To Eliminate Its Blight, Detroit Should Pass a Homestead Act

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A recent report by the Detroit Blight Removal Task Force calculated there were likely 72,000 blighted structures and over 6,000 vacant lots within the city of Detroit. Their latest estimate of the cost of addressing this problem is $850 million for the residential structures and between $500 million and $1 billion for the industrial sites. That is a lot of money for Detroit, and if they can come up with the money it would take a long time to complete the task. A better solution would be a city homestead act.

Much of the United States was settled under various versions of homestead acts. Depending on the location and time period, a settler could obtain 160, 320, or 640 acres for free subject to the requirement to live on and improve the land. From 1862 until homesteading was finally ended in 1976 1.6 million Americans gained ownership of 270 million acres, equal to about 10 percent of the entire nation's land mass. While the U.S. gave away vacant, pristine land, Detroit can do a modern variant and give away blighted properties.

For example, Detroit could allow contractors and developers to claim up to ten acres of blighted residential land or a single blighted commercial or industrial parcel. For residential sites, in exchange for the land, people would be required to clear the site within six months and either begin construction of new homes within two years or turn the land into a publicly accessible park until they are ready to build. For industrial sites, the claimants would be required to submit a plan for remediating the site to the city and have the plan approved within two years. If claimants do not follow through on their part of the deal, the land would revert to the city.

With the claimants paying the costs of clearing away the blight and improving the properties, the city would save over $1 billion. The blighted structures represent about 20 percent of all parcels in the city. If they are a proportional share of acreage, they would be about 18,000 acres. That means that if people claim the maximum amount Detroit would need about 2,000 people to claim property under their homestead act to solve their entire problem. With over 50,000 people employed in the construction sector in the Detroit metropolitan area and over 100,000 in the state of Michigan, it seems likely that Detroit could find enough takers to solve much of their problem.

To be clear, I am not suggesting that claimants have to live on the land the claim as in the historical homestead acts. Instead, these "homesteaders" would be responsible for removing the blight from the property and improving it in some productive way. In the most likely case, a person would claim several acres of residential land, bulldoze the blighted houses, and replace them with new homes to sell. The homesteaders would make a profit. Detroit would save hundreds of millions of dollars and should also end up with valuable, tax-paying properties and new residents.

Detroit's population is not ever likely to regain its former highs, and builders redeveloping these parcels are unlikely to replace blighted homes with new homes on a one-for-one basis. But if a homesteader destroys ten blighted houses and builds five new houses on larger lots that would be a huge win for the city of Detroit.

Even if only half of the blighted properties were claimed by homesteaders, Detroit might save $1 billion. The homesteaders are also likely to clean up the blighted sites faster than the city would be able to do since they will have access to private capital expecting a return from the resulting redevelopment and because the homesteaders will have to move fast in order to gain final ownership of the properties.

A series of homestead acts were very successful in populating and developing wide swaths of the country. By borrowing this policy from the past and adapting it to modern times, Detroit could help its finances, its taxpayers, and its residents. The best way to rehabilitate the over 70,000 blighted properties in the city of Detroit is to rely on the private sector. The ability to profit from performing a public service should encourage people and firms in the construction industry to help Detroit begin its path back to both financially stability and neighborhood health.

Jeffrey Dorfman is a professor of economics at the University of Georgia, and the author of the e-book, Ending the Era of the Free Lunch

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