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2022, May 19

Corporate partners, private investors help transform Detroit

Though still a city of contradictions, the revitalisation to Detroit’s once-desolate urban landscape represents changes unseen in four generations.

Detroit declined like no other American metropolis during the late 20th Century, but a radical capital improvement program has sparked a turnaround that is making national headlines and attracting major businesses back to its urban core.

For the first time in decades, The New York Times and several travel magazines have named Detroit a must-see destination in the US.

The overhaul of blighted swaths, construction of hundreds of new housing units, and a revitalisation of the business core have been achieved through modern capitalist constructs: corporate partnerships, a bond program for individual investors, and grants from nonprofit and for-profit entities.

Though some of these modern funding mechanisms are in play across the US, Detroit is one of only a few cities with completed projects and established rehabilitation programs in action.

Detroit’s historically underserved Black population is the major beneficiary of an ambitious 18-year, $75 billion plan that extends to 2030. Detroit Future City: The Detroit Strategic Framework Plan was born of a 2-year public process that included input from city residents, corporations, and community rehabilitation programs. Drawing from this process, a diverse team of experts dug into the details: how to make the best use of land, create jobs and financial stability for families, establish vibrant neighbourhoods, and build infrastructure at reasonable cost.

After a numerous failed city renewal efforts, the most recent in 2009, the Detroit Free Press deemed early implementation of the strategic plan as mainly positive for Detroit:

The big question we all asked when the Detroit Future City framework was published was this: Will that innovative document sit on the shelf gathering dust like numerous other studies before it, or will it actually guide Detroit's revitalization?

The answer, fans of the DFC framework have been happy to see, is closer to the latter.

The plan lays out a formula for complete urban renewal by 2030. The benchmarks are ambitious for a city still struggling to overcome its past. Detroit’s crime rate remains the second- or third-highest in the nation each year, hundreds of acres of abandoned buildings and factories blanket the urban core and the city continues to lose residents to the suburbs. Future City Detroit envisions a radically different tomorrow. Among the goals for 2030: a resurgence of population from 640,000 to 800,000, double the number of jobs available to Detroit residents, and an integrated regional public transit system.

A series of successful projects, both completed and underway, offer some real hope.

The new Parker Durand housing development is one of dozens of major revitalization projects completed and underway.

Opened in February, the $22.5 million apartment complex features 92 modern units, half of which are designated for low-income residents. Developed by a partnership between community lender Invest Detroit and the Detroit-based Roxbury Group, a real estate investment firm, the apartment community offers rental units for as little as $750 a month. The retail space at ground level is filling up fast and already features a Black-woman-owned fitness centre.

Detroit Mayor Mike Dugan had this to say at the grand opening:

"A couple of years ago, this corner was just another empty lot along an underdeveloped commercial corridor. Today, it's a gorgeous new building that will be home to Detroiters of all income levels along an attractive new city streetscape. This is how we are rebuilding our city as a place of beauty where any Detroiter can afford to live in any neighbourhood they choose.”

In an effort to kickstart other large municipal projects, Detroit is clearing thousands of blighted structures using a unique, award-winning bond program.

The bond series has been popular with individual and corporate investors, resulting in a $175 million fund for the project, which also rehabs salvageable houses to sell at auction. The demand for the rehabbed houses has so exceeded the city’s expectations that they’ve had to speed up the project.

The Detroit News wrote in 2021:

Saskia Thompson, the land bank's executive director, said Friday that officials originally planned to secure and stabilize 8,000 vacant properties for sale. But high demand has changed things. Some buyers are so eager to get their hands on properties that some of that inventory has already been sold, Thompson said: "That's the level of investment that people are willing to make right now that they weren't a few years ago," she said. "And so we're turning those houses as quickly as we can." Strickland noted the land bank is selling off about 300 homes per month.

Still, Detroit is digging itself out of 45 years of decline. A transformation from underdog to thriving metropolis has not yet been realised. Ask a random person walking down the street in your city if they want to go to Detroit, and you’re likely to get a response along the lines of, “Why would I go there?”

There may be no American urban centre now with a worse reputation than Detroit.

Michigan’s biggest city was a bustling auto manufacturing town for most of the 20th Century, making it a magnet for Blacks from the South looking for employment, housing, and upward mobility. The auto industry comprised 60% of all business in the city, allowing other sectors to flourish: stove-making, oil refining, pharmaceutical manufacturing. The explosion of jobs attracted hundreds of thousands of Black Americans during the Great Migration, between 1916 and 1970. Though the relocatees still faced racial discrimination and redlining, the number of Blacks employed in Detroit doubled during the postwar period.

