THE D’S NEXT DECADE | EXPANDING THE RENAISSANCE
A model for turnaround beyond downtown? $121 million in rehab projects take shape in Jefferson-Chalmers
BY CHAD LIVENGOOD
The inside of the once ornate Vanity Ballroom along East Jefferson Avenue looks like another Detroit ruin. Very little of the Aztec-inspired Art Deco interior architecture remains intact. Chunks of mortar rubble cover the floors and sunlight pours into the second-floor ballroom from an exposed roof, where trees are growing. A floating maple wood dance floor that once hosted jazz singers like Cab Calloway and Duke Ellington is long gone. But behind the crumbling concrete columns is reinforced steel — the kind that has kept much larger and older iconic buildings like Michigan Central Station and the Packard plant standing all of these decades later after their abandonment. To developer Derric Scott, that steel structure is going to give the Vanity Ballroom another chance at life, nearly a century after it opened on the eve of the 1929 stock market crash. “It’s allowed the building to be preserved a lot longer than it would have under other conditions,” said Scott, CEO of the East Jefferson Development Corp. The $14 million resurrection of the long-crumbling Vanity Ballroom and an adjacent former bicycle shop is one step away from becoming a reality, Scott said. It’s the neighborhood cornerstone of $121 million in rehab construction projects that the East Jefferson Development Corp. is quietly preparing to launch over the next 18 months using a first-of-itskind tax increment financing mechanism that could be a model for revitalizing other neighborhood commercial corridors in the city. Scott led a tour of his company’s 12 | CRAIN’S DETROIT BUSINESS | OCTOBER 5, 2020
The Vanity Ballroom at East Jefferson Avenue and Newport Street in Detroit’s Jefferson-Chalmers neighborhood is slated to get a $14 million makeover to revitalize the 91-year-old two-story building. NIC ANTAYA FOR CRAIN’S DETROIT BUSINESS
“IT’S PATIENT EQUITY.” — Aaron Seybert, managing director of The Kresge Foundation’s social investment practice
redevelopment projects Sept. 24 during Detroit Homecoming VII. The revitalization of downtown Detroit over the past decade has been dramatic. Extending that resurgence will be a challenge for the next decade. The Jefferson-Chalmers neighborhood has long been a priority for city planners and philanthropists to revitalize as part of a push to reverse the decades-long decline of neighborhoods outside of greater downtown. Penske Corp. has committed $5 million to the city’s Strategic Neighborhood Fund for a new community center at Alfred Brush Ford Park along the Detroit River. After years of planning, groundwork and wrestling away property from speculators, there are signs that a turnaround in Jefferson-Chalmers is starting to come together, even as Detroit still reels from a global pandemic that has claimed the lives of more than 1,500 of its residents over the past six months. East Jefferson Development Corp., or EJDevCo, is a for-profit subsidiary of the not-for-profit Jefferson East Inc. , a multi-service organization in the Jefferson-Chalmers neighborhood. For neighborhood-level commercial redevelopment in the city, EJDevCo is a different kind of animal. Most of these entities are not-for-profit community development corporations that have the capacity to revamp one building at a time. The Kresge Foundation’s investment arm bought a 30 percent interest in EJDevCo for $2 million, giving Scott and his team cash to acquire or gain control of 87 percent of the properties along the Jefferson Avenue corridor. Separately, the Troybased Kresge Foundation has granted
The East Jefferson Development Corp. plans to build out 15,000 square feet of ground floor retail. Uses for the old ballroom include co-working space or fine arts and theater. | CHAD LIVENGOOD/CRAIN’S
$1.9 million to Invest Detroit for supporting EJDevCo’s operations. Kresge Foundation’s investment comes from the program related investments capital that it invests in companies or ventures that align with its philanthropic goals. And while they ultimately want to get their money back, they’re not in a rush to do so. “It’s patient equity,” said Aaron Seybert, managing director of The Kresge Foundation’s social investment practice. Traditional nonprofit developers “move so slow as compared to the for-profit sector in rapidly changing markets,” Seybert said. EJDevCo is tackling five buildings at
once in its $121 million project, including a new ground-up 38-unit residential and ground-floor retail mixed use building at East Jefferson and Manistique, two blocks west of the Grosse Pointe Park border. Construction for that project is slated to begin in 2022, with about 30 percent of the residential units designated affording housing, Scott said. By investing in a for-profit entity, Seybert said, Kresge takes the risk of being a first-loss equity partner but sees the reward of larger and faster redevelopment projects that are less contingent upon tax credits, grants and other subsidies. See PROJECTS on Page 18
