumped through hoops a few years back to 'save' a few thousand for the 'new home buyer tax credit', which basically landed them with a mortgage. And that was a one time event. A family saving $2k+/year for, say 10 years, would be, if not life altering, certainly a modest incentive. Individuals making a decision like this won't be enough - it needs to be large groups who have enough purchasing power to attract other businesses/jobs to Detroit as a whole.
It's been really interesting to look at Detroit as an outsider since I've been coming every few months and working out of the Detroit area for about 10 days each time and making mental comparisons to San Francisco and the valley.
The biggest challenge I see is that the area with the greatest concentration of available low-priced office space (downtown) is also where I wouldn't want to live. Once you spend some time in Detroit, you understand why it's called MotorCity, it's highly pedestrian unfriendly and I wouldn't trust the public transportation system unless I'm willing to risk my safety.
The other challenge is that there are towns/areas around Detroit that seem to be better fit for building a new tech/startup hub when compared to Downtown Detroit when it comes to quality of life, pedestrian-oriented, and safety:
- Corktown - closest thing to the Mission, this area has an edgy industrial loft type of gentrification going on with a lot of young hip folks. This area is right on the edge of downtown but you go a few blocks away to look for housing and you encounter 50% burned down or houses in disrepair which means you can't really walk around the area feeling safe once it gets dark. I wouldn't walk there in the daytime given how few people are in that area and the number of abandoned properties.
- Royal Oak - town about 11 miles North of Detroit. It's like the Marina district, lots of trendy hip shops, safe to walk around, good quality housing and vegan food options as well as good cultural scene. This area has the shops and lifestyle that Downtown is lacking.
- Birmingham - further north in the suburbs, Google and McCann are located in this wealthy suburb. Features good food, high end shopping, a small upscale town feel (like Pacific Heights). Safe to walk around, good quality parks nearby, working and functioning government.
I like the motto and energy of Detroit that comes across in the form of "Detroit Hustles Harder" but I think you gotta address the core issue of having a city that people can feel safe in. I grew up in a poor neighborhood of LA and have never felt as unsafe as I feel driving around the large swaths of Detroit that have been left to rot.
The place is surreal. There is so much infrastructure rotting and even burning right there in front of your eyes. I grew up in LA and was there during the riots and it left an impression on me. Cities need to be designed properly or they become a social catastrophe. Detroit is the case study for us all.
Especially in downtown and in patches, there are things happening that could bring it back. Dan Gilbert is the perfect person to improve the situation, he's about as witty-gritty Detroit as it gets. Due to his efforts, there is some support infra for startups emerging and that will have some effect. Shopkeepers much more so, IMHO.
Detroit's urban planners made a lot of big mistakes. When the freeways were built in the fifties they cut entire neighborhoods in half. When Reneissance Center was built on the river in the words of one critic they pulled people off the streets and installed them in a fortress cut off from the rest of downtown.
But other cities made equally dumb mistakes but they recovered. The riots in 1967 scared people and began the destruction. I went downtown with my grandfather two weeks later and it looked like a war zone with buildings still smoldering.
Dan Gilbert is wagering a billion dollars of his fortune to turn things around and so far imho is doing very well indeed.
I read several books about urban planning and cities and it helped me understand how this happened all over the us. Detroit just got the worst of it. There are countless examples of horrible planning decisions in D., so many street-life-killing fortresses and dead voids everywhere.
I do think that the people of D. will overcome these obstacles now that the core problems are identified.
Do you remember anything about the conditions leading up to the riots?
I remember taking a series of bus rides through central LA in 1990 (2 years before the riots) and all I could see were thrashed neighborhoods and desolate stretches. It is a whole different world now, so much more life on the streets when I go back.
City of Quartz
- all about the history of LA and its power structures, lots of great anecdotes about zoning and the nasty history of racial segregation through real estate
http://en.wikipedia.org/wiki/City_of_quartz
I know Detroit pretty well and while the danger is certainly there, it doesn't negate the opportunity. The city could also be a great laboratory for a firm developing tech to minimize the crime danger.
This sort of decline has hit nearly every major city, Detroit is just the worse off. Have you been to Philadelphia or Baltimore recently? Husks of their former glory.
Smaller cities implode as well. I was just in Newburgh, NY - a once gorgeous, historic town on the Hudson just 60 miles from Manhattan, now the murder capital of New York State. Literally. Driving around that town is like visiting the set of The Wire.
I couldn't help but think of what Newburgh would look like if it was in France, Germany or England. Probably a tourist attraction. Makes you kinda depressed at how easily Americans give up on urban areas.
