Detroit Learns Hard Lesson that Shrinking Cities Should Not Build Houses

The Detroit News – 4/14/2011 –
by: Christine MacDonald

— Detroit — Former U.S. Housing and Urban Development Secretary Henry Cisneros is expected to come to Detroit today to headline a conference on saving struggling cities by shrinking them. Six years ago, he came to Detroit promising growth: a $258 million project to build about 3,000 houses on 1,200 acres on the city’s border with Grosse Pointe Park. Detroit spent millions of dollars acquiring land, razing houses and rebuilding roads in anticipation of what was touted as a landmark redevelopment. No houses were built. The land is dumping ground for trash. Court judgments are piling up. And the project has become what some call a lesson for city leaders. “It was billed as one of the largest housing development projects, to see it not come to pass is frustrating,” said Councilman Kenneth Cockrel Jr. “We need to scrutinize these deals very, very closely. We should probably look before we leap.” Cisneros is the keynote speaker in American Assembly’s three-day conference at the Westin Book Cadillac to strategize ways to save declining cities. The nonprofit public policy group based in New York, founded by Dwight Eisenhower, conducts research on everything from race to urban renewal. Cisneros said he’s not ad-vocating any prescriptions for Detroit, and blamed an “unfortunate convergence of events” for the project’s demise. The real estate market collapsed, a partner died and his company went bankrupt, and then-Mayor Kwame Kilpatrick’s administration imploded. “I never like to see something I am in-vested in not succeed,” said Cisneros, the former mayor of San Antonio, Texas, who invested through his company, AmericanCity Detroit. “I have spent a lot of time personally on the project. I was in De-troit almost every month for two years. “The project didn’t fail. The project never got started. … Everyone really broke their backs to do the right thing for Detroit.”

Area now a ghost town — Today, what remains of the New Far East Side Development project is vacant land surrounded by a smattering of houses and frustrated neighbors. “I never believed it was going to happen,” said John Myers, who lives nearby. “I think it’s just been quietly forgotten.” Cecil Williams, 53, who lives on Philip near Jefferson, still believed the development was proceeding until he spoke with a Detroit News reporter Wednesday. But he wasn’t surprised. “Let’s put it this way: It’s hard to be disappointed over something you never had a chance to get,” said Williams, whose home is surrounded by lots filled with broken concrete and tires. “I didn’t have much faith in it to begin with.” Detroit’s investment is unclear, but it spent at least $4 million rebuilding roads and side-walks and installing street lights in an eight-block area known as Fox Creek. Developers were sup-posed to build 700 homes in the first phase of the larger project that was bounded by East Jefferson, Alter, Warren and Conner. The Far East Side Development still owns 580 parcels, but its development agreement with the city is set to expire in November. Cisneros partnered with Detroit developer Melvin Washington, Chicago home builder Kimball Hill and nonprofit U-SNAP-BAC, but he said he hasn’t worked on the project for 21/2 years and isn’t sure if he’s technically still part of the company. “I don’t even know it exists,” said Cisneros, who added he made no money from it. Court records indicate the New Far East Side Development Co. LLC has two judgments worth about $180,000 against it for unpaid bills. “It would certainly be nice if they came and cleaned up their act,” said Andrew Broder, a lawyer for a civil engineering firm that claims it is owed $135,000. “That is no way to do business.” Mayor Dave Bing’s staff didn’t return calls for comment. U-SNAP-BAC Director Linda Smith declined comment. Washington and others haven’t given up. They want to pitch a new proposal to the city to build rentals rather than single-family homes, said Denise Lewis, an attorney for the company. Kimball Hill’s president, David Hill, died in 2008, the same year the company went bankrupt. The market collapse also delayed progress, but Washington wants to keep the project afloat, Lewis said. Washington told a jury last year he gave former City Council President Monica Conyers thousands of dollars for travel, shopping and tuition because she served on the pen-sion board and he wanted it to invest in one of his other developments.

Some see an opportunity — Others hope something good can come from the project. Josh Elling, executive director of the Jefferson East Business Association, said his group is in talks with Bing’s staff about the land. He said he’s been told the property will revert to city ownership and wants to ensure the land isn’t sold before a development agreement expires. He said it is one of the largest ar-eas of vacant land in the city and believes it could be a key area in Bing’s Detroit Works Project to reshape the city in part by consolidating residents in vibrant neighborhoods. Cisneros said the city’s infrastructure investment of new roads and sewers isn’t wasted. “There is no reason in the world that area can’t still be redeveloped,” said Cisneros, who founded a California investment firm called City View in 2000 that claims on its website to have generated $2 billion in urban investment nationwide. “Detroit needs to be thinking about steady progress and a long-term plan.”