MSHDA arranges study of blight removal impact on property values

The state has poured millions and millions of dollars into blight removal activities across Michigan, with one belief being that it can improve property values. But how effective is removing blight toward achieving that goal?

November 16, 2016

BY: MIRS News

The state has poured millions and millions of dollars into blight removal activities across Michigan, with one belief being that it can improve property values.

But how effective is removing blight toward achieving that goal? While the negative impacts of blight are well documented, the positive impacts of blight removal haven't been as well documented, according to Mark Wyckoff, senior associate director of the Land Policy Institute at Michigan State University. 

That's one reason why Wyckoff and his research team have been hired by the Michigan State Housing Development Authority (MSHDA) to conduct such a study, focused on Michigan's investment of federal dollars in blight removal across 16 Michigan cities. 

“The hard scientific data isn't there because nothing like this has ever been undertaken in American history, and we'll know a lot more about it after the fact,” said Kevin Elsenheimerexecutive director of MSHDA. 

MSHDA, with approval of the feds, has sunk much of its Hardest Hit Fund (HHF) dollars into blight removal. The state has received more than $761 million in HHF dollars. In a recent round of funding, about 74 percent went toward blight removal and 26 percent toward other foreclosure prevention programs. 

Elsenheimer said MSHDA told the U.S. Treasury it would analyze the impact of its investment in blight removal dollars, which has led to contracting with MSU's Land Policy Institute. 

Wyckoff's aim is to test if there is a causal relationship between removal of blight and surrounding property values. 

“Wouldn't taxpayers benefit from knowing that the expenditure of public dollars to remove blighted structures does in fact have a positive benefit, particularly on property values?” he asked. 

MSHDA has drawn critics regarding its use of HHF, particularly from some citizens of Detroit who have argued that more HHF dollars should go directly into foreclosure assistance to keep people in their homes (See “State looking to tap fed blight dollars for lead pipe removal,” 5/25/16).  

The HHF, administered by the U.S. Treasury, was designed to assist states with foreclosure prevention and neighborhood stabilization. MSHDA has maintained that addressing blight is part of that equation. 

Critics have also cited MSHDA and the feds' investigation of the use of HHF dollars toward blight removal contracts in Detroit, as concerns have been raised over the costs of demolition in Detroit (See “Feds, MSHDA continue investigation of detroit's demolition dollars,” 10/26/16).  

Preliminary results of Wyckoff's study aren't expected until March 2017, but already some analysis has shown that in Jackson, removing blight is associated with a statistically significant increase in the values of nearby homes, according to a presentation Wyckoff and his team made to the MSHDA Board today. 

Wyckoff, as far as he knows, said the few other studies done in this area were focused on fewer jurisdictions and employed different methodologies. 

Elsenheimer said people who live in areas where blight has been taken down “are reporting improved neighborhood attributes, less crime . . . we're hearing excellent anecdotal evidence to let us know that the dollars are well spent.” 

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