Water woes could sink Flint’s property values even more

The situation in Flint only gets worse: not surprisingly, residents are now worried about their property values, which have already fallen significantly over the past decade. The inability of many residents to sell their homes will only get worse as the reputation of the city’s water supply plummets. This means not only an ongoing crisis of lack of mobility for the city’s residents, who might want to move to better work opportunities, but a looming crisis for city’s already decimated property tax base. Residents will certainly request reassessments of their property values, which are tied to the true cash value of the home.

“Given what’s going on there, I’d have to imagine there’s a plummeting in the fair market value,” said Nathan Resnick, a Bloomfield Hills lawyer who specializes in tax appeals and real estate law. “There’s going to be disparity” between what assessors say the properties are worth and what buyers are willing to pay.

Morse said lenders are already skittish about lending in Flint and are asking appraisers to find comparable homes that have sold very recently rather than, say, eight months ago.”Eight months ago was a completely different market than what’s going on now,” Morse said.

Source: Water woes could sink Flint’s property values even more

Al Jazeera has also covered the story:

BART gets real

Infrastructure may not be sexy, but you tend to notice when it crumbles around you. BART has been having all kinds of problems lately, and its twitter account manager isn’t pulling any punches.

We want semi-decent infrastructure without all the boring planning and funding that requires. Anyone who’s ridden a fixed rail system anywhere outside the U.S. has to suppress the shame of realizing your own country’s efforts at transportation are like a child’s haphazard train set. Do we care enough to fix it?

Source: San Francisco’s transit system stopped being polite and got real about complaints on Twitter

Watchdog: Borrowing Trouble – Chicago Tribune series

A great series finished last month on the Chicago Public Schools district’s engagement in complex bond deals, the lack of public oversight, and the high costs of many of those deals. I’ve been researching interest rate swaps for over a year, and I’m impressed with the thoroughness of the reporting here. THIS is why we need robust and well-staffed public newspapers.

Read: Watchdog: Borrowing Trouble – Chicago Tribune. (I’m not sure how much is behind a paywall)

Detroit loses power, literally.

Detroit — A widespread power outage Tuesday that caused evacuations of buildings throughout downtown is “another reminder of how much work we still have to do to rebuild the city,” Mayor Mike Duggan said.

Duggan, speaking at an afternoon press conference, said Detroit is in the early stages of a four-year, $200 million plan to upgrade the city’s electrical grid, which has not been modernized in decades.

The outage, which started around 10:30 a.m., darkened traffic lights and buildings on the city’s municipal power grid, including hospitals and fire stations. Nine hundred “customer locations” and 740 traffic signals were affected, the city said. The city did not lose 911 dispatch service.

All outages should be restored by late tonight, DTE officials said. They said the cable failure that caused Tuesday’s outages are not uncommon in large urban centers like Detroit.

“This situation is not going to slow down our efforts to … restore the city,” council President Brenda Jones said.

City officials said the city’s public lighting grid suffered a “major cable failure” that caused power to be lost at Joe Louis Arena, Coleman A. Young Municipal Center, the Frank Murphy Hall of Justice, the Detroit Institute of Arts and some buildings at Wayne State University.

Power has since been restored in many areas, including City Hall and Detroit Receiving Hospital. Hospitals, that lost power operated on backup generators, city officials said.

Read: Duggan on power outage: City still has work to do.

Boston Fed’s Latest Role: Community Organizer – NYTimes.com

Interesting initiative by the Boston Federal Reserve, making grants to small- and mid-sized distressed cities in Massachusetts. It’s called the Working Cities Challenge, funneling money from private donors to cities based on an application process. I think the headline “community organizer” is a bit of a misnomer, I’m not sure how I would characterize this odd combination of a federal, public economic policy body mediating between the private sector and local government entities.

Read: Boston Fed’s Latest Role: Community Organizer – NYTimes.com.

Bailing on Detroit – Jamie Peck

Jamie Peck, Geography professor at The University of British Columbia, has written quite a bit about neoliberalism, what he calls “austerity urbanism” and the ongoing saga of Detroit’s finances. He has an insightful blog post on how terms like bailout, responsibility, and federalism are serving to seal Detroit’s fate as a sinking ship, forced to go under in the name of civic individualism, while the state and federal government stand by and watch.

