Once the neighborhood prioritization has been determined using the Maximizing Community Impact (MCI) tool, specific interventions must be determined block by block and parcel by parcel. Everyone agrees that it is best to save as many homes as reasonably possible. If a structure canít be saved and rehabilitated at a cost that makes economic sense for the neighborhood, then it needs to be removed.
Each neighborhood has unique market conditions, population density, and community strategies that should be factored into the evaluation process. The Detroit Land Bank Authority (DLBA) should leverage data, analytics, inspections, and community input to determine the intervention approach such as legal services, auction services, rehabilitation, and deconstruction and demolition.
TRIAGE. The Task Force recommends two specific triage tools that can assist the city and the DLBA in this specific, parcel-level decision making.
The first triage tool will accelerate the cityís and the DLBAís ability to gain legal title or the legal authority to remove the any structure.
The second triage tool, the Strategic Assessment Triage Tool (SATT), can provide essential guidance in deciding the appropriate interventions for each building or vacant lot.
The Task Force developed this tool by analyzing best practices from many source including specialized contractors and the cities of Detroit, New Orleans, Baltimore and Cleveland.
The city is working to create new codes and ordinances and strengthen existing laws that support a proactive approach to parcel intervention.
Throughout this process, the city and DLBA are committed to identifying existing owners of blighted properties and providing them with the opportunity to take action to bring their property up to code. If property owners do not take immediate action, then the city and the DLBA must be able to step in.
The Task Force strongly supports aggressive action to attain title and remove blight on abandoned and vacant properties that have been known community nuisances. There are currently three options the city and DLBA can take.
VOLUNTARY TRANSFER. The fastest approach is voluntary deed transfer. Current property owners (as well as lenders) would agree to sign a deed, transferring title to the DLBA. The DLBA can subsequently authorize demolition (or other forms of intervention) immediately as the new property owner. The Task Force recommends that when a lender deeds over a property to the DLBA, that lender be required to transfer $15,000 per property (along with the deed) to the DLBA to cover the full costs of demolition.
NUISANCE ABATEMENT. If the current property owner refuses to bring the property to code and is not interested in a deed transfer, then the Task Force supports the Mayorís program of using common law nuisance abatement actions. Property considered a nuisance meets the Task Force definition of blight. This process offers the current property owner the opportunity to take immediate action and remedy the situation. If the owner fails to do so, the court will transfer title to the DLBA, who will then abate the nuisance (remove the property). By using nuisance abatement, the blight removal process can be shortened by more than two years versus the current burdensome, cumbersome, and costly process of hearings and deferrals.
DEMOLITION JUDGMENT LIENS AND FORECLOSURE. Some private properties fall outside the scope of nuisance abatement or are already in the tax foreclosure process. These will need to follow a more traditional path for the city or DLBA to gain the legal authority to remove the blight, initiate a subsequent demolition judgment lien, and then foreclose to obtain title. Gaining legal authority in this way typically takes 90 days through the city Hearing Process, and anywhere from one to three years to transfer title after the blight removal (depending on the duration of past due property taxes). To significantly shorten these time frames, the Task Force is recommending several amendments to City Ordinance 290-H and the foreclosure process for demolition judgment liens. In addition, Chapter 7 recommends changes to the current Wayne County tax foreclosure process.
When blighted properties fall outside the scope of the nuisance abatement program, the process is forced down a more onerous path utilizing city Ordinance 290-H, judgment liens, and the tax foreclosure process. The following section breaks down the current process and recommends specific changes necessary to achieve faster and better outcomes. These changes will remove bottlenecks, improve efficiency, and reduce overall costs while protecting due process rights.
CITY ORDINANCE 290-H. The cityís ordinance applies to vacant, open, and dangerous (VOD) structures and does not apply to inhabited homes. Two types of property owners are addressed:
Those who have completely abandoned a property, and;
Speculators, who are not maintaining or investing in the properties they own.
City Ordinance 290-H currently gives city building inspectors wide discretion to determine whether a property is dangerous.
The ordinance is also unenforceable in two critical instances. First, since squatters are currently considered inhabitants, the property they inhabit are therefore not eligible for demolition. Second, the ìdangerous buildingî criteria is not met if a building is boarded up. Therefore, when residents voluntarily perform a public service by boarding up a dangerous vacant building, they inadvertently nullify the cityís ability to remove the structure .
HEARING PROCESS. The hearing process for dangerous structures presumes that each property has a single, continuous owner. But in Detroit, as in other cities with rampant property speculation, property may actually change hands between the first and second hearing notices. A deferral period of up to 18 months provides an absurd of time for unscrupulous owners to transfer a property to a new entity, thereby requiring the city to restart the notice and hearing process.
