July 24, 2009

Detroit: The Post-Apocalyptic Future of American Cities?

For 15 years, from the mid 1970's to 1990, I worked in Detroit, Michigan. I watched it descend into the abyss of crime, debauchery, gun play, drugs, school truancy, car-jacking, gangs and human depravity. I watched entire city blocks burned out. I watched graffiti explode on buildings, cars, trucks, buses and school yards. Trash everywhere! Detroiters walked through it, tossed more into it, and ignored it. Tens of thousands, and then hundreds of thousands today exist on federal welfare, free housing, and food stamps! With Aid to Dependent Children, minority women birthed eight to 10, and in one case, one woman birthed 24 children as reported by the Detroit Free Press, all on American taxpayer dollars. A new child meant a new car payment, new TV, and whatever mom wanted. I saw Lyndon Baines Johnson's 'Great Society' flourish in Detroit . If you give money for doing nothing, you will get more hands reaching out taking money for doing nothing. Mayor Coleman Young, perhaps the most corrupt mayor in America , outside of Richard Daley in Chicago, rode Detroit down to its knees... He set the benchmark for cronyism, incompetence, and arrogance... As Coleman Young's corruption brought the city to its knees, no amount of federal dollars could save the incredible payoffs, kickbacks and illegality permeating his administration. In Detroit today, the unemployment rate is 28.9%. Detroit, once our fourth largest city, is now 11th and slipping rapidly. - Frosty Wooldridge, What has happened to Detroit?‏, February 17, 2010

The Mayor of Detroit’s Radical Plan to Bulldoze One Quarter of the City

The Economic Collapse
March 9, 2010

How do you save a city that is dramatically declining like Detroit? Well, for the mayor of Detroit the answer is simple - you bulldoze one-fourth of the city. Faced with a 300 million dollar budget deficit and a rapidly dwindling tax base, Detroit finds itself having to make some really hard choices.

During the glory days of the 1950s, Detroit was a booming metropolis of approximately 2 million people, but now young people have left in droves and the current population is less than a million. The true unemployment rate for those still living in Detroit is estimated to be somewhere around 45 to 50 percent, and poverty and desperation have become entrenched everywhere. In many areas of the city, only one or two houses remain occupied an an entire city block.

In fact, some areas of Detroit have so many vacant, burned-out homes that they literally look like war zones. And yes, it is true that there are actually some houses in Detroit that you can actually buy for just one dollar. According to one recent estimate, Detroit has 33,500 empty houses and 91,000 vacant residential lots. So what can be done when an entire city experiences economic collapse?

Well, Detroit Mayor Dave Bing believes that the answer is to downsize on a massive scale. Bing believes that Detroit simply cannot continue to pay for police patrols, fire protection and other essential services for areas that resemble ghost towns.

So his plan is to bulldoze approximately 10,000 houses and empty buildings over the next 3 years and direct new investment into stronger neighborhoods. In the areas that the city plans to bulldoze, the residents would be offered the opportunity to relocate to a better area. For buildings that have already been abandoned, the city could simply use tax foreclosure proceedings to reclaim them. Of course if there were some residents that did not want to move, eminent domain could be used to force them out.

So which areas would be bulldozed and which areas would be left standing?

Nobody knows yet, and those decisions could make a lot of people angry.

Also, the city of Detroit simply does not have the money to purchase land and relocate residents without federal assistance.

So there are problems.

But other smaller cities are already doing this kind of thing on a smaller scale.

The city of Youngstown, Ohio has been bulldozing a few hundred houses a year since 2005.

Flint, Michigan has already torn down approximately 1,100 houses mostly in outlying areas. The program in Flint was actually the brainchild of Dan Kildee, treasurer of Genesee County, which includes the city of Flint.

In Flint, no residents are forced out of their homes unwillingly. Instead, the city has been buying up houses in more affluent areas of Flint to offer to those in areas that the city wishes to bulldoze.

The program in Flint has been so successful that Mr. Kildee has been asked to help implement it in other cities that are in decline.

