The Inequality of Privatized Public Services in Detroit

A.C. Grish, 2019

University of Illinois at Chicago

College of Urban Planning and Public Affairs

Detroit is a complicated place. For years, it seemed that only bad news came out of the city, and many outsiders wrote Detroit off as ruined. Recently though, there are a lot of glossy, optimistic articles popping up about Detroit’s rebirth, painting it as a booming, bustling place that young creative “pioneers” are flocking to. In fact, the reality lies somewhere in between. The renaissance of Detroit has occurred almost entirely within the 7.2 square miles of greater downtown, while the outer neighborhoods continue to crumble. This has perpetuated an imbalance of public services and some murky public-private partnerships. How has the city adapted to this plight? The answer, like Detroit itself, is complicated.

It is well-known that Detroit’s big boom came with the creation of the automobile industry and manufacturing jobs. Opportunities at the many factories drew immigrants from all over the world, as well as a large population of African-American workers moving north in the Great Migration. In 1950, Detroit’s population peaked at 1.86 million people, making it the fourth-largest city in America (U.S. Census Bureau, 2019). But soon after, white flight and the mass exodus of upper and middle-class families to the suburbs hit Detroit as it did the rest of the country. The 1960s — 1990s saw Detroit struggling with the same issues that plagued many American cities: disinvestment in the inner city leading to urban decay and demolition, segregation and race riots, discriminatory home loan policies, an uptick in unemployment, drug use, and violent crime. Additionally, the city had failed to diversify commodities. Detroit and the U.S. auto industry were inextricably linked, with the city going all-in during boom years with the “big three” auto companies of Ford, General Motors, and Chrysler without these entities having any required obligation or loyalty to the city. As the U.S. auto industry began to falter in competition with other countries, the big three acted in what they viewed as their best interest to recoup losses and moved almost all production out of Detroit city limits.

Subsequent unemployment and further loss of middle class opportunity in the city has led to a drastically lowered population spread over Detroit’s large area of about 139 square miles, making it a very decentralized city with many pockets sparsely inhabited with few residents or industry. When the financial crisis and housing market crash hit the United States around 2008, it hit Detroit especially hard. Detroit had a disproportionately large amount of sub-prime mortgages compared to the United States as a whole (Moskowitz, 2017). By 2010, 40% of Detroit’s population was living below the federally defined poverty line (U.S. Census Bureau, 2019), and in 2013, the city declared the largest municipal bankruptcy in U.S. history with a debt of about $18 billion dollars (Saunders, 2018). Many citizens who could afford to relocate left the city for greener pastures. The population dipped below 700,000 for the first time since before 1920 (U.S. Census Bureau, 2019). Over 150,000 homes were foreclosed on during this time (Goldstein, 2017) and large areas of the city were left partially or completely abandoned, with buildings crumbling or burned down as a result of arson, and lots overgrown as nature crept back into previously urban areas. The decrease in population led to a drop in the quality of public services for the mostly-black working class still living in city limits. Services like street sweeping and garbage collection were unreliable, and forty percent of streetlights in the city were not operational, many stripped for their copper parts (Public Lighting Authority, 2015).

In 2014, the Detroit Water & Sewage Department (DWSD) began shutting off the water services of those with delinquent accounts, which amounted to about half of their customers (Sabourin, 2016). A class action lawsuit was subsequently filed against the city, in which the plaintiffs (with help from the ACLU and NAACP legal teams) posited that many of the delinquent accounts had been subject to a billing error on the part of the DWSD, leading to customers suddenly receiving large retroactive water bills they were unable to pay on short notice. The suit also claimed that in many cases, the DWSD failed to give the required advance warning of impending shut-off (Lyda v. City of Detroit, 2016). The judge dismissed the case, ultimately ruling that access to water was not a constitutional right (Sabourin, 2016).