CAPACITY ISSUES. There are two major capacity (bottleneck) issues.
First, the city Clerk lacks capacity to process and issue hearing notices for the enormous number of properties presented.
Second, each and every property that is a dangerous structure recommended for removal must be brought before city council for approval. It is unfathomable that a council of a major American city would need to approve EVERY single structure for demolition. It is unnecessary and a complete waste of taxpayers money and council members time for council to review and approve each and every dangerous property for demolition.
DEFERRAL PROCESS. Property owners may request up to three, six-month demolition deferrals. Some deferrals seem to be granted without any rational.
All current state process flows are included in the Appendix for reference.
The Task Force worked with the City of Detroit and the Detroit Land Bank Authority (DLBA) in formulating the following recommendations to improve the hearing, judgment lien, and foreclosure processes. The City of Detroit has already taken the initiative to implement several of the recommendations below.
RECOMMENDATION 5-1. Take aggressive action to gain title to blighted properties through voluntary deed transfer, nuisance abatement, or demolition judgment liens and foreclosures.
RECOMMENDATION 5-2. Improve the current hearing process. The city should act decisively to enforce stricter adherence and enforcement of existing deferral requirements in 290-H. The current notification process should be enhanced to identify and communicate the minimum requirements for a property owner to be granted a deferral. These requirements should include the establishment of a demolition escrow account in which the owner contributes a minimum amount to be used toward permits or property improvements.
RECOMMENDATION 5-3. Establish a New Demolition Review Board. The city should revise Ordinance 290-H to support City Councilís creation of a demolition review board dedicated to hearing complaints. Members of the board should consist of three appointees, one by the council and two by the mayor. The entire job and function of this board would be to review dangerous building demolition requests.
RECOMMENDATION 5-4. Make changes to protect communities. Ordinance 290-H should be revised to include boarded-up properties in the definition of ìdangerous properties.î It should also narrow the definition of ìoccupiedî to rightful owners or tenants and exclude squatters.
RECOMMENDATION 5-5. Streamline the deferral process. Ordinance 290-H should be revised to reduce the number of deferrals BSEED may issue from three to one. Deferral time-lines should be shortened from six-months to 90 days. This does not remove BSEEDís ability to extend an active deferral, as long as the property owner is clearly making progress on removing blight.
RECOMMENDATION 5-6. Issue demolition orders earlier. The city should have a demolition order in place before the first deferral can be granted. This will communicate the urgency of remedy to the owner, and offer the city leverage to proceed if the owner does not act.
RECOMMENDATION 5-7. Add capacity for hearings and inspections. The city Clerkís office should add significant capacity until the vast majority of Detroit blight has been removed.
Automate or outsource the hearing notice process,
Invest in training and support current inspectors to ensure consistency, and
Expand building inspector capacity through local hiring and training programs or partnering with Detroit-based businesses.
RECOMMENDATION 5-8. The city should assume responsibility for demolition billing to owners. The city (specifically BSEED) should send the bill for demolition directly to the title holder instead of handing off this task to the county tax assessorís office. The current process is an unnecessary bureaucratic additional layer that provides no value, creates inefficiencies and adds to costs.
The City of Detroitís current process for transferring title in cases of neglected or dangerous properties involves many actors. Under the current process, each privately owned, dangerous structure is touched by at least eight city, state, and federal employees, resulting in significant time and resource costs.
Three major routes are currently available to the city for transferring title:
Affidavit (ìquiet titleî)
State law permits criminal forfeiture when a crime has occurred on a property (drug house, etc). The law allows for taking title, but stops there. Criminally forfeited properties transferred to the City of Detroit are difficult to sell because prospective buyers are deterred due to unclear title, such as tax and other liens In addition, the cloudy title makes it difficult to issue title insurance. Without title insurance, few buyers would risk purchasing such properties and there is virtually no chance of obtaining financing on the property.
The tax foreclosure system is also badly broken. In theory, it seems sensible. An owner has three years to pay delinquent taxes. If these are not paid, the property goes into tax foreclosure. The title is transferred to Wayne County, and the property is auctioned to the highest bidder.
There are significant problems with Detroitís tax foreclosure process. For example, the highest bidder could be (and has been) just about anyone. Not only are speculators and detached investors common at the tax auctions, but the actual owner who is in default of their property taxes is currently permitted to bid for the property, which is often sold at a price substantially lower than the taxes due. This creates a strong disincentive for property owners to pay their property taxes, especially when the property is assessed at grossly higher than market value. Chapter 7 includes a full analysis of the impact of the tax foreclosure process and recommendations to fix this completely broken system.
