March 11, 2010 - Flint Team Presents Policy Memo for Auto Communities Roundtable on Repositioning Land and Infrastructure for Economic and Environmental Opportunities

 As the quintessential company town, Flint, Michigan and its surrounding area’s rise and decline mirrors the history of General Motors.  Initially a trading point on the Flint River in Genesee County Michigan, Flint initially boomed with the lumber industry and became the center of the carriage building industry in the end of the 19th Century.  Automotive pioneers like David Buick, Albert Champion, Billy Durant, and Charles Stewart Mott launched Flint headlong into the forefront of one of the largest sustained economic booms in history.  Unfortunately, the community relied too heavily on its manufacturing and automotive heritage.  The community’s decline during the past 40 years has been as swift and steady as its growth in the early to mid 20th century.

The city of Flint has been losing population since the early 1970s.  Once a city of nearly two hundred thousand people, the community is now hovering just above one hundred thousand.  While the community still has many valuable assets, it is also marked by mass exodus from the core city, unchecked sprawl in the suburbs, dilapidated and abandoned housing stock, limited new housing, antiquated infrastructure, and public policy that is inadequate to address the challenges of the 21st Century.

Currently, thirty-nine percent of the parcels in the city of Flint are vacant or abandoned.  This means that 22,000 parcels have no private owners caring for their property.  10,000 of these properties have vacant houses on them, of which 6,000 are in need of demolition.  If the city were to demolish all of these blighted houses, they would need $50 million.  Because of the chronic problems of property abandonment created by the steady economic decline and the recent financial crisis, the average sale value of a single family home in Flint fell from $58,000 in 2005 to $15,000 in 2009.  More than 50 percent of the homes now sold in Flint are foreclosure sales.  There continues to be a high volume of mortgage foreclosed homes in the City of Flint.  Since 2002, more than 6,600 properties have gone through the tax foreclosure process and ended up in the hands of the Genesee County Land Bank.

There are 9,000 potential brownfields in the Flint Metropolitan area.  In the city of Flint alone there are more than 2,000 acres of former auto related industrial brownfield properties.  To compound matters, the city, county, and state governments are either broke or on the verge of financial collapse.  Once of the most pressing challenges, however, is the absence of a culture of planning embedded in local government.  The city has not had a new comprehensive master plan since the 1960s.

Despite the grim statistics, there are signs of hope and promise for the community.  Efforts at an organic and sustainable redevelopment of downtown Flint are taking root with 50 new lofts, new restaurants and relocation of some businesses from the suburbs to the central city.  The community is home to approximately 30,000 college students are four high-quality institutions of higher education.  By fall 2010 nearly 1,000 students will reside in the downtown area with more to come.  Additionally, Flint is blessed with an unusually large philanthropic community for a city of its size.

Strategies Underway

Brownfield Redevelopment Efforts – There are myriad reasons for the lack of a diversified economy in Flint, but perhaps the most significant barrier to transition is that the community is locked out of key industrial sites.  Virtually every site appropriate for new industrial development is unusable due to environmental contamination and the policies, regulations, and laws that prevent financially viable re-use strategies.

Flint was home to heavy industrial manufacturing long before he nation enacted environmental standards.  These properties were polluted and the property owners were not concerned with the long-term ecological consequences.  As a result, the land has been degraded and the value of the property has eroded.  The liability associated with these properties, combined with the lack of economic vitality in the region, keep these properties from being redeveloped.  Although there are many state and federal incentives for brownfield restoration/redevelopment, they are not as effective in Flint and other extremely weak market cities.  Viable business opportunities exist for the brownfields, but they cannot be redeveloped because of weak market conditions combined with the long term environmental liability and extreme remediation costs.

A coalition of local leaders and agencies has been working towards solving the brownfield challenge on one of our many former General Motors and Delphi manufacturing sites.  Significant progress has been made and the Environmental Protection Agency (EPA) staff in the region has recently sought new approaches to finding a cost effective way to mitigate the risk and cost of environmental contamination.  However, new policies and tools must be created.

Planning for Transition – Flint has not had a comprehensive master plan since 1960.  The community does not have a culture of planning, and there is significant disagreement with the community on the value added by creating a master plan.  Several housing, community development, and downtown redevelopment organizations have been advocating for years for a new comprehensive master plan.  In the absence of a comprehensive master plan, there have been several privately funded strategies and plans for a variety of districts, neighborhoods, redevelopment zones, and institutions in Flint.  While these plans have guided many of the positive developments in the city in recent years, they do not mitigate the need for a comprehensive community plan and strategy for implementation.

In 2009, interim Mayor Mike Brown initiated a process to develop the first new master plan for the city in fifty years.  This energy has continued into the newly elected Mayor Dayne Walling’s administration.  The process is still in development, but there appears to be a growing momentum for a city-wide master plan.  Additionally, there is interest in ensuring that the city creates a master plan that is conducive to regional strategies.

Tools For Managing Abandonment and Deterioration – Abandoned properties now make up nearly four out of ten properties in Flint.  With an aging housing stock and continued decline in population and real estate values, owners have little incentive to improve and maintain homes.  As a result, more houses are deteriorating and becoming abandoned.  The majority of the remaining city residents are living in sub-standard housing with high utility costs and health hazards causing lead poisoning and asthma.

As one strategy with the land use challenges facing Michigan communities, the Genesee County Treasurer created the Genesee County Land Bank Authority (Land Bank) in 2001.  The Land Bank was coupled with a new state law that allowed for faster processing of tax reverted property, and for the tax reverted property to flow to the Land Bank rather than to public auction.

