WASHINGTON May 27 Wiping out the abandoned and
decrepit buildings that are the hallmark of bankrupt Detroit
could cost nearly $1 billion, and more over time, according to a
report released on Tuesday by a special task force appointed by
President Barack Obama.
The report estimates the city, which filed the largest
municipal bankruptcy in U.S. history last summer, will need "as
much as $850 million just to address neighborhood blight in the
next few years." Commercial sites, with their potential for
environmental problems, will add $500 million to $1 billion to
the total cost.
Most of the money, 94 percent, would go to removing
structures, and the report said "the uncertainties related to
the cost of asbestos and lead abatement in these structures is
the largest variable in the final calculations."
The report warned that because of the unknown variables
"there may be cost escalation over time."
Last September, Obama announced a $300 million effort to
help the city and created the "Blight Removal Task Force."
Along with city leaders and the state-appointed emergency
manager, the U.S. Department of Housing and Urban Development,
and the U.S. Treasury, local and state agencies and foundations
assessed the conditions of neighborhoods.
At a presentation on Tuesday, task force members said
deconstruction - taking structures apart to reuse their
materials - is a priority over demolition, and two large
recycling centers will be established in the city for about $6
"This is a fabulous plan. It doesn't come with a check. And
that's the reality we all face," said Detroit Mayor Mike Duggan.
"We're going to have to start to go after private business
owners who have the deep pockets to demolish their own buildings
... We have identified every single city-owned building and we
are going to be coming out with a plan to demolish the ones we
The report suggested the city dedicate $8 million each year
from federal community development block grants for demolition,
and also press for more mortgage help through the Hardest Hit
Fund. Detroit's land bank should require $15,000 in cash from
banks when they transfer the titles of blighted properties, it
The city's current bankruptcy plan depends partly on
donations from foundations and nonprofit organizations, and the
blight plan also calls for tapping nongovernment sources.
"We're trying to pull together half a billion dollars - I
never thought half a billion dollars would be considered seed
money ... to provide the seed money to deal with an issue that's
been coming for 83 years," said the emergency manager, Kevyn
Orr, who traced Motor City's blight to the Great Depression.
The report found that fewer than half of Detroit property
owners pay property taxes. There are also 118,000 properties on
track for tax foreclosure, carrying more than $500 million
unpaid taxes, but "Detroit cannot afford to put more than a
quarter of the city on the auction block." It suggested the
state cut interest charged on unpaid taxes to 6 percent from 18
(Reporting By Lisa Lambert; Editing by Peter Galloway)