The affidavit or ìquiet titleî approach is available when a property owner simply wants to transfer property to the City of Detroit. Detroit already uses such an affidavit process for its Fire Escrow program. As with other types of title transfer, unpaid taxes are an issue because they remain a lien on the property after the transfer.
The City is now taking steps to empower the Detroit Land Bank Authority (DLBA) to accept title. The DLBA needs a streamlined way to clear existing tax liabilities on properties, and identify a more efficient path to recover or waive demolition costs.
Taxes. Presently, the County Treasurer must request a Rejection of Taxes from the State Treasurer for every property title transferred to the DLBA. The County Treasurer may petition the State Treasurer for Rejection of Taxes in the following three circumstances:
ìThe property was not subject to taxation at the time the taxes were assessed;
The taxes on the property have been paid; or
There had been a double assessment of the taxes on the property.î
Although the Rejection of Taxes can be requested before the three-year tax foreclosure deadline, it represents an extra step that can impede a speedy return of the property to public ownership and clear title. In other words, there is no legitimate legal standing for the State Treasurer to approve any Rejection of Taxes petition.
All current state process flows are included in the Appendix for reference.
Creating a variety of tools that will effectively expedite title transfer to the DLBA is needed to significantly improve the burdened title transfer process. The choice of tools should ensure constitutionally mandated due process rights, while providing common-sense approaches to decisive action in cases of emergency and hazardous conditions. As previously noted, nuisance abatement lawsuits are a powerful and preferred method of gaining title. The Task Force supports the Mayorís pursuit of this approach. When nuisance abatement is not an option then a significantly enhanced hearing, judgment lien, and foreclosure processes are recommended.
RECOMMENDATION 5-9. Take full advantage of the new state blight ticketing law (MCL 117.4Q sub-section 3, PA192) to gain title to blighted properties. The city should enforce foreclosure on properties with unpaid blight tickets.
RECOMMENDATION 5-10. The State should amend MCL 600.2819 to allow for the city to create its own ordinance related to the foreclosure of a demolition judgement lien. The State of Michigan and the City of Detroit should also craft an agreement to allow the DLBA to perform all demolition judgment lien and blight ticket lien foreclosures.
RECOMMENDATION 5-11. With this new authority granted by the state, the Task Force recommends that Detroit create a new city ordinance to allow a streamlined process to foreclose on the blight tickets and demolition judgment liens. This ordinance should be written to transfer title for these properties to the DLBA.
RECOMMENDATION 5-12. The State of Michigan should pass a state law that eliminates or allows the rejection of back taxes when title is transferred to the DLBA. (Georgia law provides a model for this.)
RECOMMENDATION 5-13. The city should work with the American Land Title Association to create a modified title insurance form that addresses the specific situations of foreclosure and nuisance abatement cases.
RECOMMENDATION 5-14. Buildings, Safety Engineering, and Environmental Department should file Lis Pendens (notice of default) immediately after demolition order.
RECOMMENDATION 5-15. The DLBA should leverage the SATT to provide standardized guidance in its parcel intervention decisions.
The SATT is designed to objectively evaluate and analyze data on individual structures. Deploying SATT should occur as soon as DLBA has legal authority to do so.
Then a team comprised of an environmental surveyor and construction contractor will use SATT to survey the property to ascertain the condition and potential environmental hazards associated with demolition. Data collected by the contractors will immediately be transmitted in real-time to the DLBA for overall analysis using Motor City Mapping (MCM). Potential recommendations of the SATT analysis include:
Removal of a structure,
Rehabilitating or repairing the structure,
Securing a structure for future purchase or redevelopment, or
Clearing of debris and trash.
This process not only recommends the type of intervention, but also provides information critical in the assessment of the environmental, deconstruction, demolition and recycling processes.
Keep in mind, community engagement and evaluation of neighborhood characteristics are essential before any final decisions are reached.
RECOMMENDATION 5-16. Adopt clear and transparent guidelines for decisions on each structure. The SATT information, along with the previous information collected (Detroit Future City future land use map, Motor City Mapping data, community input, geographic predictive analysis, etc), provides the necessary information to determine the appropriate intervention method:
Rehabilitate or repair the structure to code (if costs do not exceed anticipated market value) or dispose of the property to a party that will do so.
Secure structures only if there is no funding to remedy the current condition via rehabilitation/repair or removal. This will minimize the further deterioration of the property.
Remove all structures that meet the definition of blight and where the estimated cost of rehabilitation (to code) will exceed market value or create positive economic opportunities for the neighborhood.
Clearing of debris and trash.
Chapter 6 outlines the various methods to use when removing a structure
The entire blight data gathering and analysis process, from leveraging the framework of Detroit Future City through SATT, is outlined in the following sections. The steps shown represent a high level visual of everything that has been discussed in chapters 2 - 5 of this report.