In an effort to recoup losses, and without seeking input from citizens, the city reached an agreement to lease the DWSD to the Great Lakes Water Authority. The GLWA is technically a “special purpose government” that functions more closely to a private partnership that serves Detroit as well as surrounding suburbs. Six board members vote on all decisions, with only two of them appointed by the City of Detroit. This has stifled the democratic voice that city residents previously held within their water department. The Haas Institute of UC Berkeley released a report identifying the deal’s many other shortcomings, including inadequate lease payment to the city, unfairly burdensome costs to the city compared to the suburbs, and failure to adequately address the issue of water affordability or effectively safeguard the human right to water (Haas Institute for a Fair and Inclusive Society at UC Berkeley, MOSES, & Praxia Partners, 2019, p. 33). Detroiters in the thousands have continued to have their water shut off every year since, even as they attempt to repay their bills. Disproportionately targeting the outer, lower-income neighborhood residents’ late payments while skipping over commercial sites such as sports arenas and golf courses with outstanding balances of hundreds of thousands of dollars (Smith, 2014) has led to many asserting this is yet another attempt to rid the city of the poor.

Water Shut-offs by Neighborhood in 2016

Detroit today is a shadow of its former glory, with many writing the city off as a failed urban experiment. But people still live there; the city persists, and there is plenty of opportunity for calculated developers. A key player in the city’s redevelopment has been Dan Gilbert. A native of the Detroit suburbs, Gilbert relocated his company Quicken Loans into downtown at the same time as the housing crisis and city bankruptcy panic. Soon after, he started a real estate firm called Bedrock and began snapping up property. He now owns roughly 100 properties in the city, all in the greater downtown area. Cumulatively, his businesses are both Detroit’s largest employer and largest taxpayer (Feloni, 2018). This puts him in a powerful position in the city, and one that is not without local criticism.

Many are skeptical of his creating a downtown that caters to an upper class not attainable by much of Detroit, which also tends to follow along racial lines. Dan Gilbert’s downtown is largely white, in a city that is 80% black (U.S. Census Bureau, 2019). Development in any city’s downtown area is bound to be high — but usually not while the city is struggling to provide basic services like water and waste management to outer neighborhoods. Dan Gilbert has also caught flack for the tax breaks he receives for his projects from the state government, particularly those classified as brownfield development. He recently received $618 million dollars in state taxpayer money to fund four large developments he is working on downtown (Gallagher, 2018). These included brownfield incentives, which limit the city to only being able to collect taxes on the initial worth of the land while Gilbert can collect on the likely increase after development. Many Detroiters oppose these incentives because they prevent institutions such as schools, parks, and libraries from receiving the potential future revenue that they would normally be entitled to through regular property taxes.

In 2006, Dan Gilbert partnered with several other corporate giants in Detroit to create a non-profit group called M-1 Rail to develop a streetcar for the city. Public transportation had been severely lacking for many years, with Detroit holding the title of the largest city in the United States without any rail option, despite it being the size of San Francisco, Boston, and Manhattan combined. In its heyday, Detroit was home to multiple bus and streetcar lines that traveled up and down its arterial roads from downtown to the outer neighborhoods, but this system had gradually been dismantled in the mid-20th century without a comparable replacement. Current bus service is dismal, with routes and service times slashed. It is not uncommon for people without cars to walk multiple miles to work, or for even short trips to take an incredibly long time due to sparse bus scheduling and connections. The People Mover, a driverless train that began operating in 1987, makes a 3-mile loop around downtown and was originally created with the intention of connecting several other train lines stretching from downtown to other neighborhoods in a hub and spoke system similar to Chicago’s L. But infighting led to proposed federal funding being revoked, and so it remains a system operating at a loss while catering mainly to tourists; an ineffective testament to Detroit’s public transit woes. There is an excess of parking lots downtown, partially a result of all the demolition of old buildings and partially because driving is the only way folks from suburbs can get downtown — there is no commuter rail. Detroit is a city built for a time in its history when nearly 2 million citizens needed to get around and the car was king. And so, the M-1 Rail group began looking into options for bringing rail service back to Detroit. The group consisted of both public and private entities, as detailed in the table to the left from a 2018 study by Lowe & Grengs. They eventually partnered with the Michigan Department of Transportation (MDOT) who were able to secure federal funding for the project that would not have otherwise been available to M-1. They also briefly partnered with the City of Detroit who had hopes of eventually running a rail project all the way out to city limits, but due to issues with funding this project was dropped. The city decided their money would be better spent creating a more cost-effective regional bus rapid transit system that has yet to materialize.

