Crain's Detroit Business: The Big Bet on Detroit by Crain's Detroit Business

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Let’s do this together... We couldn’t be more excited about The District Detroit, a project that engages the entire city, has a far reaching impact for our community, its people, workers and businesses from every corner of the state. We can, and we are, changing the conversation about Detroit. It’s an incredible comeback story in the making. Learn more at DistrictDetroit.com

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Publisher’s note

ake no mistake, there is a big bet on Detroit. In this special annual Detroit-focused supplement, we outline just a few: ■ Gov. Rick Snyder bet his political capital that bankruptcy was Detroit’s best path to a sustainable future. ■ Mayor Mike Duggan, a Democrat, took a calculated risk that working with Snyder’s Republican team and Emergency Manager Kevyn Orr was his best bet until political power was restored to him. ■ Business and civic leaders are betting that Detroit’s cleaner balance sheet will bring enough new investment that the city’s population slide will end. That should matter to anyone

doing business in our state. The research is clear: Metro areas with strong core cities do better economically than those that don’t. Everybody has a stake in Detroit’s financial well-being. But to become truly sustainable, Detroit needs investments to create jobs for lower-income — and lower-skilled — Detroiters, and better schools to attract and keep residents. You can find evidence of the work at the neighborhood level in this report, on Pages 38 to 62. For years, Detroit made headlines nationally for dysfunction. But the negative buzz seems to be turning around. We saw it firsthand in September, when 160 successful “expatriates” returned to Detroit for the first Detroit Homecoming, an initiative created by Crain’s Detroit Business. The “expats” noticed a greater sense of cohesion than they remembered. “The Detroit Homecoming brought together a group of civic and business leaders, all of whom are aligned around the revitalization of a great American city,” wrote Al Reid, a divisional vice president at Abbott Labs and an “expat.” “The event left me energized about the possi-

bilities and future of Detroit.” Billionaire/philanthropist Eli Broad spoke on the opening night about opportunities in Detroit and how improving education was key. Nicole Curtis, host of “Rehab Addict” on cable TV, announced she would focus the sixth season of her popular show on homes in Detroit. Or this from a top executive in the headhunting world: “It felt good to be back in Detroit and welcomed by the city that raised me,” wrote Billy Dexter, a Chadsey High School alumus now a managing partner of Heidrick & Struggles. “I feel that I owe Detroit back for the amazing experiences that I had as a youth and the foundation that I have as a man.” George “Iceman” Gervin returned to Detroit with his sister Barbara, who writes about their experience on Page 43. You can find more from “expats” like Gervin, Reid, Curtis and Dexter throughout this special supplement, which was edited by Amy Haimerl, herself a Detroit transplant via Brooklyn and a soon-to-be-published author of a book about her own Detroit project, the renovation of a home built in 1914 in Detroit’s West Village. You see, there is this vibe about Detroit … — Mary Kramer

DETROIT 2.0

CONTENTS 6 The Odd Couple: Gov. Rick Snyder and Mayor Mike Duggan — a Republican and a Democrat — transcend labels to turn around Detroit.

Redesigning Detroit These four firms are designing the face of the city.

9 Billionaire Buddies: Legendary investor Warren Buffett and Detroit’s own Dan Gilbert are fast friends. Here’s how they met.

27 Hamilton Anderson Associates: Architect Rainy Hamilton never left Detroit. He drafted the master plan for Belle Isle and is now designing the $60 million mixed-use project Orleans Landing on the waterfront.

12 Spending Spree: Dan Gilbert and the Ilitch family have amassed Detroit property portfolios — but they have very different development styles. 18 (Re)Building on Up: It’s getting easier to finance commercial real estate in Detroit.

28 White Construction: If you’ve walked through Detroit, you’ve likely walked through the work of W. Bernard White. His construction firm has been involved in Campus Martius, Eastern Market and now the Detroit Red Wings arena.