And there are a whole lot of U.S. cities that are in a serious state of decline - mostly in what is known as "the Rust Belt" of America. Because of reckless U.S. trade policies, the once great U.S. manufacturing base centered in the Rust Belt has been dismantled and those jobs simply are never going to come back.

So now cities like Detroit and Flint are faced with either dealing with the economics of decline or going bankrupt for good.

But the truth is that Detroit and Flint are just on the cutting edge of what is happening to America as a whole.

The U.S. is experiencing a very painful economic decline, and what is happening in Detroit and Flint could happen in your city very soon.

Are you ready?

What Do You Do With Detroit? Bulldoze It

By Cindy Perman, CNBC.com
March 9, 2010

Have you ever wondered what will become of Detroit?

Will the auto industry bounce back in enough time to save the real-estate market? Will artists flock to the cheap real estate and colonize the city? Or, will it go the way of that luxury condo building in downtown Orlando that's overwhelmed by vultures?

Well, Detroit’s mayor has an idea: Bulldoze it.

Mayor Dave Bing is apparently working on a radical plan that would bulldoze a quarter of the city — some of the most desolate areas — and return it to farmland, the way it was before the automobile. Any residents still there would be relocated to stronger neighborhoods.

This isn't a new idea — Detroit has been kicking it around since the 1990s, and some people suggest dozens of U.S. cities hard-hit by the recession may have to be bulldozed.

One of those people is Dan Kildee, treasurer of Genesee County, which includes Flint, Michigan.

Kildee told London's Telegraph that we need to get over the American mindset that "big is good."

“The obsession with growth is sadly a very American thing. Across the US, there’s an assumption that all development is good, that if communities are growing they are successful. If they’re shrinking, they’re failing,” he said.

When this talk of bulldozing cities resurfaced last summer, some people said there was no evidence that the government had such plans in the works.

But with Detroit taking the idea seriously, one professor says it may be time that we dared to dream — in a way we've never dared before.

“Things that were unthinkable are now becoming thinkable,” James W. Hughes, dean of the School of Planning and Public Policy at Rutgers University, told the AP. “There is now a realization that past glories are never going to be recaptured. Some people probably don’t accept that but that is the reality,” he said.

Welcome to the future. Why does it look so much like 1910 instead of 2010?

Detroit: The Post-Apocalyptic Future of American Cities?

By Al Martin, Raw
July 6, 2009

Here’s a glimpse of a Turn Key Approach to Urban Wasteland Management ™.

Last week I had a chance to talk to a friend who just got back from Detroit, and boy did he get an eyeful of America’s Future. After listening to him describe Detroit, it’s obvious that it has all fallen apart.

First of all, there’s very little civil authority or regular civil government remaining and in operation. Almost everything has been turned over to these so-called Private Management Companies.

And this is how it’s being done:
They block out areas in which 80% or more of the houses have been foreclosed on, which happens to be almost the entire city and county. They have selectively begun to bulldoze the properties which have been foreclosed on; the rest have been boarded up.

Then they have turned over management of these 100-block areas to private companies, which have become defacto governments. They have the literal authority of “governments;” and they’re paid a flat fee from the city, county or state to “manage,” as they say, a square block of this urban wasteland.
These Private Management Companies sell themselves as residual property management firms. Most of these companies, as it turns out, are in fact off-shore subsidiaries of Private Military Contractors (PMCs). They provide a catch-all service. In other words, they regulate how much electrical power and natural gas flows through these areas. They also act as police force, and they act as management for local civil government. However, this Urban Wasteland Management has been pretty efficient, and they want to protect what remaining wealthy areas that still exist, like Bloomfield Hills.

These companies come in and effectively build large barbed wire fences around these mostly abandoned square block areas. Some people are still living in the houses, by the way, even though most of them are boarded up because they’re no longer bothering to serve process through the entire foreclosure procedure.

Oftentimes once the house has been taken back and is ultimately owned by the city or county or some government, they let the people stay there until it’s abandoned and then taken over by squatters. Then they’re given a 72-hour notice to leave by this private management company – before they come in and bulldoze the house. If you’re not out, that’s it. The bulldozers run. They can bulldoze the place with you in it – with legal impunity.