Construction on the rail system (now named the Q-Line after Dan Gilbert’s Quicken Loans purchased the naming rights) began in 2014 and the streetcar opened to the public in 2017. It runs for 3.3 miles in a straight line down Woodward Avenue from downtown to the northern edge of Midtown. This stretch includes stops that connect with the People Mover, the Detroit Amtrak station, and multiple bus stops. It also drops passengers at nearby attractions like the major sports stadiums, theatre district, and Wayne State University. In 2018, the Q-Line had an average of 3,280 riders daily — far below the M-1 group’s prediction of up to 8,000 riders per day (Pratt, 2019). And although there has recently been a switch to a new transit pass to enable users to easily transfer from the city DDOT buses to the suburban SMART buses, Q-Line is curiously not included in this new pass structure.

There has been much discussion about who the Q-Line is for: many liken it to the People Mover, aimed solely at tourists shuffling between nearby places like the convention center and sports arenas. Although the Q-Line does stretch beyond the central business district, it can hardly be used as effective public transit for the vast majority of Detroiters. It certainly isn’t connecting the outer neighborhoods with downtown jobs as it could have. There has been talk of an eventual extension of its route, but no solid plans have been announced. So what is the Q-Line’s purpose? On M-1 Rail’s own website, they state: “Before the first paying passenger ever boards a Q-Line streetcar, the $180 million M-1 Rail project has already paid big dividends as a catalyst for economic development” (Nichols & Walsh, 2017). And indeed, it seems that from the start the Q-Line’s role as a development tool was highly valued over its potential to be an effective form of public transportation. At an MDOT public hearing in 2013 regarding the M-1 Rail project, there were multiple public comments recommending that the streetcar should run in a dedicated center lane, citing that travelling or parked cars, bikes, and buses would all impede the planned curbside path of the streetcar. Despite input from professional groups like the Transportation Riders United also endorsing a dedicated center lane, the Q-Line was still built curbside. Parked cars blocking its path have been a frequent problem, and the streetcar is often delayed (Livengood, 2018). One local interviewee said, “We were really baffled at why they [M-1 Rail] were so insistent about putting it on the side… They were not looking for speed or reliability. Their goal was not to move people as quickly or reliably as possible… their number one goal was the boost in property values and the convenience of attracting more people to local businesses… The idea of moving people quickly and conveniently, or even moving people reliably, through this area was very much secondary.” (Lowe & Grengs, 2018) It is also worth noting that there is already a DDOT bus route that runs along Woodward. It has practically the exact same path as the Q-Line, but runs all the way out to city limits and with similar or shorter headways.

Q-Line delayed by a parked car in its lane. Photo courtesy of Detroit Metro Times

And so, what the Q-Line has accomplished is yet another closed-loop system. It ferries around tourists and the mostly well-off residents who live in greater downtown to bars and events. It does not help anyone from outside downtown access jobs and other opportunities. It doesn’t even connect to any faraway parking lot that could help suburban residents ditch their cars when they attend concerts and sports games. In 2018, the Downtown Detroit Partnership released data stating that in the downtown area more than 3.5 million square feet of floor area was being developed, with $1.54 billion invested in these projects (Downtown Detroit Partnership, 2018). All properties profiled by this report are either directly on the Q-Line or a short walk away.

Some locals have argued that even if the streetcar isn’t currently providing effective public transit, it isn’t harming anything and at least carries the possibility of eventually extending service further out. And the economic development it is contributing to is something most Detroiters would say they sorely need. But in a city whose residents are largely low-income, with 26% not owning a car (Sivak, 2014) it is absurd that federal funds were provided to help build a transportation system that does little more than funnel business to the properties of its private investors, while giving off the image of a shiny, modern city. Current mayor Mike Duggan has stated that he would like to see the Q-Line extended and given a dedicated center lane, but it is unclear where the money to undertake such a massive project would come from (Hoffman, 2018).

One of the bigwigs behind M-1 Rail was Ilitch Holdings, a company belonging to a well-known and much-discussed local family. Founder Mike Ilitch passed away in 2017, but his wife Marian and son Chris still own and maintain their empire. Native Detroiters Mike and Marian got their start in business when they started Little Caesar’s Pizza in 1959. They went on to purchase the professional hockey & baseball teams the Red Wings and Tigers, as well as many theatres and casinos in the downtown area. What they are most infamous for in recent years though, is what many refer to as their “dereliction by design.” From the early 2000s onward, the Ilitch family purchased over 100 acres of land in downtown Detroit, oftentimes demolishing historic buildings or letting them languish to the dismay of neighbors and preservationists. For years, they have left most of this land as gravel surface parking lots — eyesores that have contributed to the blight of Detroit’s downtown, and left many questioning the family’s goals.

