A new wave of development is sweeping through downtown Detroit.
“Walking around Detroit in 2008 or 2009 is not the same as walking around in 2022,” said Ramy Habib, a local entrepreneur. “It’s absolutely beautiful what’s happened over these 15 years.”
Between 2010 and 2019, only 708 new housing structures were built in the city of Detroit, according to the Southeast Michigan Council of Governments.
Much of the new construction can be traced back to the philanthropic wings of large local corporations. For example, Ford Motor is nearing completion of a 30-acre mixed-use development at Michigan’s Central Station. The station lay abandoned for years as the city fell into bankruptcy.
Detroit’s decline into insolvency formed amid 20th-century globalization in the auto industry, economists say. The city’s population jumped from 1.8 million to 639,000 in the most recent but controversial US census count. “With the population leaving, with the infrastructure remaining, that meant strains on the city. Cumulatively, they started to increase over time,” said Raymond Owens III, a former senior economist at the Federal Reserve Bank of Richmond.
The Great Recession of 2007-08 left another round of scars on the city as dozens of homes were seized. The US Treasury Department has since funded the removal of 15,000 destroyed structures in the city. “A lot of black people are moving out of town. So sometimes that identity can shift and shift in certain communities,” said lifelong Detroit resident Alphonso Carlton Jr.
Local leaders used tax and spending policies to advance downtown economic development. In July 2022, the Detroit City Council finalized a tax abatement for real estate developer Bedrock to fund the $1.4 billion Hudson site project. The abatement could be worth up to $60 million over a 10-year period. Bedrock is part of a family of businesses controlled by billionaire investor Dan Gilbert, who moved several of his businesses downtown in 2010.
Bedrock told CNBC the decision was consistent with the council’s handling of other major developments, due to high local tax rates. Local analysis suggests that in 2020 Detroit’s effective property tax rate on homes was more than double the national average. Detroit’s new tax, spending and investment policies have caught the attention of bond investors in recent years, providing another source of revenue for the local government.
Watch the video above to learn more about Detroit’s escape from bankruptcy.