Lessons from Detroit’s Urban Renewal Efforts: Insights for Other Declining Cities

Cities grow when people move there. Typically, this influx of population occurs due to the opportunity to make money and improve their economic situation. However, when economic opportunities dwindle, inhabitants leave. This phenomenon often results in a downward spiral of population decline and economic stagnation.

Detroit’s Historical Context and Lessons

As a prime example, Detroit’s growth was fueled primarily by its strategic location on waterways and railroads. Over time, though, with the rise of the highway system, these traditional economic drivers became less significant. Yet, due to existing infrastructure, the city retained a certain appeal for those who were already there.

Factors Contributing to Population Decline

BEGINNING IN 1967, Detroits government struggled with a high crime rate, which attracted criminals while deterring legitimate residents. This negatively impacted the tax base as fewer taxpayers contributed while more criminals consumed public resources. Moreover, since the 1970s, Detroit aggressively increased taxes, hindering economic growth and prompting residents to leave in search of more favorable environments.

HEAVY DEFICIT SPENDING eventually led to a cycle where Detroit could no longer afford to cut taxes or fund crime reduction. As a result, it became increasingly difficult to attract and retain a vibrant, economically active population.

Key Lessons for Other Declining Cities

Don't Offer Tax Breaks

TAX BREAKS, while enticing in theory, often fail to deliver the promised benefits, and in some cases, exacerbate existing issues. Companies may set up shop, but never contribute to local tax revenue. For example, Foxcomm, a company that promised significant job creation, ultimately failed to follow through. Additionally, when wages are too low, it can create poor working conditions and a dependent immigrant workforce, leading to a host of social issues.

OTHER TIMES, the cost of providing essential infrastructure to support these new businesses often outpaces the short-term tax benefits. As seen in the case of GM in Flint, even when basic services like clean water are provided, the real cost to the community, such as health issues, far outweigh the benefits.

Alternative Strategies: Focusing on Urban Renewal

INSTEAD OF OFFERING Tax breaks, cities like Detroit are turning to strategies that leverage existing infrastructure. The Detroit Land Bank, for example, takes a different approach. They provide abandoned properties for free to new businesses, but with the condition that these businesses are built in dense, high-revenue districts. This ensures that the city benefits from stable and sustainable growth.

THEY ARE FOCUSING on creating vibrant, economically active neighborhoods where businesses thrive. This not only provides job opportunities but also boosts the local economy, leading to a safer and more stable community.

Conclusion

TAKEAWAYS FROM DETROITS experience and the evolving strategies of cities like it offer valuable lessons for other municipalities: Focus on sustainable economic growth through smart urban planning and infrastructure development, rather than short-term economic incentives that may be unsustainable or ineffective. By doing so, cities can revitalize their economies and communities, creating a positive cycle of growth and stability.

Additional Tips for City Leaders

Avoid offering tax breaks to businesses that do not deliver on their promises. Ensure that new developments and businesses are integrated into existing, economically vibrant areas. Focus on creating a community that is attractive to residents and businesses alike, providing a safe, clean, and economically diverse environment. Use public land and assets effectively to catalyze urban renewal efforts. Prioritize the development of local talent and economies, rather than relying heavily on external investment.

In conclusion, while it may not be easier to make money in Detroit than in other places today, the lessons learned can guide other cities through strategies that prioritize sustainability, community well-being, and long-term growth.