Excitement spread across the city when Detroit developers Greg Jackson and Richard Hosey announced in early March a $135 million plan to reinvent the former Fisher Body Plant.
That excitement to turn the site into affordable and market-rate housing and retail wasn’t just from residents. Other Black developers say working on the 600,000-square-foot former auto plant on Hastings Street is a dream project for their hometown and has the potential to bring more dollars to the area.
“Seeing that these things are possible is a big deal to the entire city,” Hosey told BridgeDetroit who also said the project is a manifestation of Black developers’ ability to take on large-scale developments.
Related:
- The high cost of affordable housing in Detroit
- How rent is determined for Detroit’s affordable housing
- Public-private partnerships fueling Detroit’s neighborhood comebacks
The plant, empty for 33 years, first belonged to one of the original auto manufacturing companies in the city before being swallowed by General Motors Co. The project, to include nearly 500 rental apartments, parking, coworking spaces and retail, is regarded one of the largest Black-led developments, in size and in dollars invested, in the country.
Getting deep-pocket investors to understand the value of Detroit is an important, yet tricky, maneuver that local government and developers have been entangled in for years. Everyone says they want to see continued investment in Detroit while maintaining and creating affordability, but it’s not easily done. Financial institutions have shown a willingness to invest in downtown and midtown projects that cater to high earning professionals but longtime residents question their place in those spaces.
As the city changes, Black developers who grew up in Detroit or have an attachment to the city have steadfastly worked to preserve, protect, and produce accessible spaces. To them, the development needs in Detroit are more than affordable housing. It’s also about affordable food options, culturally relevant spaces, transportation, daycare and other amenities within neighborhoods.
In his 2022 State of the City Address, Detroit Mayor Mike Duggan highlighted 33 Black developers in Detroit. Together, they have invested over $500 million in housing, mixed-use and commercial spaces across Detroit.
“Black developers with Black ownership are rebuilding the city,” Duggan said during the March 9 address.
Development is ‘viable in Detroit’
Black-led development in Detroit isn’t new, but more dollars are being invested with Black developers at the helm. Black developers were willing to invest in the city when no one else would. Today, Detroit’s Black developers say creative strategy, intentional investment and collaborative partnership will further Detroit long-term.
Roderick Hardamon, a long-time Detroiter and CEO of URGE Development Group, said the Fisher project is evidence that “we can’t undersell the signal that says developments of significant scale are viable in Detroit.”
Hardamon said his firm’s goal is to take a long-term view to place-keeping in the Motor City. His company honors the historical legacy and culture of a community within their projects.
Two of Hardamon’s current projects are an apartment building on Grand River and an apartment building on West McNichols. Both are located within the city of Detroit’s Strategic Neighborhood Fund areas, which are now part of a larger 10 neighborhood investment strategy, and they will include affordable housing.
Finding a location for a development can be difficult. Hardamon said he could name several Detroit neighborhoods he’d like to work in, but it has to make sense for the community and be done in a way that encourages future and ongoing investment. Hardamon says some areas “just need a good cheerleader” to get the attention of firms with deeper pockets.
“By making these early investments in communities and neighborhoods, the benefits (go) to the local residents who are already there (and) to the businesses, it’s exponential,” he said.
Collective, intentional impact
Hosey said he was drawn to the Fisher project because others said it couldn’t be done. He said he’s seen smaller cities, like Richmond, Calif.; New Orleans, La.; and Durham, N.C., tackle similar redevelopments and knew that transitioning the body plant in Detroit was possible.
He grew up in Detroit and lived in other cities over the years working on development projects across the United States. Detroit, he said, is the only city he has seen that has this many Black developers working on projects with collective, intentional impact.
“It’s a very special thing to have this larger group, this diverse group, of this many Black people actually doing it (development),” he said.
In the past, Hosey said he has seen one or two Black developers who were able to access large-scale developments in Detroit. That’s changing.
“Anyone who truly loves the city, I would expect that (development project) to be expressed as it really takes into account the impact on current residents, longtime residents, and doing the type of developments that people throughout the city will be excited about,” Hosey said.
In the past, few Black developers were able to secure the financing necessary to work on large-scale projects in Detroit. Banks would not increase loan amounts for those aspiring to work on larger projects, he said.
Before becoming a developer, Hosey worked for banks in commercial real estate lending. He said a developer can ask to borrow $50 million, but their financial history needs to show that the individual can pay back funds if the development doesn’t go as expected.
“In terms of disparate impact in my banking career, the conversation becomes that someone needs a stronger guarantor, a friend or family member, or someone who was wealthier to sign with them,” Hosey said. “That conversation was always with white males.”
A high bar
Larger banks in Detroit have recently created programs to expand opportunities for Black developers, according to Hosey. Institutions like JPMorgan Chase, Fifth Third Bank, and Flagstar Bank have better relationships with Black developers than some others. He also noted that mission focused investors that leverage philanthropic dollars, like the Detroit Development Fund, Capital Impact Partners, and Invest Detroit also increased access to opportunity.
Those who have strong relationships with banks and have a career history proving financial institutions and wealthy guarantors have faith in their projects, are more likely to receive larger loans in Detroit, Hosey said.
Hardamon said his development group is able to tackle multiple projects at once with the help of philanthropic dollars. However, access to capital continues to be the biggest barrier to Black developers in Detroit, he said.
It can be difficult for smaller-scale developers to commit to multi-million dollar projects every year with at least 10% down in cash for each property.
“That’s money that you don’t need to eat off of, that and naturally your mortgage, it’s not your kids’ tuition,” he said. “It’s additional side cash, right. That’s a very high bar. Especially given the historical trends and barriers to African Americans.”