Map of Ilitch-owned parking lots downtown as of 2018. Photo courtesy of Detroit Free Press

It seems that the blight was actually their goal. The Ilitch family’s neglect drove down land value in the areas around their derelict properties, enabling them to purchase more land at a lower price. Thirty-nine parcels of land were even sold to the Ilitch family by the city for just $1 each (Perkins, 2017). In 2014, Chris Ilitch admitted to this planned neglect, telling the Detroit News, “It’s been painful to not be able to develop some of that property because every time we made a move, the price for other property would shoot way up. But we had to wait and that hurt. It took us 15 years to accumulate the property so we can achieve this transformative project,” (Aguilar, 2017). The transformative project he is referring to is something called District Detroit.

In 2013, mere days after the city of Detroit declared bankruptcy, the Ilitch family announced that they would be building a new sports arena downtown — and using public tax dollars to do so. Little Caesars Arena cost $863 million dollars to build, of which $324 million was taken from public tax money, even as the city doled out layoffs and pension cuts (Shea, 2017). The Ilitches also struck a deal with the city to eliminate a tax for this new project that had been in place at their previous arena which regularly contributed an additional $10 million dollars in taxes to the city each year (Shea, 2017). All of this occurred as the city was facing the largest municipal bankruptcy in U.S. history, stripping government entities of their funding.

So, through dereliction by design and government subsidies, the Ilitches took advantage of an already-struggling city to achieve their mega sports complex. But the Little Caesars Arena was only supposed to be the first part of a grand vision. The Ilitches had promised “District Detroit,” a 50-block residential, office, and entertainment area with Little Caesars Arena as the crown jewel. Once completed, it would be one of the largest such districts in the country and include five new mixed-use neighborhoods, sporting arenas, theatres, hotels, bars and restaurants. This residential neighborhood aspect was especially exciting for locals, as this promised to reshape many empty lots and help alleviate the housing shortage that had developed downtown.

This was particularly important because when locals protested the public funds and tax breaks the Ilitches received for their project, the city attempted to placate them with promises of new housing and local amenities and job opportunities. The proposed newly fabricated neighborhoods would be walkable communities with apartments, retail, and greenspace where empty parking lots currently stood. But to date, there has been very little construction besides the arena, and the description and renderings of the proposed neighborhood projects have all been removed from the District Detroit website without public comment from the Ilitch family. To date, there are still more parking lots than properties in District Detroit.

Surface lots in “District Detroit.” Photo courtesy of Crain’s Detroit.

It may be surprising to hear that any part of Detroit has a housing shortage, given the vacancy rate. In fact, since the mass revitalization of downtown, units have been in extremely high demand in that area. A local real estate report from the first quarter of 2019 states 93% occupancy in greater downtown (Broder & Sachse Real Estate, 2019). There are benefits from living in the densest area of the city beyond proximity to jobs and amenities. For years, Detroit as a whole has averaged dismal police response times, with a recent average of about 12 minutes to respond to high priority 911 calls and up to an hour or more for lower priority calls (Jones, 2019). But a recent report found that in the greater downtown area, response times are 50% faster (LeDuff, 2019).

On top of this imbalanced police service, greater downtown also has something the outer neighborhoods lack: a significant private security force. Securitas, a security contractor used by Dan Gilbert for his various properties, averaged about a 25% growth each year between 2013 and 2018 (Reindl, 2018). There are frequently job fairs to hire on more security guards for various new businesses downtown. Dan Gilbert and other downtown developers certainly realize that to entice people with money to move into a city struggling with a high crime rate, they need to give them a sense of safety. In addition to the droves of security officers presiding over downtown offices, residences, and businesses, there is “a Rock Ventures security force [that] patrols the city center 24 hours a day, monitoring 300 surveillance cameras from a control center,” (Austen, 2014). This surveillance as well as private security forces have contributed to improved safety in greater downtown while the outer neighborhoods still struggle with high rates of violent crime and dismal police response times. Private security forces have also come under criticism for overstepping their authority. In 2015, the ACLU of Michigan filed a federal suit against a private non-profit group called Detroit 300 Conservancy after its hired security firm Guardsmark stopped protestors from peacefully demonstrating in Campus Martius, a downtown public park under Guardsmark’s patrol. In an opinion piece about the incident, the Detroit Free Press columnist Nancy Kaffer (2015) asked “Who is downtown and its public spaces for? And who, exactly, makes those decisions?”