31 Patrick Thompson Design: Patrick Thompson has been in business for only five years, but he’s already become the go-to interior designer for Detroit’s creative businesses. His biggest commission was making over the DIA’s Kresge Court. 32 Barton Malow: Construction management firm Barton Malow may be based in Southfield, but its roots are deep in Detroit. The company is actively finding ways to get Detroiters and Detroit-based contractor jobs on the upcoming arena project. Corktown

SEE PAGE 2 PIERRETTE DAGG/CDB

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CONTENTS ESSAYS FROM THE EXPATS

rain’s Detroit Business created and convened the Detroit Homecoming, a three-year initiative to re-engage successful Detroit expatriates in their hometown as it emerges from bankruptcy. It began with an inaugural Homecoming event, Sept. 17-19, that attracted 160 former metro Detroiters for tours, speaker sessions and networking. Speakers included Detroit Mayor Mike Duggan, investor Warren Buffett and local investors and entrepreneurs. The goal: Encourage expats to re-engage through investment, philanthropy and re-connecting with leaders in their hometown. A few expats wrote essays about their experience and the future of their hometown: Ron Fournier, editorial director of the nonpartisan political publication National Journal, reflects on growing up in Detroit and why even his mom thinks the city can rebound, Page 4 Dan Doctoroff, New York City’s deputy mayor for economic development from 2002-2008, outlines how Detroit can enjoy a Harlem renaissance, Page 11 David Feehan, who consults with cities seeking to develop downtowns and strong neighborhoods, reflects on how far downtown Detroit has come since he helped form the Downtown Detroit Partnership, Page 36 Barbara Gervin-Hawkins and her brother, NBA great George Gervin — both alums of Martin Luther King High School in Detroit — commit to investing in the city, Page 43 Vahe Tazian, a lawyer in Connecticut with three degrees from metro Detroit-area universities, explains why he sees a strong urban core and walkable districts as key to keeping recent grads from leaving, Page 65 Adam Finkel of Orfin Ventures, reminds expats of the talent that never left, Page 69. Scott Sellers, from the local auto dealer family and a private equity investor in San Francisco, outlines the case for investing in Detroit, Page 85 Martha Boudreau, chief communications and marketing officer at AARP, boosts the Detroit brand, Page 88

When the community works together, the community works A healthy, vibrant community depends on the participation of its members. Bringing a neighborhood together to bring about positive change is no small accomplishment. Bank of America is honored to support Crain’s and Detroit Homecoming which helps create common goals and a long-term vision for the community. Visit us at bankofamerica.com/Local

For more details and coverage of the September events, visit detroithomecoming.com.

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DETROIT 2.0

Spreading the wealth Bringing investment to Detroit’s neighborhoods 35 The ‘G’ Word. Is gentrification all bad for Detroit? 38 Corktown. There are challenges even in Detroit’s most thriving, small-business-friendly district.

CONTENTS

40 Osborn. Capers Steakhouse has turned out steak by the ounce for three decades, even as the neighborhood fell around it. 45 East Jefferson. Spanning from downtown to Alter Road, East Jefferson Avenue spreads through five thriving districts. 49 Grandmont Rosedale. Pop-ups, coworking spaces and more open up on Grand River Avenue, bringing entrepreneurship to one of Detroit’s most stable residential areas. 53 Southwest Detroit. A haven of small businesses, thanks to its mostly Latino and immigrant population. 57 Brightmoor. A new Meijer store is all the buzz in this northwest neighborhood, but there’s more happening than just groceries. 61 Avenue of Fashion. This strip of Livernois Avenue between Seven and Eight Mile roads was once the height of luxury. Now, restaurants and retailers are returning.

70 State of the Grade. 100,000 children attend school in Detroit. Here’s where they go. 73 Detroit Edison Public School Academy. Every member of the 2014 graduating class of DEPSA was accepted to college.

Editor: Amy Haimerl, entrepreneurship editor, Crain’s Detroit Business

ing, King of Clubs; and the Spirit of Detroit, King of Hearts.