So here’s the scene:
Imagine a 100-square blocks in a city on a hot summer night. Only one out of every 20 streetlamps is working, and even that is low-wattage. These lamps are broken and swinging back and forth in the wind. There are rusted out steel drums lying here and there and pyres of burning scrapwood. In the background there are shadowy figures darting in and out of buildings, trying to salvage anything or strip the remaining buildings of anything that’s worth anything.

Since no electricity is being provided to these residents anymore, what this private management security company does is bring in old water trucks. Then these water trucks are placed at certain locations during certain times. The people then totter down with their old plastic buckets and bottles to get their water.

My friend said that what Detroit looks like now, particularly at night, is like a scene that you would see five or ten years after a Third World War. Everything is bulldozed, but it’s not all collected because there’s not much left after everyone has picked it apart. They just bulldoze it, chop it up, and leave it in little piles.

So imagine these little smoldering piles of rubble with these broken low-wattage street lamps swinging back and forth. And don’t forget the rusted out water trucks bringing in water for the “survivors” (what else can you call them?). They also bring in food from various charitable organizations and distribute free food like Spam and week old bread, etc.

The residents (survivors), in order to get anything, have to register with the private security company and get a card, which must be presented to the authorities if they want to get any water, etc.

They also provide very rudimentary medical care, which is part of their contract service – to provide Band-Aids if the need arises.

It’s all very quiet and all you hear is the howling of feral dogs in this urban wasteland scene.
Is Detroit a precursor of times to come in other American cities?

The economy isn’t improving (despite what the Obama Regime and the Financial Media say), at least not in the respect that foreclosures are still rising. Residential foreclosure rates won’t even peak for another year. And the foreclosure debacle that is coming in commercial and industrial properties hasn’t even really begun. Last week Fannie Mae announced that they expect the coming debacle in commercial and industrial properties is going to increase the foreclosure rate forty-fold in the next 12-18 months.

In spite of that, the Wall Street Journal is promoting REITs, writing about how the REIT market is “hot” once again. This is what I might call Triple-Reconstituted REITS. In other words, they got busted out, raised money, then bought the same property back for 50 cents on the dollar. Then they got busted out again, raised more money, and diluted shareholder equity even further. Later they bought back the same property for 25 cents on the dollar. Then they’re busted out a third time.

Then it becomes a question of how many pennies on the dollar is it ultimately worth – residential areas that are on the periphery of industrial areas which are also all foreclosed, shut down or burned out?

A lot of the train tracks that run through these areas have already been ripped up and sold for scrap metal. They must have security guards in hand cars driving up and down with searchlights looking for train track scavengers.

These private management companies have been given more power than the underlying governments ever had. They have become, for lack of a better word, a defacto privatized post-apocalyptic government.

This could be the template for the future of America’s cities.

As the state and county governments continue to get squeezed and revenue continues to fall, they have to cut back the amount of money they’re paying these private companies. So what they’re doing instead is allowing these private companies to set up what are defacto private enterprise zones with complete governmental power. All of the aluminum and copper and other scarp metal that’s being stolen by the survivors is being bought by these outfits, which are just beyond the fence and are actually owned by the privatized security/government companies. They also act as pawn shops for anything that’s left. This is one way to subsidize what is a declining government co-payment.

As legitimate government funding for this diminishes, these outfits take on more and more power of government until they become virtual mini-dictatorships.

My friend told me that you go down the street and you see this barbed wire fence and right across the street is the border of a very wealthy area. You see all of the private security that the wealthy people have hired and the searchlights that are monitoring activity in the neighborhood. It’s similar to South America where you see the barrio or favela come right up next to a wealthy neighborhood.

As foreclosures mount and government resources diminish, these Urban Wasteland Zones (UWZs) are expanding. Now these companies also hire themselves out to provide security for the remaining wealthy areas, so they have their own security patrols going up and down the street. In some cases, it’s only one street that separates where the barbed wire fence stands and what they call “no man’s land” near the wealthy area.

This is evidently going on in cities all across the United States, just on a smaller and less organized scale. Now as foreclosures mount, this will become more prevalent in other cities.

