A bellwether election in Michigan for the US

Genesee County, Michigan, is the homeland of not only General Motors and its most severe critic, film-maker Michael Moore, but it is now the host of one of the largest stocks of unoccupied dwellings in the Great Lake State, if not the United States. Last year, the county became the subject of derision directed by the entertainer and radio-show host Rush Limbaugh who made light former Genesee County Treasurer Dan Kildee and his much-heralded effort to “shrink” the city of Flint and areas in Genesee County by bulldozing abandoned housing.

Genesee County and Flint are well past the political arguments of whether or not to actually shrink the community. The county as a whole, and not just Flint, is clearly shrinking already from the standpoint of population. Therefore, there are too few households to fill too many available housing units. Property values have plummeted at least 30 percent since 2005, leaving most communities and Genesee County as a whole, with significantly less realistic revenue potential than is required by their budgetary obligations. Furthermore, property values will not stabilize, let alone recover, so long as the surplus of housing units remains.

If the area will have any possible chance at a turnaround, it will require strong and effective leadership from the next Genesee County Treasurer. Without an overall County Executive, the Treasurer is in a unique position to bring together the elements of the community that can have a positive impact on the property valuation crisis that has brought Genesee County and Flint to the brink of disaster.

We are just two weeks away from the August 3rd Democratic primary in what may be the most important race in mid-Michigan in the last 30 years. There has been virtually no media coverage of the Treasurer’s race, one that is far too critical to the livelihood of our community to be left to political alliances and 30 second sound bites. There is a need for the media in the area, and the wider region, to focus directly on this race and examine the positions of the two Democratic challengers. The people of Genesee County, and the state of Michigan, deserve to hear exactly what Democrats Lee Gonzales and Deb Cherry would plan to do in the Treasurer’s office. Voters need to know about their respective backgrounds in finance, urban planning, and executive experience in the treasurer’s office.

Realistically speaking, the county will be electing the next Treasurer in the August 3rd primary rather than in the November general election. Consequently, the county’s future may well depend on how the winner of the primary deals with the following realities:

A) Census data suggest the area has lost 18,000 (7,200 households) since 2006.
B) The next treasurer will inherit responsibility for more the approximately 7,000 properties currently facing tax foreclosure in the Treasurer’s office or held by the Land Bank.
C) Census data show that the loss of population has taken us to 170,000 households to fill 197,000 households.
D) While local employees comprise the primary market for Flint-area housing, there are only approximately 133,000 jobs in Genesee County or, in other words, 0.68 jobs per housing unit.
E) According to RealtyTrac, the county has 5,300 homes in some stage of bank foreclosure, with 3,300 homes currently ‘bank owned.’
F) The combination of 27,000 more homes than households, combined with more than 12,000 in foreclosure, had a devastating impact on property values. Consequently, in the best-case scenario, the Federal House Price Index (HPI) Flint-area homes have lost 30 percent of their value since 2005.
G) G. Luxury homes, residential investment, and commercial/industrial properties have lost even more of their value than the “conforming” homes covered by HPI.
H) Despite recent reductions in “taxable value,” more Flint area homes are taxed at a level well above their actual value.
I) The burden of those unrealistic assessments make it more difficult to place County-owned properties into private hands, while increasing the likelihood that additional owners and deed-holders will walk away from their current properties.

The next Treasurer of Genesee County will have to deal with these crises that are facing the region and must recognize the seriousness of the realities that have had an impact on property values. The treasurer must be willing to lead from a position of reality versus political expediency and acknowledge the primary purpose of private property is not to provide funds for government but to provide wealth and security for property owners.

In addition, the Treasurer must acknowledge that the rehabilitation of Land Bank properties may be a politically-expedient goal but likewise acknowledge that dollars spent on the rehabilitation of Land Bank properties that go beyond their real value are wasted. The primary focus of dealing with county-owned properties should be on demolition. When individuals, politicians and the media attack a needful policy of demolition (a.k.a. ‘shrinking’) they should note that even if all of the properties currently owned by Genesee County were to be demolished there would still remain a surplus of roughly 20,000 housing units.

The treasurer must remain conscious that the few homes subjected to tax foreclosure should be taxed at their real value. Consequently, no county-owned home should be sold or rehabilitated without prior agreement from the municipality involved that the assessed value will match its actual selling price.

Many county-owned homes are decades old. Older homes have high maintenance costs. Consequently, just because a buyer can afford to buy or finance a home this does not mean that he is able to maintain such a home. The treasurer must understand that while it may be politically expedient to convert foreclosed properties to owner-occupied residences, the maintenance costs of homeownership may actually make selling them to professional landlords much more advisable.

The crises of property value devastation and blight are not exclusive to Flint. One need only visit nearby suburbs to see blight. Genesee County as a whole is faced with a housing surplus that continues to drive down values. Consequently, both Flint and the suburbs require the attention towards preservation that Flint has uniquely received in the past.

Genesee County has no other county-wide executive that can bring to bear the resources required to address housing blight. However, whoever the next Treasurer is, he or she will have to bring together the elements of the local housing industry such as realtors, landlords, builders, lenders, and neighborhood groups, along with local units of government and get them on board with a rational policy of dealing with foreclosed homes in particular, and the valuation crisis as a whole.

Barry Simon is the publisher of Veritas, and former publisher of Housing Quarterly of mid-Michigan. He is also a former Executive Vice President of the Builders’ Association of Metropolitan Flint.