The Detroit deck of cards brings out some of the city’s highlights. From left to right: Gov. Rick Snyder and Mayor Mike Duggan share the Jack of Spades; the Belle Isle fountain, Queen of Diamonds; tiger sculpture outside Comerica Park, Jack of Clubs; top of the Penobscot Build-

Cover illustration and layout: Pierrette Dagg, senior producer, Crain’s Detroit Business. Illustration: Gov. Rick Snyder and Mayor Mike Duggan: Mark Kotila.

Ralph Bland, superintendent of the New Paradigm for Education, which manages the school, talks about how it happened.

Making the Grade Education in Detroit

About this issue

On the cover

2012, lawyer and entrepreneur Kyle Smitley started the DAA in Brightmoor. Here’s what the 29-year-old has learned about education in Detroit.

75 Eli Broad and the EAA. Philanthropist Eli Broad helped fund the new Education Achievement Authority of Michigan. Here are his thoughts on the effort and what the future of education may be in Detroit.

80 Doers in Detroit. These eight groups are small but mighty, making significant impacts on Detroiters young and old.

78 Detroit Achievement Academy. In

86 Homecoming in Review. Pictures of our expats re-engaging with Detroit.

Design: Bob Allen, senior editor Copy editors: Gary Piatek, senior editor; Ed Bradley; Heidi Bitsoli; Beth Jachman

CRAIN’S DETROIT BUSINESS ISSN # 0882-1992 is published weekly, except for a special issue the third week of October, and no issue the fourth week of December by Crain Communications Inc. at 1155 Gratiot Ave., Detroit MI 48207-2732. Periodicals postage paid at Detroit, MI and additional mailing offices. POSTMASTER: Send address changes to CRAIN’S DETROIT BUSINESS, Circulation Department, P.O. Box 07925, Detroit, MI 48207-9732. GST # 136760444. Printed in U.S.A. Entire contents copyright 2014 by Crain Communications Inc. All rights reserved. Reproduction or use of editorial content in any manner without permission is strictly prohibited.

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RON FOURNIER

Rethinking Detroit Homecoming: Beyond the hype, there’s hope

wenty-nine years ago, I stood in the driveway at 15285 Coram St. in the northeast corner of Detroit and said goodbye to my parents — and to my hometown. The end was just the beginning for both the industrial era and the newspaper industry. The only job I could find was in Hot Springs, Ark. My mother was raised across the street from 15285 Coram. My father grew up three doors down. Their fathers, uncles, aunts and cousins all lived nearby and worked for the Big Three — a family lifted into the middle class by union wages that grew decade after decade until my last one in Detroit, the 1980s. “Be good,” Dad said. I was 22, a University of Detroit graduate who had not traveled outside metro Detroit except for a high school trip to Iowa and time spent at the family cottage in nearby Canada. Everybody, it seemed, had a cottage those days. The American Dream roared to life in Detroit every Friday afternoon, when factory workers — riding cars they built and bought — steered north to their second homes. “You’ll do great,” Mom smiled. As I ducked into my Ford Escort overstuffed with belongings, she quickly added, “and you’ll move back to Detroit.” Some memories soothe. That one aches — on this September day, anyway, because I’m in town to attend the Detroit Homecoming, a conference of 160 native Detroiters who left the city years ago. I arrived early and drove to the old neighborhood. It looks like a war zone. I can see the lot where my Mom’s childhood home once stood, a victim of arson a decade or so ago, its charred, wooden skeleton buried beneath a thicket of wild flowers and brush. Dad’s old house is the last on the block to look habitable for a middle-class family. The house at 15285 Coram, where Mom and Dad raised four kids and eased their parents into retirement and death, gave way to fire this year. Squatters came first, then addicts and arsonists. The tiny lot is now