The Midtown neighborhood (previously known as the seedy Cass Corridor) is home to Wayne State University and has also seen recent changes in its policing as development has increased in the area. Wayne State University Police have forged a unique relationship with the Detroit Police Department wherein per their official website (2019), “each [WSU] officer is also commissioned as a Detroit police officer with full police authority within the city of Detroit.” Because of this, WSU Police’s reach goes far beyond the safety of students and staff, with 80% of their patrols taking place outside of the school campus (Dickson, 2017). While many neighborhoods struggle with slow 911 response times, the WSU Police website lists a separate phone number to call with response times of just 90 seconds. Wayne State Police also operates around 850 surveillance cameras throughout the Midtown neighborhood, and attends bi-weekly CompStat meetings with multiple nearby authorities to collaborate on safety within the area. Those that can afford to live and/or operate a business in the Midtown neighborhood benefit greatly from being within the jurisdiction of the WSU Police: violent crime rates in the area fell 52% between 2008 and 2015, while the city as a whole only saw a 18% reduction in this time frame (Wayne State University, 2015). Of course this decrease in crime is welcome in Detroit, but currently the only neighborhoods achieving this level of improvement are those that have additional security forces bolstering the notoriously threadbare Detroit Police Department. And it seems the only areas able to supplement the police force are economically prosperous, tourist-friendly areas with big names like Bedrock and Wayne State present to provide security so people will feel comfortable spending their money there.

Privatization of public services in Detroit is, in effect, helping to build a wall of prosperity around the 7.2 miles of greater downtown. This is creating two entirely different cities within Detroit: one in which people can work at high-paying jobs, live in loft apartments in mixed-use neighborhoods, commute by efficient public transit, and enjoy reliable public services, and one in which people are subject to joblessness, home foreclosures and blight, difficult commutes, ineffective policing, and spotty public services. Many Detroiters have been complicit and even supportive of private investment and partnerships, and it’s hard to fault them — when there has been little to no investment or opportunity for so long, it would seem ridiculous to turn down anyone interested in injecting capital back into the city. In this way, Detroit has been a petri dish of sorts for neoliberalist ideals to flourish. In a place whose government has failed so profoundly, it has been easy to make the argument for privatization of services — particularly when the choice is between private services or blatantly ineffective services. The problem is, in Detroit there is a lack of the competition needed for the touted neoliberal benefits of better service with lower prices. No one else is building a more comprehensive streetcar system to siphon the Q-Line’s riders. No one else is swooping in to attempt to develop the area around the Ilitch family’s empty lots. When there is no competition, private companies have more free reign to set higher costs without necessarily regulating the quality of their services. And when private companies fund public amenities, they will always have their own interests at heart, not the obligation to do what is best for the general public. This is why there are only effective security forces, or well-maintained parks, or thriving new commercial districts in areas with the resources for businesses to financially justify them. In this way, privatization creates an economic segregation wherein the only ones that receive quality service are those that can afford it. While the public sector is certainly not without fault, it at least has the guiding principle of providing service to all, not just those from whom it seeks economic gain.

When asked whether two different, unequal Detroits seemed to be emerging, Zak Pashak, owner of a luxury bike store downtown, replied, “We’ve got to make sure the people here are being lifted up from the rising tide,” (Moskowitz, 2017). Counting on this idea of a trickle-down prosperity has resulted in the “new Detroit” being built on the backs of, and in spite of, many Detroiters who have watched their city fall from grace, and their neighborhoods slowly disintegrate. Private investors cannot be relied upon to create an equitable city, and as such the new Detroit may be nice but it has not been created for everyone.

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Traveler / urbanist / grad student / roller derby player with a few thoughts & opinions.

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