I knew that Detroit had a problem with enforcing laws, but I had no idea the laws of economics – chiefly, the law of supply in demand – apparently does not apply in the Motor City.
The Midtown area of Detroit is, as I’ve mentioned before, a very decent area that has shown signs of life in recent years. And politicians have figured out that it’s a heck of a lot easier to piss “development” money all over Midtown than it is to actually solve the deep-rooted problems in Detroit. So that’s what they’re doing. Call it the, “we can’t really help the people who actually live here, so we’ll bribe new people to come here and call it a rebirth” approach.
Anyway, it seems to be working to some degree – demand in Midtown is surging and far outpacing available supply. So a new apartment complex – the Auburn – is set for development. But…uh…this:
Midtown is the area north of downtown Detroit that features major employers including Wayne State University and the Detroit Medical Center. In the past few years, demand has outstripped supply for apartments near WSU and other anchors. Some rental buildings in the vicinity are fully booked.
"We really need these units," said Sue Mosey, president of the nonprofit group Midtown Detroit, one of the partners in the Auburn project.
Mosey and DiRita said such complex financing is still necessary even in Midtown because rents -- and therefore rates of return to investors -- remain low. Apartments in the Auburn will rent for about $1.25 per square foot, while a deal done strictly with market-rate capital might require rental rates of $2.25 per square foot or so.
Well yes, I see that a woman heavily (and laudably) invested in the revitalization of Midtown thinks tax dollars should be shoveled to Midtown, but that’s not terribly surprising. Or convincing.
I mean, why don’t you just rent the apartments for $2.25 a square foot (a number that makes DC residents vomit, btw)? Would those apartments not rent? If not, why don’t you just build more modest apartments? Are the subsidies permanent? If not, what happens when they run out? Wouldn’t subsidizing one apartment building in the area disadvantage all the others? Why are we subsidizing housing for “graduate students and young professionals” in a city with 30-50% unemployment and poverty rates? Anybody? Reporter? Bueller?
Nope. Just the same story in a different newspaper four days later with the same BS about subsidies reported as fact:
The occupancy rate of residential rentals in the Detroit neighborhood is at 95 percent, according to study done earlier this year by Midtown Detroit. That's the highest level of occupancy in at least a decade, Mosey said. More than 200 additional housing units are planned this year in others projects in Midtown, she said.
Despite the growing popularity in Midtown, it still takes complex deals with multiple lenders, tax credits and foundation help to get major projects done.
That’s some fine detective work right there.