When Danny Dill and Mel Tillis wrote "Detroit City" back in 1963, it was a song about making cars by day and visiting bars at night. Back then, the thought of farming centered on memories of and yearnings for the cotton fields back home. Now there are far fewer jobs making cars with the unemployment rate hovering near 18%, and cotton won't grow in Michigan, but high-value crops, like hardwood trees, just might begin the process of restoring hope through farming in Detroit city.
Real estate transactions in the old city of Detroit are few and far between because there is almost no market at any price. Home values have fallen 60% as the population declined and as a result of the real estate market collapse in 2008. Twice each year, however, buying activity picks up when the Wayne County Tax Foreclosure Auction occurs. In 2012, 20,658 parcels went on the block in the auction, most of them inside Detroit city. In the end, 11,972 sold and all of the remaining 8,686 properties could have been purchased for as little as $500 each by a single purchaser - no questions asked. No one in the city - politicians, communal farms, unconcerned citizens - nobody seems to care. This year, some 43,000 properties are facing foreclosure auction and there is almost no press on the subject.
But when a businessman proposes to buy up block after block of abandoned property to be used in a for-profit enterprise, the people that brought Detroit to its knees are now trying to keep it there. Bureaucrats and people looking for another handout, somehow believe that public land belongs to them and so they are screaming "Land Grab!"
In 2009, a wealthy business owner and Detroit resident named John Hantz, contemplated a solution to begin the process of economic recovery in the Motor City. He relates his epiphany very clearly:
I’ve lived in Detroit for 20 years. To get to work, I leave the city and drive to the suburbs—the opposite of what most people do. I would take back roads and I’d look out the window and I’d tell myself, Something has to happen. Something has to change. One day I was sitting at a traffic light, thinking this through from an economics point of view, and I thought, What’s our problem? Why doesn’t it get better? Well, we have multiple problems, but one comes down to real estate. We don’t have scarcity. What I mean is, there’s no reason to buy real estate in Detroit—every year, it just gets cheaper. We’ve gone from 2 million people to 800,000. There are over 200,000 abandoned parcels of land and—by debatable estimates—30,000 acres of abandoned property. We need to create scarcity, because until we get a stabilized market, there’s no reason for entrepreneurs or other people to start buying. I thought, What could do that in a positive way? What’s a development that people would want to be associated with? And that’s when I came up with a farm. People often think you have to have a big solution to a big problem—why not keep it simple and start with a simple solution?Provided that the City Council ceases its delaying tactics and authorizes some parcels to be purchased as previously agreed, the private venture of Hantz Group will proceed as a smaller version of its original project, now involving 1956 parcels covering 170 acres, where some 70,000 hardwood tree seedlings will be planted. Hantz Woodlands is to pay $300 per lot and for some tax deferrals, agrees to tear down between 100 and 200 dangerous and abandoned houses. When the project is finished, this land and will go back on the tax roles, contributing $60,000 annually to city coffers. Oddly, unless proposed changes to Detroit's local land use regulations go through, however, the trees will not be permitted to be harvested for resale.
But harvesting trees will be a long way into the future. So exactly why has Mr. Hantz persisted through the bureaucratic delays that have now lasted three years and why has he taken the abuse and been lied about by local food commune liberals, MoveOn.org, Huffpo columnists and city bureaucrats? Does his philanthropy trump his capitalistic tendencies? Not likely, according to Detroit-born freelance writer Minni Foreman:
Money does grow on trees. In fact, with the gift foresight and some start-up funds, it can grow on just about anything.
Don’t take it from me. Just ask Warren Buffet, the third richest person in world who made his fortune based on money growing speculation. He’ll tell you something that all investors know, but perhaps haven’t fully mastered: “The lower things go, the more I buy. We are in the business of buying," Buffet told Fortune magazine in an interview. Well, here in the Tha D, “things” have pretty much bottomed out.
And unless Detroit is the one city that defies history, there’s nowhere to go but up, up, up. You don’t have to be a soothsayer to see the signs. It’s a slow, slow uptick, but it’s happening. It’s not rocket science but it’s a science of analysis: The people who make the big bucks are the ones who see them coming before they land.
John Hantz, the successful investor who plans to buy up a big swath of Detroit for cheap, is one of them. He knows that in 40 years “things”—in this case city land—won’t be dished out at fire sale prices. No. The early bird gets the worm and it’s just a rule of investing.
Hantz has pitched this proposal as a philanthropic act, claiming that he only wants to spend millions on the area surrounding his Indian Village home simply to make Detroit a better place to live; simply because Detroiters deserve better, that more research has to be done on using urban land for agricultural purposes. We can operate under the guise of philanthropy or we can just call it what it is. I prefer the latter. So let’s be real: this is a business investment.
In Detroit there is an element of class warfare, a rich v. poor battle raging on under and at the surface and often justly so presenting a grand clash of idealism and realism given the country and society we live in. Rich people can do stuff that poor people can’t.
The plan is to demolish abandoned buildings and clean up the land which makes up about 140 contiguous acres and plant thousands of hardwood trees. Trees that will take about 40 years to get to the point to where they could be harvested for lumber. Right about the time land values in Detroit will be going up.
So why are we participating in this charade? We all know what the real intentions are: to invest in the land, buy low, sell high or develop and sell even higher. From an economic standpoint this is a great thing. But lets call it what it is and not insult our intelligence. If the city council approves it, approve it for what it is and not for what it’s pitched to be. History can be the guide here.
Look back to New York in the 80s, in the Alphabet City neighborhood. It was a total slum. Now? Million dollar apartments abound there. That was 30 years ago. Look at what happened in Washington DC, in Berlin, Germany. It's the history of cities.
In 30 years it will be happening in Detroit. It’s happening now. Dan Gilbert knows it, John Hantz knows it and the ones who don’t will be crusty visionless naysayers left in the dust. Detroit is coming around, shaping to be an investor's dream. Time and money is all it takes.But Crain's Detroit Business reports that John Hartz will likely never see a personal return on this investment:
The realities of the Hantz timber operation make it a long-term play in Detroit. Because the hardwoods are planted so close together, they will tend not to grow branches near the ground and produce wood logs with fewer knots when harvested. Some trees will fall or be harvested as they lose access to sunlight amid dense growth, but most trees will take more than 50 years to reach their full height. That means the full return on a hardwood investment would belong largely to future generations.
"This would be a legacy investment for John Hantz. But there isn't any debt involved because it's a cash-funded business," [Hantz Woodland President Mike] Score said. "No bank would get behind it, but it doesn't have a lot of operating costs, it yields a benefit to the community and he (Hantz) doesn't have to worry about the investment being able to make him rich, because he already is."