Serving to Guarantee Minority Builders Take part in Detroit’s Financial Comeback
Detroit, 2009. National and international headlines proclaimed the demise of a once great city, from its economy (“How Detroit Went Bottom-Up”) to the depletion of its population (“How Detroit, the Motor City, Turned into a Ghost Town”) to its housing market (“How Low Can Homes Go? Try $0”) and its crumbling infrastructure (“Feral Detroit: Nature is Reclaiming the Motor City”). The city would file for bankruptcy four years later. “For decades it seemed like everything had been taken from us,” said Detroit Mayor Mike Duggan. “Companies were moving out, car factories were moving out, gas stations and movie theaters were moving out, and people were moving out.”
The city’s black-majority neighborhoods were plagued by vacancy rates, some 70,000 in number, but Detroit’s handful of black developers failed to find appeal. “Two to four of us tried it,” says Clifford Brown, a longtime real estate entrepreneur and Detroit resident, “and all the deals we looked at were partnerships. We did not drive the developments ourselves and were unable to secure access to capital.”
In a city where 85 percent of the population identified as Black, there was an abundance of talented Black professionals—real estate agents, architects, lawyers, bankers, urban planners, carpenters, electricians, and plumbers. Nevertheless, there were hardly any black developers. This was and is consistent with the rest of the United States, where only 5 percent of real estate developers identify as Black.
The biggest barrier to entry for black real estate entrepreneurs has always been lack of access to capital. This is a problem for numerous reasons. It’s widening the racial wealth divide for another generation of young Black men and women. In an increasingly heated real estate market, it opens the city’s communities to development by outsiders who have no knowledge, loyalty, or love for them. After all, it means many of the people who believed in Detroit during its toughest years may not share in the fruits of its comeback. In his State of the City 2022 address, Mayor Duggan squarely asked, “Will Black entrepreneurs benefit fairly from Detroit’s recovery?”
To ensure this, JPMorgan Chase works closely with local Community Development Financial Institutions (CDFIs), including Capital Impact Partners and Invest Detroit. These partnerships provide the resources, expertise and inspiration to help a new generation of black developers rebuild Detroit.
In 2014, JPMorgan Chase made a landmark $100 million pledge (which has since doubled to $200 million) to fund the city’s economic recovery. But first, it listened to Detroiters—community partners, civic leaders, local experts, and residents. “We learned early on the importance of equity within the community – from allowing residents to build their own neighborhoods to supporting developers who reflect the city’s population,” said Pierre Batton, program officer for global philanthropy at JPMorgan Chase, based in Detroit.
Today, Detroit’s residential and commercial districts are gradually coming back to life. What’s happening with the help of Capital Impact and Invest Detroit is the opposite of gentrification: developers—increasingly black developers—are revitalizing communities, not for wealthy newcomers, but for the people who live in them.
To support these developers, Capital Impact partnered with JPMorgan Chase to launch the Equitable Development Initiative (EDI), an annual training program, in 2018. EDI’s mentors and advisors, including Clifford Brown, educate BIPOC developers through the early and mid-career stages of project development and finance, help demystify the market for them and, crucially, give them access to low-cost after graduation to raise capital. Capital Impact leveraged JPMorgan Chase’s support of more than $32.5 million in dedicated loan funds for Capital Impact’s national program. In 2017, as part of its ongoing investments in Detroit’s recovery, JPMorgan Chase committed $500,000 to the EDI over a two-year period. The company continues to support the program, not only in Detroit, but also in the metro areas to which it has expanded: Washington, DC, San Francisco and Dallas.
In four years, more than 200 developers have been trained by EDI or are currently involved in its programming. The Detroit program alone has more than 100 alumni.
“We’re already seeing graduates progressing and doing their second, third, and fourth projects,” says Batton.
Graduates of the program bring specific values and goals to their ventures. “They not only want to grow as developers,” says Jeff Mosley, Capital Impact’s national program director for EDI, “but also create housing that meets the needs of their communities – so that their work has social relevance. ”
This is evident in EDI alumnus Marcus Jones’ $1.3 million development project, funded by Invest Detroit and JPMorgan Chase through the Strategic Neighborhood Fund, in a long-abandoned commercial building in the borough of Livernois-McNichols.
The project Jones undertook with his partner and Detroit roommate, Akunna Olumba, shows exactly why local developers are so important to Detroit’s recovery. The construction team was more than 98 percent based in Detroit. The subcontractors—welders, plumbers, and electricians—were 90 percent black. The 6,000-square-foot restaurant, Detroit Pizza Bar, opened in 2022 and 97 percent of its employees live within a two-mile radius. “We knew that not having a car, license or insurance to drive often prevents people from accessing a quality job,” says Jones.
The restaurant’s energy costs are partially offset by solar panels and high-efficiency appliances; Operating costs are partially offset by tax breaks from the City of Detroit. “Invest Detroit really believed in us,” says Jones, “and they convinced the city to have our back as well.” The rooftop overlooks a new $7 million overhaul of the McNichols streetscape.
The picture in Detroit is brightening. The city’s housing market is stabilizing, with more than 50 percent of units owner-occupied, up 7 percent from 2019, and black developers like Brown and Jones are playing an increasingly prominent role. Near the end of his State of the City 2022 address, Mayor Duggan celebrated 33 black developers in Detroit who have collectively invested more than $500 million in residential, mixed-use and commercial properties across the city. “Black developers with black ownership are rebuilding this city,” he explained.
To date, Clifford Brown has completed projects in four different Detroit neighborhoods and continues to invest in real estate across the city. He recently broke ground on the Brooke on Bagley, a $23 million development that will include 78 apartments — 80 percent of which are designated rent-restricted — and 2,105 square feet of retail space. “I would argue that Detroit is probably the best place in the US for color developers to start,” he says. “Obviously there are amazing opportunities elsewhere. The challenge is that you don’t have Capital Impact and Invest Detroit. I spent six months trying to make a $23 million deal work. I called Capital Impact Partners and within two weeks they said, ‘We’re going to be a senior lender.’”
In an increasingly affluent Detroit, there are significantly more black real estate entrepreneurs than in 2009, and there is a growing training and funding infrastructure to help them succeed. “We’re creating equitable and inclusive opportunities that didn’t exist before for black developers, architects, designers and craftspeople,” Batton says. “Now we will just keep gaining momentum.