By Will Greenberg, Daily Staff Reporter
Published June 4, 2014
This is a piece for the Detroit Beat, a new blog at The Daily. Look for the Detroit Beat link on our website in the fall.
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It would be easy to think most people wouldn’t put their money on a place going through bankruptcy, declining population and massive blight problem. However, optimism for Detroit refuses to quit as members of both the private and public sector see the city as a good bet for investors.
Since declaring bankruptcy last summer, Detroit has been on the national stage as economic experts, media outlets and the residents themselves wondered what the future would hold for the city. These days though, many around the city see through the struggles and find a wealth of opportunity.
People like QuickenLoans founder Dan Gilbert have already been heavy contributors to the rebuilding efforts of the city, working toward creating a stable economy and fully livable town. Just last month, JP Morgan Chase announced a $100 million investment into the city. The money is divided among several categories, the largest of which providing $50 million to community development and $25 million to addressing the city’s blight situation. The full plan illustrates a broad initiative banking on a prosperous future for the city.
“We believe in Detroit,” John Carter, president of the JP Morgan Chase Michigan Middle Market, said. Carter said the money is intended to serve the city in the long term and is part of the company’s effort to be a “good, corporate citizen.”
“For us, the return truthfully is down the line,” he added. “It will be measured by an improved Detroit. We’ll have more residents, more businesses, more consumers and, as a bank, ultimately we’re going to benefit in that environment.”
Carter said much of the money is philanthropic, not an investment in the sense of an expected dollar amount. As for the companies that can’t afford to wait for a full city recovery, Carter said there’s plenty to be excited about in Detroit.
In fact, the distribution of the $100 million touches upon most all of the major areas Detroit has to be excited about. There are $12.5 million going to strengthening the workforce and job training, $7 million going to small businesses and $5.5 million towards future economic growth, all areas the city is working toward bolstering in the effort to create long-term economic stability.
“As more people become aware of what’s going on in Detroit — and I’m talking now about the other fund organizations that are outside of Michigan, outside of the United States — we think those people will want to deploy capital here,” Carter said. “The logic would be that this is the ground-floor of something that has the potential for other investors, who aren’t doing it as philanthropy as we are, but for other investors to look at this as a good place to invest.”
Dan Kinkead, director of projects for Detroit Future City, agreed that Detroit is revitalizing. Detroit Future City is a non-for profit that launched its strategic framework plan in January, 2013 and has been working closely with the city towards the revitalization efforts.
“You feel it on the ground right now in the city,” Kinkead said. “You get a sense that things are changing. There is a sense of optimism that I haven’t felt here in the ten years since I’ve been working here.”
Kinkead said part of what makes Detroit so appealing is the relative low risk of failure of investors, considering the inexpensive real estate, business-friendly atmosphere and improving infrastructure. He said the city could serve somewhat as a testing ground for new ideas, comparing the Industrial Revolution, with business owners and entrepreneurs starting to re-think the framework of the economy.
So what would an economically healthy Detroit look like down the line? Ideally, it would exhibit a diversity of strong industries in areas like auto, medicine, education and technology. The expectation would the mid-town and downtown development would lead the rest of the city.
That’s not to say the neighborhoods have been forgotten. Stephanie Young, district manager for Detroit’s first district, said the city has been making significant efforts to improve all aspects of the city as best it can. Young commended the mayor’s Building Detroit project which auctions off unused houses to new residents as well as investors rather than demolish all the buildings.
Young echoed the sentiments of Carter and Kinkead, saying a strong city will rely heavily on the creation of more jobs and small businesses. She said the community is also working on attracting retail, like the new Meijer grocery store in a city that lacks many big-box stores suburbanites take for granted.
Still, despite the wealth of optimism, Detroit likely has a long way to go and will need plenty of money to recover from decades of blight and political mismanagement.
John Mogk, a law professor at Wayne State University, has worked around Detroit for years and has advised the state and city on housing and other initiatives. Mogk warned that neighborhoods in extensive require particular rebuilding, requiring much riskier investments than what's seen mid- and downtown.
“Most of the other parts of the city are still in decline so you can’t predict when they’ll stabilize and reverse course,” he said. “The future of mid-town and downtown is pretty much on the upswing and I think that’s reasonably predictable.”
Correction appended: A previous version of this article did not mention that Building Detroit is primarily geared toward new residents, not simply outside investors.