Introduction: Detroit’s Housing Market Has Been on the Decline for Years, so What is an AI-Powered Homeownership Program Doing in the City?
The extensive work that Detroit’s Big Idea team has done within the city is part of a larger trend of cities around the nation, looking to address the growing issue of housing. By using AI-powered technology, cities are finding new ways to plan and develop their housing market. The goal is to connect with buyers and renters in a smarter way, providing a better way for people to make decisions about their future.
What the Big Idea is doing in Detroit is helping to create a community of residents who are looking to become homeowners. The process for buying a home can be extremely stressful and time-consuming, so Big Idea is using AI to create an easier experience for its customers. In order to make this possible, the company will have to build trust with its clients and utilize the right technologies.
What is a Community Land Trust?
A Community Land Trust is a locally owned, community-controlled non-profit organization formed by landowners to provide affordable housing opportunities that are legal and sustainable. The organization plans to provide long-term affordability to families, protect the environment and improve living conditions for residents in the neighborhood. To accomplish this, the land trust will maintain a “land bank,” acquiring land within the city of Detroit and provide a wide range of opportunities for future housing development. With a focus on local residents, the organization plans to provide resources through in-house services and partnerships.
The organization has engaged a broad spectrum of community partners and advisors. The University of Michigan’s Housing Research Program provided critical guidance to the organization throughout the development stage and through the research process. The organizational advisory board includes representatives from faith-based organizations, city leaders and non-profit housing developers. It also includes representatives from city-assistance programs such as Detroit Homecoming, Tenant Resources and Development Corporation (TRDC) and Detroit Land Bank Authority (DLBA).
This paper will provide an overview of community land trusts, the organization and goals. It is intended to be used as a case study for future research.
The company’s own web site states that “The Community Land Trust (CLT) develops, acquires and holds permanent title to affordable housing in urban neighborhoods. CLTs then provide affordable homeownership opportunities to families from low-income communities by creating new homebuyer cooperative housing units.”
What are Detroit’s Housing Challenges?
Detroit is the largest city in Michigan, with a population of approximately 652,000 people. Since 2000, the population has decreased by over 30% and it is now more than half of its peak population in 1950. Private residential property sales have plummeted by almost 75%, while the city’s population has continued to decline. In total, nearly 80% of possession housing units in Detroit are abandoned or vacant. There are also significant challenges related to Detroit’s historic tax credit program created under the Michigan State Housing Development Authority (MSHDA). The tax credit program was created in order to spur development in the city, but has not been used for nearly 30 years. With no redevelopment channel property tax credits were lost, and as a result much of Detroit’s housing stock has failed to receive proper maintenance over the past several years. Similar to many other cities in the United States, Detroit also faces issues related to both urban and suburban sprawl. This has resulted in a significant lack of transportation infrastructure and one of the highest distances between residential developments which can be found in the nation.
1) Tax Equity: Securitization is an important option for property tax credits. (http://www.dbmls.org/docs/default-source/taxes/transfer-tax-revenue–availability-of-tax-equity—securitization—a.pdf)
Due to the relatively low risk associated with federal tax credits, financial institutions are willing to purchase them and securitize them as they often do with other forms of debt that do not have the same degree of certainty. In addition, there are various federal and state financing programs which are available to help cover the costs of projects with the use of tax credits.
What Is an Office of Future Land Use Planning and How Does it Work?
In Detroit, the Office of Future Land Use Planning(OFFLUP), within the City Planning Administration, is an office that focuses on one specific aspect of building housing stock according to its nature. The office works with the Community Land Trust (CLT), which is a non-profit organization that develops housing in Detroit. The office has four areas of focus: historic preservation, economic development and community persistence, economic development and revitalization, and neighborhood livability. These various facets help OFFLUP determine what is needed in the community and how to best facilitate that need. This office also works with local organizations to support community initiatives, such as the Community Land Trust.
In the office, there are two main divisions: the Demolition team, who oversees the demolition of dilapidated housing, and the Housing Preservation team, who works to prevent demolition of existing housing. Each of these teams has five or six members that are divided into several smaller units. The staff member each unit consists of takes special care in making sure that all demolition projects are done in a methodical fashion to avoid disregarding safety issues.
The staff may be in contact with many other offices through their tenacity in keeping the community safe and strong. While they are working on demolition projects, they are looking for vacant lots that might be suitable for a community garden. They are also concerned about the details of each project, such as making sure that city ordinances are followed, and that if there is a new construction project, that it is done correctly and according to standards so that it does not disintegrate as time goes on.
The Four Components of Minneapolis’ Healthy Neighborhood Initiative
Minneapolis is the county seat of Hennepin county and the most populous city in Minnesota. The city has experienced a significant population decline over the past several decades—especially during the 1960s and 1970s—with a reported loss of more than 15% to 20% of its population since 1950. To help stabilize housing across the city, Minneapolis introduced four components for their Healthy Neighborhood Initiative: investment in property, expansion of the real estate market, support for local entrepreneurs and community development. The Healthy Neighborhood Initiative first began in 2015 and was introduced as part of a revision to Minneapolis’ Comprehensive Plan. It helps ensure that each neighborhood benefits from the same level of services, even if they are located in different areas of the city. In addition, the Healthy Neighborhood Initiative allows all people to receive high-quality services, regardless of where they live in the community.
The four components of the Healthy Neighborhood Initiative are:
Since Minneapolis launched the Healthy Neighborhood Initiative, property values have increased and rental rates have risen as a result. Local entrepreneurs have also benefited from greater access to capital as a result of additional funds provided by their city government. The initiative has allowed local residents to participate in investment funds offered by their city government, resulting in jobs and new businesses being created across Minneapolis. Moreover, as investment in property increases, so do property taxes. In addition to providing a stable and predictable revenue source for the city, investments in property also provide a more positive by-product: affordable housing.
The Healthy Neighborhood Initiative has created opportunities to invest in the Minneapolis community and to ensure that the city continues to grow and thrive as residents grow older. As additional properties are purchased and renovated, they provide a reliable source of revenue for the city government. Strong property values produce tax revenues for the city, which supports the Healthy Neighborhood Initiative.