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Detroit vacant home sales lift recovery, sets example for aging Japan

This July 9, 2018 photo shows the central district of Detroit under reconstruction five years after the city filed the largest municipal bankruptcy in U.S. history. (Kyodo)

DETROIT (Kyodo) -- Five years after Detroit filed the largest municipal bankruptcy in U.S. history, restructuring its obligations in the face of nearly $18 billion in debts, the city's economic recovery is starting to pick up momentum through efforts to fill vacant homes and rebuild the once-desolate downtown area.

Japan, which is witnessing depopulation on a mass scale due to its aging society and low birthrate, could learn by example a model for revitalization of fallen communities, experts say.

This July 10, 2018 photo shows vacant houses in the suburbs of Detroit. (Kyodo)

The iconic Midwestern city, known as the hometown of General Motors Co. and the birthplace of Motown Records, has suffered a decades-long trend of depopulation, including a major exodus in the late 1960s after racial tensions exploded into clashes in the streets.

As the population dwindled from its peak of 1.8 million in 1950 to the current level of around 670,000, a growing number of vacant and abandoned homes in poorly monitored neighborhoods, some of which went unlit at night due to budget shortfalls, hastened the rise of drug trafficking and violent crime.

Efforts to break this vicious cycle -- in which depopulation leads to declining tax revenues, failing infrastructure and further abandonment -- have therefore focused on bringing area residents back into the city.

The Detroit Land Bank Authority, a public agency whose mission is to return the city's idle spaces to productive use, has been striving in recent years to get residents into the roughly 95,000 properties currently under municipal control.

"When I first came here, to hear about buying a house for $1,000, I said this has got to be a joke, there's no way," said Rod Liggons, the Land Bank's director of community affairs.

"But it is a reality. We have seen single parents, young millennials, seniors who were living out in Warren or some other suburb of Detroit that said, 'Let's go back to our neighborhood.'"

In Detroit, failure to pay property taxes for at least three years results in the city seizing ownership of the property and selling it in an online auction process administered by the Land Bank. Bidding starts at $1,000 for all properties and goes up in increments of at least $100.

Another of the agency's programs allows residents to purchase lots adjacent to their homes for just $100. In less than four years, over 9,500 side lots have been sold.

The Land Bank was originally founded in 2008, but only became an effective force for urban revitalization once it expanded and teamed up with multiple other organizations in 2014, according to Yasuyuki Fujii, a professor at Shizuoka University of Art and Culture in Hamamatsu, Japan.

Fujii believes that Japan, which also struggles with rising numbers of vacant homes, could benefit from adopting the same model.

"In order to introduce Land Bank's structure to Japan, it is essential to establish a legal system to transfer ownership of abandoned land and tax-delinquent property to public agencies," he said.

In addition to residential properties, Land Bank has also sold land to urban farm projects such as RecoveryPark. The five-acre farm employs 14 people, hiring locals who are recovering from drug and alcohol addictions and providing services to help them get back on their feet.

"I think the more local you can make production, the better it is for you as a consumer (and) the better it is for your economy because you are creating local jobs," said RecoveryPark Chief Executive Gary Wozniak.

Urban agriculture has been especially helpful in the post-bankruptcy landscape of Detroit, as it puts otherwise vacant land to use while also strengthening community bonds, a key factor in reducing crime rates.

Downtown Detroit has also benefited from economic revival efforts, thanks in part to investments from the private sector.

The QLine streetcar system which launched in May of 2017 received more than $100 million of its overall cost of $187 million from private-sector donors. The train line, servicing a stretch of roughly 5 kilometers along a major downtown thoroughfare, is estimated to have spurred some $7 billion in new investment along its route.

Though ridership has yet to meet initial goals, the train is seen as the beginning of a mass transit system that will eventually connect suburban areas with downtown in anticipation of a growing number of commuters.

Quicken Loans founder Dan Gilbert, whose company was the largest corporate contributor to the QLine and bought naming rights for $5 million, had already moved thousands of his employees from suburban offices to Detroit's central business district in 2010.

Through Rock Ventures, Quicken's parent company, Gilbert has since invested some $2 billion in a push to renovate the downtown area's empty commercial properties as the city seeks to lower its 7.5 percent unemployment toward the nationwide rate of about 4 percent.

Taro Futamura, an associate professor at Kyoto's Doshisha University, believes the policies and strategies fueling Detroit's post-bankruptcy economic recovery could be useful in Japan as well.

"Japan could see major investments if companies are assured with factors found in Detroit, such as easy access to young talent, proximity to mass transit systems and support from the local government," he said.

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