cleared of debris, except for a young tree clinging to the burnt-orange ground where our garage once stood. With twiggy arms and a few fluttering leaves, the sapling seems to be waving hello. Or is it waving me away? Chuckling at the thought, I pull out of the rutted, weedy driveway and aim my rental car north. A 10-minute ride will take me across Eight Mile Road to St. Clair Shores, where I’m meeting my mother for breakfast. I punch “Mom” on my cellphone, and she answers on the first ring. We both ask, “You home?” Before finishing that story, what can I tell you about this Detroit Homecoming conference? Bottom line: It’s a sales job — all hype and hope and “please invest here.” The city’s corporate and political elite hope to dazzle the Detroit expats, mostly wealthy business men and women who might place bets on the city. We get private tours of the city’s cultural attractions (the Motown Museum and batting practice at Comerica Park, home of the Detroit Tigers); of its new industries (the tiny Shinola watch factory is no match for the ginormous auto plants that started leaving Detroit in the 1950s, but it’s hip); and of a few recovering neighborhoods (definitely not Coram Street in the crime-infested northeast corner). The organizers didn’t invite me for my money. They’re angling for a glowing story about the city’s rebirth, and I suspect they’ll be disappointed by what I eventually write. I’m a cup-is-half-empty guy, a professional skeptic — and Detroit is struggling through bankruptcy that might, finally, mark the rock bottom of a decades-deep hole. The climb-out will take years, maybe generations, if it happens at all. This is not my first trip home, not by a long shot. My wife is also from Detroit, a suburb actually, and we return to Michigan several times a year to visit our families or vacation at our cottage in the northern woods. Two trips this year were for funerals — my father’s and my mother-in-law’s. I’m thinking of my father, an ex-Detroit

cop, when Quicken Loans founder Dan Gilbert sits across from me at dinner. Gilbert owns much of downtown — and he employs a huge private security force to keep the streets safe. Meanwhile, my father’s beloved Detroit Police Department is cash starved and, like the city, a shadow of its former self. Gilbert seems like a good guy — or at least a guy who cares about the city and is trying to do good by it. He tells a bunch of us, “This city, it’s going to shock people in five years.” Come on. Shock? Really? Yes, Gilbert insists. Built like a fireplug, Gilbert speaks in rapid bursts of big words and ideas, and with a confidence that is as infectious as it is rehearsed. In five years, he says, downtown Detroit and Midtown — an emerging neighborhood of hipsters and young entrepreneurs — will be knitted together by a new hockey arena/business district. Also, thousands of abandoned houses and other blight will be erased from every city neighborhood. In half a decade, he says, “smart investors” will have built the first new neighborhoods — developing cheap land in exchange for promises to build police stations, schools and parks. Smart investors, Gilbert declares, like the Detroit Homecoming expats. “There’s no silver bullet here,” he says. “It’s not going to be one family or one group. It’s got to be wide. It’s got to be deep.” One after another, Detroit’s leading men and women try

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“There are some great things happening downtown and Midtown.” Mom pauses. I think she can see the shock in my face. to woo us — or our money — back home, leavening genuine enthusiasm from scraps of hope and progress. “It’s not a time of fixes,” says Gov. Rick Snyder, a Republican. “It’s a time of reinvention.” “People are starting to believe in the future of this city,” says Mayor Mike Duggan, a Democrat, during a PowerPoint presentation on plans to eradicate blight, incentivize housing and fix the water system. “We’re here to stay,” says Walter Robb, CEO of Whole Foods Market, which defied Detroit skeptics and opened a grocery store in Midtown. Mary Barra, CEO of General Motors Co., excites us with plans to build a flagship Cadillac sedan at GM’s Detroit-Hamtramck plant. Gilbert and his investor pal Warren Buffett yuck it up on stage. The city’s hockey prince, Chris Ilitch, gives us a peek at the new arena blueprints. I bump into Ilitch later. He says the city’s political and business leaders have not been this united in 50 years — and I believe him. “America loves an underdog,” he says. “It used to be that when I told somebody I was from Detroit, there would be a long pause, and then they’d say, ‘You got a Waving hello or great hockey goodbye? A tree grows out of where team!’ Now, when the author’s I say I’m from childhood home once Detroit, people’s stood. eyes light up and they want to know all about us.” I nod. The same thing happens to me. It’s all so impressive, this conference, and yet … well, this is still Detroit. Barra doesn’t bother

