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Detroit real estate developers rebuild city amid budget shortfalls

A new wave of development is ripping through downtown Detroit.

“Walking around Detroit in 2008 or 2009 is not the same as walking around in 2022,” said Ramy Habib, a local entrepreneur. “It is absolutely magnificent what happened throughout those 15 years.”

Between 2010 and 2019, just 708 new housing structures went up in the city of Detroit, according to the Southeast Michigan Council of Governments.

Much of the new construction traces back to the philanthropic wings of large local businesses. For example, Ford Motor is nearing completion of a 30-acre mixed-used development at Michigan Central Station. The station sat abandoned for years as the city fell into bankruptcy.

Detroit’s decline into insolvency formed amid 20th century globalization in the auto industry, according to economists. The city’s population fell from 1.8 million to 639,000 in the most recent but controversial count by the US Census. “With the population leaving, with the infrastructure staying in place, it meant strains on the city. Cumulatively, they started to mount over time,” said Raymond Owens III, a former senior economist at the Federal Reserve Bank of Richmond.

The 2007-08 Great Recession left another round of scars on the city as scores of homes fell into foreclosure. The US Treasury Department has since funded the removal of 15,000 blighted structures in the city. “A lot of Black people are leaving the city. So sometimes that identity can change and shift in certain communities,” said Alphonso Carlton Jr, a lifelong Detroit resident.

Local leaders have used tax and spending policies to advance economic development downtown. In July 2022, the Detroit City Council finalized a tax abatement for the real estate developer Bedrock to finance the $1.4 billion Hudson’s site project. The abatement could be worth up to $60 million over its 10-year span. Bedrock is in a family of companies controlled by billionaire investor Dan Gilbert, who moved several of his businesses from him downtown in 2010.

Bedrock told CNBC that decision was consistent with the council’s handling of other major developments, due to high local tax rates. One local analysis suggests that in 2020, Detroit’s effective property tax rate on homes was more than double the national average. Detroit’s new tax, spending and placemaking policies have drawn the interests of bond investors in recent years, providing another source of revenue for the local government.

Watch the video above to learn more about Detroit’s escape from bankruptcy.

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What Pro-Lifers Should Learn From Kansas

Peggy Noonan is an opinion columnist at the Wall Street Journal where her column, “Declarations,” has run since 2000.

She was awarded the Pulitzer Prize for Commentary in 2017. A political analyst for NBC News, she is the author of nine books on American politics, history and culture, from her most recent, “The Time of Our Lives,” to her first, “What I Saw at the Revolution.” She is one of ten historians and writers who contributed essays on the American presidency for the book, “Character Above All.” Noonan was a special assistant and speechwriter for President Ronald Reagan. In 2010 she was given the Award for Media Excellence by the living recipients of the Congressional Medal of Honor; the following year she was chosen as Columnist of the Year by The Week. She has been a fellow at Harvard University’s Institute of Politics, and has taught in the history department at Yale University.

Before entering the Reagan White House, Noonan was a producer and writer at CBS News in New York, and an adjunct professor of Journalism at New York University. She was born in Brooklyn, New York and grew up there, in Massapequa Park, Long Island, and in Rutherford, New Jersey. She is a graduate of Fairleigh Dickinson University in Rutherford. She lives in New York City. In November, 2016 she was named one of the city’s Literary Lions by the New York Public Library.

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Federal emergency savings proposals may also increase retirement funding

Nirunya Juntoomma | istock | Getty Images

It’s no secret that households with sufficient emergency savings are more the exception than the norm.

Two proposals in the Senate aim to change that. And, experts say, tackling the problem could lend itself to workers saving more for their golden years.

“One of the best ways to protect retirement savings is to help families more effectively weather short-term emergency savings needs,” said Angela Antonelli, executive director of Georgetown University’s Center for Retirement Initiatives.

Pandemic showed the need for savings

The Covid-19 pandemic shone a light on the many workers who were unprepared for the financial struggles that ensued from suddenly being without a job and income. While generous government aid aimed to keep families afloat as the economy righted itself, Americans now find themselves battling inflation and rising interest rates that are making both buying and borrowing more expensive.

The overall share of Americans who are either very comfortable (13%) or somewhat comfortable (29%) with their emergency savings dropped to 42% in June from 54% two years ago, according to a recent Bankrate report.

While some companies are offering emergency savings accounts to employees, the Senate proposals come with certain parameters and are both linked to 401(k) plans.

The proposals were approved in separate committees in late June as part of that chamber’s evolving version of the so-called Secure Act 2.0. The legislation would build on the original Secure Act of 2019 by making additional changes to the US retirement system in an effort to increase the ranks of savers and the amount they’re putting away for their post-working years.

The first proposal being considered would allow companies to automatically enroll their employees in emergency savings accounts, at 3% of pay, that could be accessed at least once a month. Workers would be able to save up to $2,500 in the account, and any excess contributions would automatically go to a linked 401(k) plan account at the company.

The other Senate proposal takes a different approach: It would let workers withdraw up to $1,000 from their 401(k) or individual retirement account to cover emergency expenses without having to pay the typical 10% tax penalty for early withdrawal if they are under age 59½ .

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However, a separate account would be the preferable of the two so that people would be less likely to make withdrawals from their 401(k), Antonelli said.

“It helps prevent leakage from retirement savings,” she said.

However, for workers who have access to a 401(k) or similar workplace plan but don’t participate, having emergency funds available could spur them to enroll in their company’s retirement plan, said Leigh Phillips, president and CEO of SaverLife, a nonprofit focused on helping households build savings.

“One of the big things that prevents people participating in long-term savings is a lack of short-term liquidity for emergencies,” Phillips said.

One of the big things that prevents people participating in long-term savings is a lack of short-term liquidity for emergencies.

leigh phillips

President and CEO of SaverLife

In traditional 401(k) plans, where contributions are made pre-tax, the penalty for withdrawing from an account comes with a 10% tax penalty if the person is under age 59½ (unless they meet an exception allowed by the plan).

“Having money locked away that you can’t touch is alarming to some people,” Phillips said.

That concern is addressed in state-facilitated retirement programs, which generally auto-enroll workers — those without access to a workplace plan — into Roth IRAs (individuals can opt out of enrollment if they want).

Why Roth accounts can give peace of mind

Roth accounts come with no upfront tax break for contributions as traditional IRAs do, but you generally can reclaim your contributions at any time without an early-withdrawal penalty.

The Roth structure “offers greater flexibility and more conditions that allow someone to tap those savings if they need to,” Antonelli said.

Altogether, 46 states have either implemented or considered legislation since 2012 to create retirement savings initiatives to reach workers without a plan at work. More than $476 million is collectively invested through these plans, according to Antonelli’s organization.

Although there are some minor differences among the state-run programs, the general idea is that employees are automatically enrolled in a Roth IRA through a payroll deduction (starting around 3% or 5%) unless they opt out.

It’s uncertain if either of the Senate’s emergency-savings proposals would make it into that chamber’s final version of the Secure Act 2.0, or whether an approved provision would look exactly like what’s been proposed.

The House passed its version of the Secure Act 2.0 in March. It’s uncertain when the Senate may revisit its rendition. Assuming senators give their approval, differences between their legislation and the House bill would need to be worked out before a final version could be fully approved by Congress.

If it doesn’t happen this year, the legislative process would start over in a future Congress.

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