In response to the national foreclosure and subprime lending crisis, in July 2008, Congress enacted the Housing and Economic Recovery Act of 2008. Primarily designed to address the impacts of foreclosure in communities hardest hit by the crisis, this legislation aims to foster market recovery and stabilize neighborhoods. States, cities and counties will receive a total of $3.92 billion to acquire, rehabilitate, demolish, and redevelop foreclosed and abandoned residential properties. With the realization that while these funds empower state, county and local governments to provide some level of response and relief in their respective communities, the funds allocated are by no means a comprehensive remedy to the larger crisis.

As the city with the highest home foreclosure rate among the nation’s 100 largest metropolitan areas, the city of Detroit has suffered tremendous impacts as a result of this crisis. With over 67,000 foreclosed properties, 65% of which remain vacant, the City of Detroit recognizes that the $47 million allocation must be implement in a manner that is strategic, efficient and yields great results. Noting that Detroit faced several challenges prior to this crisis, including a shrinking population still spread across a large land mass, a market where the supply of housing exceeded the demand, a declining tax base, older housing stock, and an old infrastructure system to name a few, we recognize the need to strategically utilize these funds to stabilize neighborhoods hardest hit by the foreclosure crisis, devise proactive remedies for anticipated future foreclosure activity, and foster market recovery for enhanced quality of life.

It is important to note the strong focus on demolition activity in the plan, which accounts for approximately 30% of the total award amount. Due to the number of vacant properties, duration of vacancy and the market conditions, eliminating blighted structures in the target neighborhoods for future development or alternative land uses will have a tremendous stabilizing impact. Priorities for demolition will include structures adjacent to development projects nearing completion, and concentrations of blighted, vacant properties.

This plan details the City of Detroit’s strategy for utilizing these funds to achieve the goals for which the program was designed. While the foreclosure problem is widespread, touching almost every neighborhood in the city, investing these funds on a citywide basis will not yield the impact or results needed. As such, we have used the data to determine a targeted approach, focusing on nine neighborhoods. By targeting the allocation, the opportunity for sustained impact is significantly higher. Once implemented, this plan will result in stabilization of neighborhoods most severely impacted by foreclosure and abandonment, reversal of the decline of neighborhood housing values, significant elimination of blighted and abandoned structures, and stimulation of other investment in and around the target neighborhoods.

The Planning & Development Department convened meetings will key stakeholders including Community Development Advocates of Detroit, City Planning Commission, Michigan State Housing Development Authority, Office of Foreclosure Prevention, LISC, Wayne County and financial institutions. Opportunities to leverage the Detroit NSP award amount and engage partners in implementation was discussed and will be further detailed once the plan is submitted.

The time line for the Neighborhood Stabilization Plan is as follows:

•    Nov. 5 – 20: Public Comment Period
•    Nov. 21: City Council approval
•    Dec. 1: NSP Action Plan due to HUD

Neighborhood Stabilization Program Plan (Revised January 2009)