telling us that she’s moving GM’s Cadillac brand to New York City of all damn places. Buffett laughs off Gilbert’s attempt to secure investment commitments. Duggan has no good answer for the fate of Detroit’s schools. Every time expectations outstrip Detroit’s reality, I think of Dan Doctoroff, the hometown boy who served for six years at New York City’s deputy mayor. He’s the conference’s realist, telling the expats to temper their aspirations. “The goodwill money runs out quickly,” he says in a keynote address. (See Doctoroff’s essay, page 11.) I nod my head and take notes as he urges city boosters and leaders to “think small.” Rather than overpromise, do the little things well, he says, and create a “virtuous cycle” of success. Fix the streetlights. Repair the roads. Pick up the trash. If one person notices that the city is picking up garbage on schedule, after years of mismanagement, that person might start putting his trash out on time. A neighbor might notice and start dragging her trash to the curb on time, too. Doctoroff has big ideas, too. Michigan should look at what Abraham Lincoln did to encourage western migration: Provide urban “settlers” free or cheap land in Detroit. Another idea: Ease visa restrictions so the city can become a home for 50,000 immigrants. Finally, Doctoroff says, the mayor must take control of the city’s schools. The expats applaud Doctoroff. They love his hope and appreciate his caution. To anybody who talks to him afterward, Doctoroff repeats these three sentences: “Don’t get ahead of yourself; don’t make promises you can’t keep; say what you can do, and do it.” Breakfast with Mom is at a diner on Jefferson Avenue near 10 Mile Road, across the street from Lake St. Clair, in a modest neighborhood on the southern edge of Macomb County, where in the 1980s pollster Stanley Greenberg famously found a label for working-class whites who considered Democratic pleas for economic fairness as code for advantaging African-Americans. I was raised by two such “Reagan Democrats.” People like my parents are good-hearted and tolerant, but social change hit them

hard. They left the city — actually, they say the city left them — in waves, after the 1967 riots and school integration in 1976. They love and loathe their city. They romanticize the past and color the present with every shade of cynicism. While driving to the diner, I tell Mom why I’m in town. “They’ve brought a bunch of us expats back to sell us on Detroit, starting tonight.” I expect her to take the bait — to rant and reminisce, like always. Instead, she shakes her head and says, “I think Detroit is coming back.” Say what? “I do, really,” she says. “There are some great things happening downtown and Midtown.” Mom pauses. I think she can see the shock in my face. She continues: “For years, whenever you said you were from Detroit, people looked at you with sympathy or made a joke. Now they want to know what you know about the city, or tell you about somebody they know moving back into Detroit.” One of the young imports is her granddaughter, my 26-year-old daughter, Holly. Born in Arkansas and raised in suburban Washington, Holly decided after graduating from college to spend a year or two in community service. She joined City Year and asked to serve in Detroit, a city she visited three or four times a year while growing up. After City Year, Holly quickly got a job at the Detroit News, then fell and love with and married a local guy. They live in Midtown. Her 22-year-old sister, Gabrielle, graduated from James Madison University in rural Virginia a few months ago and now attends law school at Michigan State University, 90 miles from Detroit. That leaves just my wife, Lori, and our 16-year-old son, Tyler, living in Arlington, Va. We finish breakfast and I reach for the check. It’s time to head downtown for the start of the conference. “When are you moving back?” Mom teases. I think of that sapling on Coram, waving hello. “Someday, we’d love to,” I say. “Someday,” she smiles, “you’ll do it.” Ron Fournier is the senior political columnist and editorial director of the National Journal and the author of the forthcoming book, In the Ballpark of Perfect, based on his son, Tyler, who has Asperger’s syndrome, and his time covering the Clinton and Bush White Houses.

