Among the most ambition plans to repair, in modest part, the cratered housing market in Detroit was a deal to buy 6,365 badly damaged homes all at once. The transaction has fallen apart barely weeks after it was announced with great fanfare. Once again, Detroit cannot catch a break.

According to a report in the Detroit Free Press:

Detroit developer Herb Strather today withdrew his auction bid for over 6,000 parcels of blighted Detroit land spread across the city.

He and his Texas-based partner, Eco Solutions, offered $3.18 million for the bundle of properties last month in the Wayne County Treasurer’s annual tax-foreclosure auction

Also:

Chief Deputy Treasurer David Szymanski said a major shortcoming of their plan was a proposal to have the city of Detroit use federal money to clean up the blight. The bill for such an effort could run into the tens of millions of dollars.

“The whole idea here was whoever bought the bundle would have to demolish the properties at their expense,” said Szymanski. “It doesn’t make sense to make Detroit do the dirty work and then they get the cream of the crop” properties.

Strather’s bid was never serious, given the rules. He counted on a level of financial support that never was likely to happen.

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The effort to sell the homes almost certainly will fall back to the Detroit Land Bank’s plan to sell homes mostly one by one. The project, called “Building Detroit,” has been a failure, if its goal was to sell anything other than a tiny number of houses. Only a few are for sale, with a first bid at $1,000, between now and Thanksgiving. One by one it would take decades to go through the available inventory. The ease with which the homes can be purchased tells how hard it has been to find buyers and to sell houses in any number:

• You must be a Michigan resident, a non-Michigan resident who will live in the property after rehab, or a company or organization authorized to do business in Michigan.
• You, or any legal entity in which you have an ownership interest, cannot have unpaid delinquent property taxes on properties located in Wayne County, or have lost property to back taxes in Wayne County in the last three years.
• You, or any legal entity in which you have an ownership interest, cannot have material unresolved blight or code violations in the City of Detroit.
• You cannot have won a previous auction and then failed to make the down payment, close on the purchase, or satisfy the conditions of bringing the property up to code and having it occupied within 6 months.
• You are limited to the purchase of one property per month, and you cannot bid again until you have demonstrated a track record of satisfying the conditions of bringing the property up to code and having it occupied within 6 months. Once you have demonstrated capacity to complete rehabilitation on purchased properties and have them occupied within 6 months, you will be allowed to purchase more than one property per month.
• If you use a legal entity to purchase the property, you must have an ownership interest in it. This legal entity, and all other legal entities in which you have an ownership interest, cannot bid again until it has demonstrated a track record of satisfying the conditions of bringing the property up to code and having it occupied within 6 months. Once the purchasing entity has demonstrated capacity to complete rehabilitation on purchased properties and have them occupied within 6 months, it will be allowed to purchase more than one property per month.
• Any bidder who misrepresents themselves regarding these qualifications is subject to loss of payments and/or the property.
• In addition, the Detroit Land Bank reserves the right to exclude bidders with a history of delinquent taxes or code violations.

For bulk sales of homes, Detroit has to go back to the drawing board. And the flimsiness of Strather’s bid shows how difficult that will be.

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