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Certain City Leaders Would Have You Believe That Property Values In Jackson Are Increasing As A Result Of the Demolition Program

Here is a rather decent looking house in a nice area. Even a city manager once rented here.

Like many other properties in Jackson where prices are falling, this property seems to be benefiting from the negative effects of the demolition /neighborhood stabilization program initiated by Pat Burtch and the city council:

Sale Date 04/04/2002 Sale Price $216,500.00
Year Taxable Value

Are the values increasing as alleged by city officials?

The original plan to stabilize neighborhoods and increase property values through demolition was hatched in 2011 by the team of Larry Shaffer and Patrick Burtch.

With Burtch serving as Community Development Director under City Manager Larry Shaffer in October 2011, the pair championed a new program they claimed would jumpstart Jackson's economy.

One aspect of the initiative, they said, would be to demolish about 800 vacant and condemned homes. Most city officials reasoned demolition was favorable over rehabilitation, estimating it would cost $9.8 million to demolish those homes and more than $54 million to rehab them.

The program was implemented and included many disincentives for investors and potential home owners to buy and rehabilitate properties to serve as rental units and single family owner occupied homes. The proponents of this program preferred demolition to private rehabilitation and preserving the tax base. They alleged that clearing blight and demolishing homes would increase remaining property values and reduce crime as a bonus

Contrary to these assertions by city officials, the results so far show none of the supposed improvements promised. A recent article by the MLive/Cit Pat editorial board suggested that sold as silver bullet to cure many of Jackson's ills, the demolition program falls flat.

A further study by the CitPat/MLive staff found that not only has crime not decreased as a result of the demolition program but that property values have not increased after spending $3.1 million on this program.

A brief review of the city's own published data shows the following:

It is obvious that overall property values have not increased and in fact have decreased after implementation of the demolition program.

City officials both elected and appointed have tried to mask this reality by citing a few statistics on a few properties which they neglect to identify. The bottom line is that the tax base is eroding and with it tax revenues.

In the April 28th special budget meeting, city manager Patrick Burtch stated that properly values are increasing in Jackson. Councilman Derek Dobies chimed in adding that the demolition program is having a positive effect on Jackson property values.

Mayoral candidate Laura Schlecte, a local realtor added that studies by realtors show increasing property values most likely attributable to the demolition program. No data supporting this claim was presented.

Colin Cote, President of the Jackson Area Association of Realtors, says he believes the program is in part helping raise the market values all over the city. But in those neighborhoods where homes are demolished, positive change is harder to quantify. "Homes that were selling for $50,000 two years ago are now selling for $70,000 to $80,000," he said. "A lot of homes with lesser values – $25,000 homes and the like – aren't seeing a huge increase, they need too many repairs to begin with. "There's no way of knowing for sure, but the program is helping in theory."

"In theory"? That is an excellent basis for predicting the future course of home values in Jackson considering that the data does not support this conclusion. Click the link above to see the real data for all neighborhoods in Jackson

In a circular mailed out at great expense to 6th Ward residents, 6th Ward councilman Derek Dobies stated that over 400 vacant and dilapidated properties were demolished which has increased public safety and raised property values based on sales statistics from "Jackson real estate professionals". No identity of the real estate professionals who were the source of this claim was provided nor was any supporting data provided.

"There are some wards that have seen an increase of 90 percent in home values," Councilman Derek Dobies, 6th Ward, said. "An economic turnaround alone doesn't produce numbers like that."

Dobies is quite right on that point. An economic turnaround does not produce numbers like that but misrepresenting the data does. There is no ward that has experienced a 90% increase in values. Perhaps Derek was confused and speaking of one house in one ward bought at auction for $4,000 and resold for $7600 after some rehab activities.

Burtch said Jackson's economy is on the precipice of making a comeback under the Neighborhood Economic Stabilization Program, citing rising market values and about $10 million worth of business investments coming down the development pipeline as constructive results. City officials declined to name any specific businesses expected to move into Jackson, saying it was too early in the development process. The rising market values were not identified.

In June 2013, the U.S. Treasury signed off on a proposal allowing the Michigan State Housing Development Authority to create a blight elimination program using federal funds originally set aside for mortgage relief and home rehabilitation.

Cities such as Detroit, Flint, Saginaw, Grand Rapids and Pontiac are beginning to ramp up their demolitions of vacant homes using federal funds. "We're a model for the state," Burtch said.

After being turned down by CAA and the county land bank, the city turned to the John George Home to manage the demolition program. Contrary to program requirements, the John George Home has no background or experience in managing demolitions as is required by the federal program. The only relevant factor is that Burtch, Dobies and ex-Mayor Griffin are on the John George Board of Directors and able to exert influence on the John George management to accept responsibility.

MSHDA set aside $75 million this year to fund demolition efforts in communities across Michigan. Jackson is one of 12 communities in line to receive a portion of those funds, with recipients announced Monday, Dec. 8. Up to 400 Jackson homes could be bought and demolished using the federal funds which were intended to help underwater owners and prevent foreclosures with the purpose of stabilizing neighborhoods. Funds which were to keep owners in their homes are to be used to demolish serviceable homes.

Michael LaFaive, director of fiscal policy at the Mackinac Center for Public Policy, said federal lawmakers should have nixed the mortgage relief and rehab program years ago, instead of "morphing it into a demolition fund." "I don't blame the cities for applying for some of those funds," LaFaive said. "I blame the feds for having the program in the first place."

As long as the city council supports this wanton destruction of the tax base to support a vision of a resurrected downtown Jackson peopled with "young professionals" scurrying from bar to bar, that vision is doomed to failure and Jackson with it.

Police, crime rates and fire protection are high on the list of desirable attributes when people look to places to move to. We know that increased police presence reduces crime. Many studies support this conclusion.

With regards to the demolition program in Jackson, Chief Heins said the only gripe he has with the program, "from a self-preservation standpoint," is how quickly city lawmakers are spending general fund dollars to administer the program while policemen and fire fighters annually make union concessions.

In June 2012 for instance, Jackson fire fighters agreed to a contract that set back wages for new fire fighters 10 years and cut pension contributions nearly in half. In the same budget cycle, city officials transferred hundreds of thousands of dollars from the general fund – money used to operate Jackson's police and fire departments – into the demolition program.

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