COURTESY OF RON FOURNIER

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TRANSCENDING POLITICS

Bigger than labels Detroit turnaround work transcends political, state rifts BY CHRIS GAUTZ CAPITOL CORRESPONDENT

ll the work Gov. Rick Snyder has done in his first term to turn around Detroit — from the bankruptcy filing, to sending in state financial assistance, to protecting the art and pensions — was never going to win him votes in a city known as a Democratic stronghold. In 2010, Snyder received 5 percent of votes cast in the city; most analysts expect it to be about the same on Nov. 4. “He could cure cancer, walk on water and do a back flip, but the fact that he has an ‘R’ next to his name keeps him from getting support in a meaningful way from the city,” said Sandy Baruah, president and CEO of the Detroit Regional Chamber. “In three years, Gov. Snyder did more for DeBaruah troit than his predecessor did in eight years.” But what Snyder has done, say many business leaders from around the state, is improve the perception of Detroit inside and outside Michigan. And in doing so, he has improved his own image, too. “The business community thinks it (Detroit’s image) is a critical issue for the perception of the state,” said Michael Jandernoa, founder and chairman of 42 North Partners LLC, a Grand Rapids-based investment management firm. Snyder’s unlikely partner in this effort? Detroit Jandernoa Mayor Mike Duggan, a Democrat who has worked with Snyder incredibly well, Baruah said. “These are two very pragmatic, get-itdone kind of leaders,” Baruah said. While Snyder and Duggan may seem like

Analyst: Duggan’s influence on Snyder vote a nonissue So the political question of the hour is: Will Detroit Mayor Mike Duggan push a get-out-the-vote campaign on Nov. 4 for Democrat Mark Schauer to defeat incumbent Republican Gov. Rick Snyder? The answer may be moot, unless the election is very close. Political analyst Eric Foster notes that in 2010, only 175,400 votes were cast in Detroit out of 3.2 million statewide. Foster projects that this year the turnout may be even less — or 5 percent of the total statewide count. If Snyder wins, Foster said, “you can’t put it on the sitting mayor.”

political opposites, they are two “grownups” who know that big problems sometimes require tough decisions and calculated risks, said Rich Studley, president and CEO of the Michigan Chamber of Commerce. Said Matthew Haworth, chairman of Holland-based Haworth Inc.: “I think that’s one of the wonderful things about Gov. Snyder. He’s taken on some difficult issues and been always principled, but also with a good touch of pragmatism. I think that comes from his accounting background.” Studley said Duggan, too, from his time as a deputy Wayne County executive, and as CEO of the Detroit Medical Center, learned to set aside disagreements and make tough decisions to encourage change.

Statewide impact While Snyder’s actions aren’t likely to win him many votes from Democrats in Detroit, it could also lose him some support from conservative Republicans, said Eric Foster, senior consultant and chief strategist for West Bloomfield Township-based LB3 Management, a management and consulting firm. Tea Party conservatives and Libertarians don’t like his investments in Detroit with

state money, and see other actions like taking over Belle Isle and making it a state park as an expansion of state government, he said. Foster said he thinks those voters will still go to the polls but will likely skip voting for governor and vote for other candidates on the ballot in other races that fit their ideology Add to that Snyder’s pushing of Medicaid expansion, the tax on some pensions, support for the New International Trade Crossing and wanting to raise taxes for roads, and it can be too much for some, he said. “That’s a lot of sins in that wing of the Republican Party,” Foster said. “There’s a possibility that he may see some voter backlash from that wing of the party.” But business leaders outside of metro Detroit support Snyder’s efforts in Detroit. “So often we hear from outsiders that their perception is that Detroit is Michigan,” said Jackie Krawczak, executive director of the Alpena Area Chamber of Commerce. “We need Detroit to be the best it can be.” For cities like Alpena, she said, it’s not just about perception; it’s tangible. When the auto industry went through the downturn, many from the Detroit area with second homes in Alpena couldn’t afford to keep them and had to sell, and real estate prices in the city went down, she said. Fewer tourists back then, she said, also meant fewer dollars being pumped into the local economy. “We rely on the people of Detroit to visit our community,” she said. Communities that might have once felt that Detroit was a drag now realize that when Detroit gets momentum, “it is really able to drive the whole state,” said Doug Rothwell, president and CEO of the Business Leaders for Michigan. Rothwell said people attribute much of that to the work Snyder has done not just in his policies but in his travels around the state, always talking positively about the city and why it is important. “I think he’s getting recognized for it, and

