Moody’s: Boost non-down­town tax base

The Detroit News - - News - CANDICE WIL­LIAMS The Detroit News

Detroit — While down­town devel­op­ment is fu­el­ing Detroit’s re­cov­ery, the mo­men­tum must con­tinue by strength­en­ing the tax base in other parts of the city, Moody’s In­vestors Ser­vice said in a re­port re­leased this week.

The rat­ing agency at­tributes down­town Detroit’s surge in em­ploy­ment and tax rev­enue to the ar­rival of af­flu­ent res­i­dents and large-scale de­vel­op­ments. Since 2014, Detroit’s rat­ing has gone from B3, to Ba3 sta­ble, which is con­sid­ered a sta­ble out­look.

“The trends, cou­pled with sav­ings achieved through bank­ruptcy, have led to marked im­prove­ment in the Mo­tor City’s fi­nan­cial po­si­tion and credit qual­ity,” Moody’s wrote in its 12-page re­port.

The rat­ing agency’s af­fir­ma­tion of the city’s out­look was re­leased in ad­vance of the city of Detroit’s is­suance of about $115 mil­lion in gen­eral obli­ga­tion debt by the end of the year.

John Hill, chief fi­nan­cial of­fi­cer for the city, said he agrees with Moody’s assess­ment, not­ing that it’s about em­pha­siz­ing the move­ment that the city has made.

“It’s a work in progress,” he said. “The city is com­ing back from a very hard bank­ruptcy, and ev­ery­one is ac­tu­ally sur­prised that we’re as far along as we are in get­ting out of over­sight and mak­ing im­prove­ments in our credit rat­ing that we have over the years.”

The core down­town has seen a pos­i­tive trend in terms of pop­u­la­tion growth with the ad­di­tion of more than 1,000 res­i­dents since 2010, ac­cord­ing to Moody’s. The greater down­town area has seen a 28 per­cent in­crease, about 9,000 res­i­dents, dur­ing that time.

Moody’s notes the “thriv­ing down­town” makes up only seven of Detroit’s 143 square miles. The trend in the down­town area is not stem­ming the city’s over­all pop­u­la­tion de­cline as the greater down­town area’s 41,000 res­i­dents ac­count for only 6 per­cent

of the city’s pop­u­la­tion of 673,104.

The re­port pre­dicts that due to nu­mer­ous busi­nesses re­lo­cat­ing to the city, growth down­town will likely to con­tinue fu­el­ing ris­ing in­come tax col­lec­tions if there isn’t any wider state or na­tional eco­nomic down­turn.

Noted in the re­port are the city’s two most prom­i­nent re­de­vel­op­ment projects, Ford Mo­tor Co.’s $740 mil­lion plan to re­de­velop the Michi­gan Cen­tral De­pot and sev­eral nearby prop­er­ties in Cork­town and Be­drock’s $1 bil­lion devel­op­ment on the for­mer site of Hud­son’s store in down­town.

The re­port lists ways that the city has ex­panded devel­op­ment in­clud­ing: the Strate­gic Neigh­bor­hoods Fund, ser­vice im­prove­ments, re­mov­ing blight and pro­vid­ing eco­nomic devel­op­ment and busi­ness in­cen­tives.

Hill said he be­lieves the Strate­gic Neigh­bor­hoods Fund will “bear a sig­nif­i­cant amount of fruit.”

Through the fund city will in­vest more than $100 mil­lion, from a com­bi­na­tion of fi­nanc­ing through city, state and phil­an­thropic arms, into 10 neigh­bor­hoods to im­prove re­de­velop parks, strengthen com­mer­cial cor­ri­dors and re­ha­bil­i­tate hous­ing.

“The city is mov­ing for­ward very well and mak­ing its own in­vest­ment, but I think the larger com­mu­nity, both the busi­ness com­mu­nity and the phil­an­thropic com­mu­nity, is mak­ing huge in­vest­ments in the fu­ture of the city that im­pact neigh­bor­hoods as well,” he said.

Moody’s con­sid­ers one hin­drance to the city’s re­vi­tal­iza­tion the Detroit Pub­lic School Com­mu­nity Dis­trict and its in­abil­ity to ad­dress its cap­i­tal needs. The dis­trict re­ceived a $617 mil­lion state aid pack­age in 2016. The dis­trict is deal­ing with el­e­vated lead and cop­per lev­els in drink­ing wa­ter in build­ings and has no path to ad­dress sig­nif­i­cant cap­i­tal needs, the re­port said. In June, the school dis­trict re­leased a re­port that showed it would cost $500 mil­lion to re­pair its build­ings.

“Ab­sent state sup­port, or siz­able phil­an­thropic do­na­tions, the de­te­ri­o­rat­ing fa­cil­i­ties could be­come an in­creas­ing drag on the city’s re­vi­tal­iza­tion ef­forts,” the re­port said.

Be­cause the school dis­trict is a sep­a­rate le­gal en­tity, there re­ally isn’t any ac­tion the city can take, Hill said.

“What we have been able to do in the past, the city has taken va­cant school build­ings and helped to re­move them as blighted areas,” he said. “That’s helped the school sys­tem to not have to main­tain some of those va­cant prop­er­ties. So the city has been able to help.”

Clarence Tabb Jr. / The Detroit News

Noted in the re­port are the city’s two most prom­i­nent re­de­vel­op­ment projects, the Michi­gan Cen­tral De­pot and the for­mer site of Hud­son’s.

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