Detroit then is a template of what America’s future cities will look like.

Federal government has virtually given up doing anything because they don’t have the money. The states are right because all the money, which was hundreds of billons that was promised them under the Bush Regime through Homeland Security grants etc., never came through; and all they ever got was maybe 14 cents on the dollar. Under the Obama Regime, federal transfer payments have actually diminished because the regime doesn’t have any money.

You can point to these examples all over. Last week the State of California began paying tax refunds in promissory notes or I.O.U.s. Many states and counties are now trying to settle obligations in promissory notes.

Looking at the bigger picture, we have entered this W-shaped economy and we are going to go into a second dip. When we are at the trough of that second dip, then it’s push-comes-to-shove time, which means that we’ll see about the Federal government’s ability to hold it all together.

Why? Because state governments are in a defacto state of collapse and there’s not much that the federal government can do about it, other than to provide these financial guarantees, which allow the states to sell more bonds and municipal securities, the interest of which they don’t have the ability to service. They come with a federal guarantee, however, so if they go into default, the federal government has to assume the responsibility.

What buyers of these notes don’t, by and large, understand about these federal guarantees is that these guarantees are only guaranteeing the principal of the bond and not the interest. In many cases, as Moody’s and Standard & Poor’s have pointed out, all these guarantees that the Obama Regime are making are part of what is a reconstituted Resolution Trust situation. Many of them are only partial guarantees, maybe 60 cents on the dollar. Now many of the people who are buying these securities don’t understand that.

So what has been government’s response to declining tax revenue at state levels? To continuously increase cigarette tax to a dollar a package every six months. As prices increase, sales go down faster than the additional tax revenue is collected. All states have sold tax anticipation revenue bonds, even though none of them have sufficient revenue from increased tobacco tax to service the bonds. Republicans are now solidly behind a smoke-free America, which will impinge on the American people’s right to partake of tobacco. That is the new mindset. They won’t make it illegal, but eventually it will make tobacco a privilege of the wealthy.

What will happen to the $150 billion of tobacco tax anticipation bonds states have already sold? How will that debt be serviced? None of the states have the necessary cash flow to service these tobacco and alcohol tax revenue bonds (anticipation revenue notes) because most of the states, between federal and state tax hikes, are increasing the price of liquor $1 per every proof gallon every six months.

Tobacco and liquor will become the province of the wealthy. The hoi polloi sitting on top of those piles of smoldering rubble in Detroit, trying to scrounge aluminum gutters – no more tobacco for you. You’ll be getting the corn husks from your local paramilitary government association.

When cash goes to promissory notes – what’s the next step from there? Government-issued chits. Maybe they’ll look like the German money/chits from the 1920s. They were half the size of today’s currency issued in One Bullion Mark and Ten Bullion Mark denominations.

But these will be corporate-issued chits. You’ll get a chit for so many gallons of water or a chit for so many hours of electricity. You can get a bag of corn-husk “tobacco” or coffee, which will be 10% coffee and 90% chickory, just like the “old days.”

So maybe we should all go and scrap lumber. Imagine the amount of scrap wood necessary to print all these promissory notes, chits and coupons… Just kidding.

"Shutting Detroit Down:" John Rich sings about the crisis, but also spreads confusion
Housing crisis accelerates blight in Detroit neighborhoods
Thousands march in Detroit
Detroit residents protest cuts in bus service
Death of Detroit firefighter: victim of a city’s social decay
The deindustrialization of Detroit
Detroit residents speak on utility bills, social crisis
Panic in Detroit: Unemployment Stands at 50%
The Ruins of Detroit (Slide Show)
Photos of Detroit by Griffioen
Detroit Mayor Bing emphasizes need to shrink city
Mayor Dave Bing said Wednesday he "absolutely" intends to relocate residents from desolate neighborhoods and is bracing for inevitable legal challenges when he unveils his downsizing plan.
Hard work ahead for resized Detroit
Logic, efficiency and the city’s battered budget scream out for the right-sizing of Detroit — moving isolated residents and businesses out of blighted neighborhoods and clearing vast land tracts.
Detroit family homes sell for just $10
Family homes in Detroit are selling for as little as $10 (£6) in the wake of America’s financial meltdown.
Thousands in Detroit face utility shut-offs with end of "winter protection plan"
Detroit Plans to Bulldoze 10,000 Abandoned Structures