Over the past five years, the Land Bank has acquired over 7,000 properties through the tax foreclosure process.  Of those, approximately 1,900 have been returned to use through the sale of homes and side lot transfers.  More than 1,000 dilapidated homes have been demolished.  Of the 5,100 properties in the current inventory, nearly 3,400 are vacant residential lots and nearly 1,500 are vacant residential structures (many that yet need to be demolished).  The remaining 200 are commercial and industrial properties.  It appears the Land Bank will acquire another 1,500 to 2,000 properties in 2010 through the tax foreclosure process.  Over the next five years, it is projected that the current trend will accelerate, especially in the area of increased foreclosures of commercial properties.

The Land Bank hopes to continue to take advantage of crews provided under the American Recovery and Reinvestment Act (ARRA).  Since June, 2009, workers assigned to the Land Bank have abated weeds and trash on 9,000 parcels, removed 800 tons of trash, coordinated with community members to cultivate 65 urban gardens, made minor improvements and performed maintenance on 100 Land Bank rental properties, assisted in renovating 15 Land Bank owned homes, helped clean out and prepare 30 Land Bank houses for sale, boarded and secured approximately 150 homes, and inspected 1,000 newly acquired foreclosed properties.

The Land Bank has been effective in taking advantage of reforms to the state foreclosure process at the local level.  However, additional tools and resources can help land banks in auto communities make greater contributions to market stabilization and value creation in distressed neighborhoods.

Policy Proposals
Emanating from a land use perspective, we have several broad policy proposals to help improve market conditions and increase capacity in auto communities like Flint.  Each of our suggestions is guided by an overarching belief that the Federal government can most significantly help these communities by providing funding to address large scale chronic problems associated with population decline and disinvestment, mitigating risk, and by increasing capacity a the local level.

There are several framing issues that are important to discussions about cities like Flint:

• Federal government must recognize the difference between acute and chronic market distress.  NSP was designed for acute market distress.
• Federal policies and programs are designed with embedded assumptions about capacity and community conditions that aren’t true for many auto communities.
• Federal government agencies are making a significant effort to integrate and craft creative solutions to challenges, but this does not currently translate well to the local level.  The Federal government needs policies and mechanisms to help ensure that their vision gets realized at the local level.
• The distressed market condition, combined with long-term environmental liability and extreme remediation costs make it financially unfeasible for the redevelopment of brownfield sites.

Specific policy ideas include:

• “Cities/Regions in Transition”-Federal government should recognize the unique nature of the market in these places.  This is not an appeal just for points on federal scoring, but for the re-design of grant programs to enable local governments in these regions to respond to the specific challenges associated with chronic disinvestment.
• Reframing HUD Section 4 – Section 4 directs resource to intermediaries to provide support to local community development corporations (CDCs) to implement housing stabilization programs at the local level.  This section should be expanded to enable intermediaries to provide support to local governments as well as CDCs to build the capacity needed to implement housing related programs under NSP.
• Capacity for Auto Cites – Embed Federal staff with grant funding to cities like Flint to build capacity and guide local staff on how to use Federal funds in new and flexible way as promoted by this administration.
• Secretarial Waiver on NSP II – Land Banks and “cities in transition” can be enhanced by a change in NSP to allow for more demolition and more flexibility on where the funds are spent in a community.  Also, NSP falls short by not having planning embedded.  It assumes that planning exits.
• Funds for Demolition – the biggest contribution to market stabilization in a place like Flint is demolition of vacant and abandoned structures.  This includes making funding available for demolition of commercial properties.  Blight in residential areas emanates from abandoned commercial and industrial corridors.
• Bonding pool or bonding insurance pool for these “cities in transition” – Mitigate the risk that can not be absorbed in chronically distressed markets.  This can leverage several state and Federal strategies, funding programs, and incentives for environmental cleanup and redevelopment.
• “TARP for Cities” – Just as the federal government provided relief for troubled financial institutions, the federal government can provide targeted and strategic support for troubled auto communities.
• Increase Capacity at the Local Level to Manage Abandoned Property – Enhance and expand funding for maintenance and management of vacant, abandoned, and unused property that is flowing through the American Recovery and Reinvestment Act.
• Incentives for More Efficient Plans, Infrastructure, and Services – Provide grants to encourage “cities in transition” to better plan, account for, and re-adjust infrastructure and services to accommodate the declining population.
• Liability Mitigation for Brownfields-Federal government can provide “full and firm protection” from brownfield liability on large scale auto-related sites for municipalities and Land Banks.  This would assist anti-sprawl and smart growth redevelopment strategies.
• Address Other Bad Assets From General Motors – Prior to the government takeover of General Motors, a significant number of “bad assets” were put into Delphi Corporation and other subsidiary holdings.  These assets, including acres of brownfield property, are effectively locked out of the marketplace.
• Transition brownfields and Parks to Low Maintenance Green Spaces – Federal government can support the conversion of former industrial sites and parks into more naturalized and low maintenance green spaces.
• Incentives for Regional Planning Through Transportation Funding – The Federal government should create incentives to connect land use planning to transportation decisions.
• Transition communities to be sustainable, walkable, and mixed use-Additional grant programs or incentives to update outdated existing housing stock.
• Create Statutory Revision to RCRA – There should be a statutory revision to RCRA so that when a property is transferred, the liability does not transfer to the purchaser with the property as long as all appropriate inquiry requirements are met.

Flint, Michigan Land Use Team:
Mike Brown
Keith Edwards
Neal Hegarty
Christina Kelly
Dan Kildee
Wendy Johnson
Ravi Yalamanchi