It was not to last. In 1950, Detroit’s population reached a high of nearly 2 million, making it the fifth-largest city in America. But its middle-class white residents began moving to the suburbs in 1970 as the auto industry downspiraled, factories closed, and the crime began to soar. The city’s crime rate peaked in the mid-1980s. In 1985, there were 2000 violent crimes per 100,000 people in Detroit, more than 4 times the national average, according to FBI statistics. Black Detroiters found themselves stuck in an urban sinkhole they couldn’t afford to leave. By the new millennium’s second decade, Detroit’s population had dropped to 680,000 and vast tracts of the city were in a severe state of urban decay.

In 2013, the City of Detroit filed for bankruptcy. The Week magazine wrote something close to an obituary:

On Thursday, Detroit made history — and not in a good way. The heart of the U.S. auto industry and home to the Detroit Tigers, Eminem and the White Stripes, Motown, and (maybe) Jimmy Hoffa's body became the largest city ever to file for bankruptcy. In many ways, this financial crisis is 60 years in the making…. Motor City faces an uncertain future.

But even then, Detroit’s makeover was underway, a movement that has only accelerated over the last 6 years.

The Local Initiatives Support Corporation, or Detroit LISC, was founded in 1990, a part of a larger national organisation, which serves as a community development intermediary for cities. LISC combines corporate, government, and philanthropic resources to help revitalise areas in decline. Over the last few years, donations to Detroit LISC from businesses and foundations have outpaced federal dollars. Among the big-ticket investors are JP Morgan Chase, The Kresge Foundation, and Bank of America.

Two years ago, the Detroit LISC announced a $169 million neighbourhood improvement program, which includes $72 million in private grants. Housing projects slated for 2022 include: the completion of 1,000 new affordable housing units, the rehabilitation of 3,000 existing units, and a $50 million investment in the construction of additional affordable housing.

On the business and finance side: LISC has financed 3 million square feet of commercial, retail, and community space, part of a strategy to stimulate the local economy and improve economic conditions in a revitalised commercial corridor. As part of that effort, LISC plans to invest in Black-owned businesses over several years and help local families achieve greater financial literacy.

While Detroit has won numerous state and national awards for its successful and creative financing of residential and commercial properties, the city still faces tough consequences from its slide into insolvency. High taxes continue to plague residents, and suburban dwellers have not yet returned in substantial numbers. In addition, Black middle-class residents continue to move out.

Rip Rapson, president and CEO of the Kresge Foundation – which publishes an annual report tracking perceptions of Detroit – wrote in the Detroit Free Press:

The (reality) is sobering. Even accounting for the undercount of the 2020 Census, the city’s population continues to decline, including for Black middle-class households. A city long proud of its homeownership has become a city of majority renters. Despite new commercial and industrial jobs, Detroit has the second-highest official poverty rate of any big city — more than 30%. A downtown that seemed to be hitting its stride faces deep uncertainty in a post-pandemic world of flexible and remote work.

The good news: We can couple federal and state recovery dollars with municipal budget priorities and private and philanthropic capital to seize a once-in-a-generation opportunity.

A number of companies have seen the strategic plan’s early successes and gambled big money on Detroit’s hoped-for resurrection. Though tax increment financing zones (which keep property taxes low for new businesses to spark development) saturate the city, local officials hope that homeowners' tax bills will begin to drop as larger businesses open their doors.

Many businesses are revitalising old structures or building on footprint of of demolished factories.

GM recently opened Factory ZERO in Detroit, a $2.2 billion plant that will produce electric vehicles. It’s housed in a previously abandoned factory. The automaker hosted a local job fair to fill 500 jobs at the plant, which eventually will employ 2,200 people.

Ford made big headlines when it bought the abandoned Michigan Central Station in 2018. The 109-year-old structure, which was very nearly demolished by the city in 2013, is undergoing a massive renovation and will serve as offices for Ford, which plans to relocate 5,000 workers to the space, according to the Detroit Free Press. The renovation is slated for completion in 2023.

Midwest developer NorthPoint is constructing a new 684,000-square-foot manufacturing centre on the site of the old Cadillac Stamping plant, vacant since the 1980s. The development brings with it 450 jobs.

Though still a city of contradictions, the revitalisation to Detroit’s once-desolate urban landscape represents changes unseen in four generations. They’re happening fast. One of the promises of the strategic plan is continuous community involvement in the planning and implementation processes. Taylin Hodges plans to hold city officials to that.

The 18-year-old sits on the youth committee of the Warrendale-Cody Rouge neighbourhood revitalsation project. Hodges and other residents have spent a year sketching out $7.4 million in improvements, such as new playgrounds, a revived business centre, streetscape beautification and housing stabilisation.

Hodges told the Detroit News:

“Whenever I used to look around and see different things being made, I used to think it’s up to the city, the community doesn’t have a decision most of the time, but knowing I have a chance to make an impact, especially as young as I am, it’s awesome," she said. "It’s really amazing.”

Photo by Liz Weddon

Tamara Kerrill Field’s writing and commentary on the intersection of race, politics and socioeconomics has been featured in USNews & World Report, the Chicago Tribune, NPR, PBS NewsHour, and other outlets. She lives in Portland, ME.

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