Jan 26, 1:40 PM EST

Plan to give Detroit workers, retirees half-off vacant homes



DETROIT (AP) -- Detroit municipal workers, retirees and their immediate family members would be able to pay half the price of their winning auction bids for city-owned houses under a plan released Monday by Mayor Mike Duggan.

The program is part of aggressive plans to flight blight while growing the city by finding owners for thousands of vacant houses spread across Detroit's 139 square miles.

About 9,000 current city employers and more than 20,000 retirees would be eligible for the auction discount plan. Their relatives would grow the pool of potential homebuyers by thousands more. The plan, which has to be approved by the City Council, also includes people working on city contracts.

"I wanted to create an environment where our employees wanted to live in the city," Duggan told reporters. "We want those in the city now as renters to be homeowners."

A survey last year showed more than 40,000 structures in Detroit needed demolition. Another 38,000 had indications of blight and could be up for demolition. A few thousand of those houses are owned by the city.

Last year, the city also began taking owners of blighted property to court to get them to make improvements or lose the properties. Many of those lawsuits are expected to reach their conclusion in the coming weeks, Duggan said.

"We are going to have a very strong group of prospective properties for sale," he said Monday.

Detroit emerged in December from the largest municipal bankruptcy in U.S. history. The city shed or restructured about $7 billion in debt and is setting aside millions of dollars for improved services and blight removal.

City leaders have said that growing the tax base is paramount to Detroit's future, but to do that it needs to refill neighborhoods devastated by decades of suburban flight and the national mortgage crisis.

"Now we are able to take some of our best housing ... and put people in them," City Councilman Andre Spivey said. "People build neighborhoods. People build communities. People build cities."

Winning bidders in the discount program must live in the house for at least three years. If the home is sold before that time, percentages of the profit would be returned to the land bank.

Nearly 400 homes were sold by the land bank last year. But buyers' trouble in securing mortgages contributed to only about 150 properties being closed on.

Duggan said lenders are not granting loans for more than the appraised value of homes.

The city hired a company last year to give a more accurate assessment of property values. A full appraisal hasn't been done in a half-century.

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