Detroit's already got this, in the form of the LiveDowntown program, targeted at employees of major downtown private employers, like DTE, BCBS, Quicken, and Compuware, and the LiveMidtown program targeted at Wayne State, DMC, and Henry Ford Health System employees. These programs are funded by a combination of the private employers involved & some of the foundations working in the area. Early evidence suggests they are making a difference in supporting the housing market in the target areas, in terms of increased occupancy, rising rental rates, etc. The Kalamazoo Promise is a variation on the theme, with a more post-hoc incentive structure.
The only thing new here is the assertion that it wouldn't actually cost that much to the city, relative to the costs of the vacant/foreclosed property.
Some cautions as far as trying this elsewhere--the scope of the foreclosure/abandonment problem in Detroit and Flint is probably well beyond the reach of something like this, and the abandoned properties there in much worse condition than anything we've got in Ypsi. This is going to work best in concentrated doses, as a "neighborhood stabilization" strategy: if the local foreclosure rate is too high, or if too large an area targeted, probably this wouldn't have as much impact--e.g. it might be less effective in Ypsilanti Township. Finally, the fiscal returns depend on having a certain level of property values and a certain tax rate in order to make the math work out: a lower tax rate or a lower average property value would reduce the fiscal benefits--the property values in River Rouge or Ecorse probably wouldn't yield much return (though might also require less incentive to trigger purchase/rehab).