That’s where organizations like Invest Detroit Ventures and philanthropists have contributed strategic planning and dollars while the local government offered land for “community revitalization.” Over the years, state and federal governments have contributed matching funds to support expanded affordable housing, streetscapes and public park options.
Any developer with cash can purchase land or property, submit plans for development and create something new. In cities like Detroit, where property has low cash value, investors have been able to take advantage and out-buy local Black developers.
Invest Detroit partnered with the city in 2016 to launch the Strategic Neighborhood Fund (SNF), which made targeted investments in three Detroit neighborhoods. SNF expanded from three neighborhoods to 10 in 2018 and Invest Detroit began requesting proposals to develop land before bigger investors had a chance to jump on the opportunity and drive up prices.
At Invest Detroit, a lender and investment company focused on economic growth in Metro Detroit, employees say they are interested in supporting neighborhoods with amenities that residents want to see.
Jermaine Ruffin, vice president of Invest Detroit’s neighborhoods division, said it’s important for residents to have the opportunity to shape their own neighborhoods. He said residents should be privy to projects being proposed and have a voice to determine whether they will support those investments.
“Wherever we’re going and trying to implement a business or start a business, if the community has not had a strategic neighborhood planning process from the city, we’re not able to go into that neighborhood. It just doesn’t present itself in a favorable way for investing,” Ruffin said.
Invest Detroit has deployed almost $440 million in the city since its inception in 1995 and leveraged $2.8 billion, according to its 2020 annual report. Most major banks are unwilling to invest in commercial properties within areas that have had limited growth. But Invest Detroit’s mission is based on “revitalizing neighborhoods” so they can offer lower cost capital to help developers be more successful, said Ruffin.
An equitable process
Could Black developers have made significant investments in Detroit neighborhoods without the input of others? Probably. But on a much slower timeframe, said Chase Cantrell, executive director of Building Community Value, a nonprofit focused on developments in underserved neighborhoods.
“It would have been much, much more difficult (without the RFP process),” Cantrell said.
Cantrell lives and primarily works within Detroit’s Bagley neighborhood. One of his developments with Jason Headen, a fellow Detroiter who launched the Detroit Housing Network and previously worked for Bedrock Detroit and Rocket Mortgage, is an 8,000-square-foot building at 7400 W. McNichols. A Black-owned brewery scheduled to open later this year will be the project’s anchor tenant. Cantrell said they responded to an Invest Detroit request for proposals to do the development.
Cantrell says the practice is creating equity for Black development, but he’s not sure if the existing process is as equitable as it could be.
His $3.4 million development on Detroit’s northwest side was predetermined and hits a lower price-point than properties in the highest-earning parts of Detroit — like Corktown or downtown.
“It’s not like Jason and I just went out and said ‘Hey, we really love this property, want to buy it.’ No, someone else decided that this would be a property that investors would acquire and that they would RFP it and try to get Black developers,” he said. “So like, there’s a system, and there’s a process.”
To the City of Detroit’s credit, he said, officials are trying to ensure Black developers are part of the conversation.
The City has worked with investors like the Detroit Development Corp., LISC, and Invest Detroit to siphon off pieces of land that have been used for development RFPs.
Detroit also has created RFPs to support Black development and prioritizes working with local and women-owned businesses.
The city’s director of planning and development Katy Trudeau said the city’s involvement is “being overstated a little,” as there is a lot of development that is happening organically in city neighborhoods.
Though he’s critical of the process, Cantrell said he does think it will work. He’s also glad to be able to develop more properties in his neighborhood. Investors are creating “micro-corridors” in areas that they’ve determined need growth and the process of soliciting proposals has given Black developers greater opportunity to be a part of it.
“Most of the values on our corridors are very low, but if you can concentrate resources, concentrate money, you can actually create a more robust market in a small area. And hopefully, we don’t know yet, but the hope is that it’ll spill out,” Cantrell said.
The importance of lived experience
Not every Black developer in Detroit is building projects with assistance through the City’s SNF program.
Cecily King is expected to complete 16 townhomes in Brush Park next summer. She said she chose the arena-laden neighborhood because she didn’t see a lot of Black ownership and the neighborhood’s appreciation rate has been significant over the last few years. According to King, changing the landscape of Brush Park is a priority.
“I could sit in a restaurant with my back to the wall and know I’m the only Black person sitting there. And in a majority Black city that’s really problematic,” she said. “I think the neighborhoods that are in that same area often end up looking very homogeneous and not in the way of the rest of Detroit.”
A portion of the two-bedroom, two-bathroom townhomes will be designated for first-time homebuyers and will be sold at an affordable rate. While her Brush Park project will intentionally bring first-time homebuyers to the neighborhood, King says there are still many issues of affordability within Detroit’s development plans. She pointed to how long it has taken for a Target to be built on the eastside where residents are seeking access to everyday needs. Even on her own project, only a few townhomes can be sold at a lower rate due to the financial risk.
Lack of access to capital continues to hinder Detroit’s Black developers through the ability to attain low interest rates, loans, and loan fees for new projects.
King said there are many more women developers who do not receive recognition for their work in Detroit. They have contributed to creating affordable family housing in the city rather than large-scale apartments. King says she wants to see more Black women participating in multi-million dollar developments before they are excluded from Detroit’s future.
As Detroit changes, Black developers contest they are the most qualified people to do the work.
“The barrier is about experience,” Hardamon said. “Most of the Black developers you’re going to talk to are overqualified, overly educated, overly experienced, overly everything.”
Lived experience is important to them, too.
“We understand both history and context, right, like we remember what these quarters used to be,” said Cantrell. “We live in the community so we hear what our neighbors say and oftentimes our neighbors are also our family members – we’re closest to the issue.”