It doesn't seem like there's any great pattern out there for managing a declining urban area. Everyone knows how development should work - increasing density and infrastructure - but I don't think there's a good plan for what to do when an area inevitably goes into decline (and they all do sooner or later, if only temporarily.) Like NYC in the 70s, when folks were burning down buildings because it was better than maintaining them.
I used to visit Newburgh a fair amount when I was younger. Do you think by chance the large number of historical buildings is actually whats creating part of the problem?
No, I don't think so. I'm not really sure how historic buildings could cause blight.
I know a big "urban renewal (read: slum-clearing) project in Newburgh demolished the historic waterfront in the 60s/70s. Then they never built anything to replace it.
Historic buildings can cause blight the way that any building restriction can. They limit supply and raise costs. Historic buildings in particular, affect the ability for new business owners to bring in businesses as well as limiting homeowners.
Another great example of that is Washington DC, which has incredibly strict building limitations and a large number f protected historical buildings, which means that despite massive tourism, the city is largely a slum with millions of workers choosing really long commutes over living in the city.
The urban rot problem is intrinsic to real estate. People don't sell when the value goes down. The fuckers hoard for decades (keeping prices artificially high) while the poor suffer and everything goes to hell.
Then, after something more like 30 or 40 years, real estate is affordable again (sometimes dirt cheap) and people can buy, but not most of the people who live there.
I've thought for more than a decade that the Midwest would be the "New Place" for 2005-2025. The coasts seem kind of played-out. The elites here (in NYC and SF) are already in place and going to try to block any real innovation. Silicon Valley was built in a time when Northern California was seen as a backwater-- sure, one with nice weather, but not a place the Northeastern elites took seriously-- and that was why it was able to generate so much momentum in the 1950s to '90s.
However, there's the problem of capital, and also one of risk-aversion. It may be that Michigan (where failure has already happened) is where the next wave starts. I can't predict such things, but it's interesting to follow the pulse of it. Does technology really still need high-priced locations? It seems to think it does, but that may be a venture capital get-big-or-die bias.
One thing that pisses me off is the talent-pays aspect of real estate. Why is New York expensive? Because companies want to hire here. Why? Because people like me live here. So we are effectively paying because we're awesome. Well, fuck that. Why am I paying a bunch of people who have nothing to do with productive activity because of that? If we, as a group, stopped being awesome then this city (even the country) would be fucking nothing. It's people who keep cities going.
I could really see a Midwestern city just killing it by throwing a few million dollars at some really great startup ideas. Bring 100 of the best programmers in the country together and pay them a market salary to work on whatever the fuck they want, then wait 5 years, see what they build and get a critical mass effect.
I like this idea. Now do you propose that a municipality create a startup accelerator with the requirement for funding being that you are willing to relocate?
Would be pretty amazing if they through in office space / housing for the first few years. One would have to believe it would pay off quickly.
Now do you propose that a municipality create a startup accelerator with the requirement for funding being that you are willing to relocate?
I think that could work. I'd focus on long-term projects and an "autonomy fund": $100,000 per year to 100 top-notch engineers. The city gets a non-voting 37.5% stake (implied valuation of $266.67k per year) in whatever you build, and you have to have at least half of your employees working there at least 45 days per year, or maintaining a residence (tax base).
The biggest problem Detroit has is declining population of income-producing people. Yes, there are issues of businesses for people to work at being in the city, but let's face it, people will drive to work wherever they are, at least until there's much better public transport there.
Businesses get tax breaks to locate in particular areas - why don't residents? Michigan could/should introduce a 10 year state tax holiday for residents of Detroit. If you live in Detroit the city, you pay 0% state income tax (or... a reduced sliding scale or something like that).
People will move there. People will relocate there. Supporting businesses will follow - more restaurants to serve local residents - residents who are earning, not the left-behind/leftover residents of a hollowed out city. Almost everyone who can get out of Detroit has already.
Efforts of entrepreneurs to turn things around are good and should be applauded, but the problem is of a bigger scale than most people realize, and imo should be tackled at a state level via tax incentives (a great social engineering tool). One rebuttal I got to this is many in surrounding areas (Royal Oak, Ferndale, Easpointe, etc) would object because they'd be losing residents to Detroit. It probably would happen some, but the entire area has lost a lot of population as more people leave the region (and state) than move in.
As companies try to lure people back - I've heard from more than a few people that Ford is hiring aggressively - "no state income tax if you live in Detroit" would be a nice extra incentive.
[1] http://michaelkimsal.com/blog/solution-to-detroits-current-p...