Updated 5/15/10 (Newest Additions at End of List)

Off-the-Cuff Suggestion Prompts Discussion on What to Do with Abandoned Neighborhoods in Flint, Michigan

By Kristin Longley, The Flint Journal
March 17, 2009

Look in any direction from Bianca Bates' north Flint home, and you'll see graffiti-covered siding, boarded-up windows and overgrown lots. About half of the homes on her block are burned out or vacant magnets for drug dealers and squatters. It isn't where she thought she'd end up, but it's all she can afford to rent.
"It's a dangerous place to live," said Bates, 21, who lives on East Russell Avenue. "Everywhere you look, these houses are empty around here."
Property abandonment is getting so bad in Flint that some in government are talking about an extreme measure that was once unthinkable - shutting down portions of the city, officially abandoning them, and cutting off police and fire service.

Temporary Mayor Michael Brown made the off-the-cuff suggestion Friday in response to a question at a Rotary Club of Flint luncheon about the thousands of empty houses in Flint. Brown said that as more people abandon homes, eating away at the city's tax base and creating more blight, the city might need to examine "shutting down quadrants of the city where we (wouldn't) provide services."

He did not define what that could mean – bulldozing abandoned areas, simply leaving the vacant homes to rot or some other idea entirely.

On Monday, a city spokesman downplayed Brown's comments. Bob Campbell, Brown's spokesman, said the acting mayor was speaking hypothetically about a worst-case scenario, "not something that would be laid out in the next six months" while he's in office. But City Council President Jim Ananich said the idea has been on his radar for years. The city is getting smaller and should downsize its services accordingly by asking people to leave sparsely populated areas, he said.
"It's going to happen whether we like it or not," he said. "We'd have to be creative about it, but it's something worth looking into. We're not there yet, but it could definitely happen."
Flint resident Derrick Young, 39, doesn't think people in his West Austin Avenue neighborhood would bow too easily to such a request.
"We (are) all family over here," he said. "We all stick together."
Even in neighborhoods where more homes are vacant than occupied, Young, who rents, said the city shouldn't interfere.
"They shouldn't be so hard on people, just because they live in a bad area," he said. "They should find more ways to fix it up and rent it out."
The concept of "shrinking cities" isn't new to urban areas similar to Flint. Last year, the city of Youngstown, Ohio, proposed incentives to encourage people to move out of nearly empty blocks and relocate to more populated areas closer to the heart of the city. Some people were offered upward of $50,000, according to news reports.
The idea was to shut down entire streets and bulldoze abandoned properties so the city could discontinue services such as police patrols and street lighting, according to a CNN report.

The problem came, understandably so, when officials asked residents to move.
Abandoned and foreclosed homes are on top of the list of major challenges facing Michigan cities, said Arnold Weinfeld, director of public policy and federal affairs with the Michigan Municipal League. The organization surveyed several cities that cited declining property taxes as the No. 1 problem, he said.
In the past three years or so, cities in Michigan have lost a combined $147 million in property taxes, he said. "That's bound to have an impact on local services," he said. "There's no question it's an issue. Each community is going to address it differently."
Brown took over last month after former Mayor Don Williamson resigned facing a recall election. His replacement will be elected Aug. 4. Brown is focused on economic development as a key to revitalizing Flint, Campbell said. The city also has the advantage of having the Genesee County Land Bank, he said.
"Cities such as Flint might be forced to make difficult choices at some point," Campbell said. "However, what he's all about is having an economic development plan in place so we don't have to seriously consider that as an option."
Bates said the idea might make some people happier, but she doesn't see how it would help the city. But her roommate, Gabrielle Daniels, said it sounds like a good idea.
"Let's get these kids out of these bad areas," she said. "Get them out of drug houses and into safer neighborhoods."

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