One Year In… Tackling Blight
Finding solutions to Detroit’s many square miles of abandoned and vacant buildings is vital to the city’s turnaround, but the challenge is formidable. Before making our investment, we listened closely to key players in the city’s anti-blight efforts and worked with the Detroit Land Bank Authority (DLBA). This helped us identify a need to strengthen the technology guiding the city’s blight reduction efforts, as well as a lack of rehab financing for homeowners who purchase recovered properties.
Strengthening The Capacity Of The Detroit Land Bank Authority
Our engagement also made clear that for the DLBA to play the essential role with which it had been tasked – to lead and coordinate the city’s anti-blight initiative – it needed immediate organizational support to weather a short-term funding gap. It also needed longer-term capacity enhancements to scale to the size of the challenge and strengthen its infrastructure. In response, we provided DLBA with a $5 million grant, which enabled the organization to continue operating in the months before the city’s bankruptcy exit plan was approved and significantly increase its staff. Since May 2014, the DLBA has sold 406 homes at auction, earning more than $3 million.
Supporting The Motor City Map
In 2013, the Detroit Blight Removal Task Force mounted an extraordinary effort to map and assess approximately 380,000 parcels in Detroit. This generated massive amounts of valuable data, but created a new challenge: the lack of a robust system to manage and use the data effectively.
To help solve this problem, we invested $1 million to support the data integrity of Detroit’s Motor City Map – a centralized technology resource that DLBA and others use to manage, share and update millions of pieces of property data. Our contribution also supported development of a “blexting” feature that enables citizens to submit images of individual properties from their phones or tablets, ensuring that the community remains involved in keeping the Motor City Map data up to date.
Helping Liberty Bank Provide Critical Rehab Financing
Financing home rehabilitation has been a major barrier to demand for homes auctioned through the DLBA’s Neighbors Wanted program, an online auction of homes in target neighborhoods. Homebuyers who purchase a recovered property through the program must bring the house up to code within six months. However, rehabs on long-abandoned properties are expensive. The result is that many prospective homeowners in Detroit can afford to purchase a home, but not to make the property livable.
To help bridge this gap, in July 2014 we provided community lender Liberty Bank with a $5 million grant to cover potential loan losses, enabling it to extend affordable rehabilitation loans to qualified buyers and, in the process, giving these buyers confidence that when they bid on properties, they will have the ability to finance necessary repairs. We also provided an additional $300,000 for down payment assistance for qualified low- and moderate-income households. Through this collaboration, Liberty Bank’s Home Restoration Program is working over the next five years to extend up to $20 million in loans to buyers who are ineligible for traditional mortgage financing. To help ensure buyers have the knowledge and tools they need to make homeownership sustainable, the Home Restoration Program also requires borrowers to participate in a housing counseling program.
The program’s pilot phase focused on the Boston-Edison and East English Village neighborhoods. During the second half of 2015, the program will expand into four additional neighborhoods and will provide financing to buyers seeking to purchase homes outside of the auction. Liberty Bank will also provide home improvement loans to existing homeowners in the same six neighborhoods.