These arguments are perfectly consistent with the conservative legal doctrine of fiscal federalism, where not only “each level of government,” but in effect each unit of government, must “internalize both the costs and the benefits of its activities.”[8]  This is the antithesis, effectively, of Keynesian redistribution, with its compensatory fiscal transfers and anti-cyclical stabilizers.  In contrast, the neoliberal version of fiscal federalism holds that cities, suburbs, and local-government entities must always be free to opt out, as in the logic of small-government suburbanism,[9] but they must never, in any circumstances, be “bailed out.”  This disaggregated, go-it-alone world is a world ruled by fiscal discipline, imposed across different tiers of government and between neighbors; (in)solvency duly becomes, rightfully, a local matter.  The new fiscal landscape can be crudely divided between free-riding, low-tax suburbs on the one hand, and indebted (or even bankrupt) cities on the other.  In the morality plays of austerity urbanism,[10]“irresponsibility” is perversely conferred on the latter, not the former.

Read the rest here: Bailing on Detroit | cities@manchester.

And check out many other great entries at cities@manchester

Chicago’s Credit Rating Downgraded by Moody’s – NYTimes.com

The pension battle in Chicago and Illinois will be fueled by Moody’s latest announcement:

Moody’s Investors Service downgraded Chicago’s credit rating, citing the city’s unfunded pension liabilities. The agency announced Tuesday it was lowering the rating on $8.3 billion in debt to Baa1, from A3, putting it only three notches above junk status. Moody’s gave Chicago a negative outlook, indicating another downgrade could occur if there is no pension fix.

Moody’s says the rating “reflects the city’s massive and growing unfunded pension liabilities.” It says those liabilities “threaten the city’s fiscal solvency” unless major revenue and other budgetary adjustments are adopted soon and are sustained for years to come. The lower rating means the city may have to pay higher interest rates. Moody’s said a commitment to raising tax revenue is a factor that could lift the credit rating.

Read: Chicago’s Credit Rating Downgraded by Moody’s – NYTimes.com.

Last year, Fitch Ratings downgraded Illinois just days after the state legislature adjourned (May 31) without passing pension reform. After the Governor threatened to withhold legislator salaries until pension reform was passed, the legislature rallied to pass legislation in November that was signed into law December 5, 2013. Litigation over terms of the reform is ongoing.

For some local coverage of the “reform” effort in Illinois, go here.

Detroit Ruin, quantified

So many articles (and a dissertation) to write about Detroit, so little time. Meanwhile, the New York Times’ Monica Davey keeps on writing about the struggling city, with a piece today about “Detroit Ruin.” The city is building a database, with pictures, of Detroit’s abandoned properties.

Everyone here has long known that Detroit is plagued by emptying neighborhoods, but this expedited, top-to-bottom analysis of all 380,217 parcels of land in the city, which is to be finished in a matter of weeks, will quantify the state of blight here with a level of detail rare for an American city.

The survey is costing $1.5 million, donated by foundations and private sources, will be used to inform the work of the Blight Removal Task Force (issuing recommendations sometime in the next couple of months). Somewhere between 70,000 and 90,000 buildings in Detroit are estimated to be vacant. Mayor Bing’s efforts to demolish just 10,000 buildings struggled to get off the ground. Private foundations seem to think they can do better (which depends on your definition of “better” and also of “democracy”). The non-profit Detroit Blight Authority set out to help Bing accomplish some blight demonstration projects, but Bing’s energy for shrinking Detroit eventually succumbed to the city’s emergency takeover and eventual bankruptcy.

The Blight Removal Task Force is headed by, among others, Dan Gilbert, owner of Quicken Loans, and the man who’s been buying up Detroit property (that’s a whole other article). I remember a bit from my economics classes about supply and demand, and it makes good business sense that a man who controls much of the supply of Detroit property would be interested in demolishing what he doesn’t control. There is also some tragic irony in the fact that many of these homes might have been abandoned by folks who just couldn’t keep paying the loans held by Mr. Gilbert’s company, Quicken Loans Inc.

Anyway, it will be interesting to see how this database shapes up, and how the process of “shrinking Detroit” reshapes itself through the bankruptcy and beyond.

Read: A Picture of Detroit Ruin, Street by Forlorn Street – NYTimes.com.