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ASSOCIATED PRESS

Michigan Gov. Rick Snyder introduces Detroit Mayor Mike Duggan before signing legislation June 20 to provide state funding for Detroit municipal pensions as part of city's bankruptcy. The ceremony was held at the refurbished Globe Building in Detroit.

I think it matters a great deal,” Rothwell said. “The divides between east and west Michigan that maybe were there a decade or more ago have really faded away. People realize all over the state that when Detroit does well, the whole state does well.” That doesn’t mean they like everything about it, Krawczak said, especially the $195 million that was part of the “grand bargain” package of legislation Snyder signed this year to create a fund to support Detroit pensions and immunize from bankruptcy the sale of works in the collection at the Detroit Institute of Arts. “Nobody wants to see their money go anywhere else. We can think of plenty of things to do with that money,” Krawczak said. “But in the business community, most

people understand that what happened, had to happen.” Others applauded the move. Jandernoa, of 42 North Partners, said Snyder’s combining of state funds and private sector donations to support both the DIA and pensions was a “stroke of genius … . The governor’s leadership was absolutely brilliant,” he said.

Election Day effects As a member of the board of directors for the U.S. Chamber of Commerce, Studley said his colleagues across the country often ask him about Detroit and what the governor is doing. “We are proving that Democrats and Republicans can work together and rescue a city that was careening toward a devastat-

ing bankruptcy,” he said. “People can choose to focus on differences, or leaders can choose to focus on what they have in common.” Baruah added that Snyder and Duggan deserve credit for creating an environment that encourages nonpartisan alignment. “The governor, the mayor, the emergency manager, the City Council, the philanthropic and business community, all the key players for a society are now aligned,” Baruah said. “This is what’s making fundamental change possible. I think that’s incredible. If any one of those elements wasn’t there … we wouldn’t be where we are.” Chris Gautz: (517) 403-4403, cgautz@crain.com. Twitter: @chrisgautz

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THE GIVING PLEDGE NETWORK

Billionaire buddies Gilbert, Buffett become fast friends over biz and beyond BY DUSTIN WALSH CRAIN’S DETROIT BUSINESS

efriending billionaire investor Warren Buffett is something of a notch in the full-grain leather belts of America’s business elite. Microsoft Founder Bill Gates has called Buffett’s advice invaluable to his career. Gates and Buffett are known to host dinner parties for the world’s wealthiest business types — usually to discuss philanthropy. The pair created the Giving Pledge in 2010, asking fellow billionaires to make a commitment to giving away at least half their wealth during their life or at death. Nearly 130 have taken the pledge. One of them was Quickens Loans Chairman Dan Gilbert, who accepted the pledge in 2012 and, in turn, found a mentor in Buffett. The relationship between these prosperous pals blossomed when Buffett came to Detroit in November 2013 to kick off the Goldman Sachs 10,000 Small Businesses program, which Buffett co-chairs. The $20 million program trains entrepreneurs in major U.S. cities as a way to create economic growth. Gilbert became Buffett’s tour guide to Detroit. They cemented a friendship over a business transaction that played on Buffett’s love of collegiate sports — he’s a wellknown University of Nebraska fan — and Gilbert’s knowledge of basketball as the owner of the NBA’s Cleveland Cavaliers. Together, they launched a $1 billion bracket challenge for anyone that could pick the winner of every NCAA March Madness tournament game correctly. Gilbert’s Quicken Loans offered the money, and Buffett’s Berkshire Hathaway insured the prize. Odds of winning were estimated at 1 in 9 quintillion. No one won the grand prize, but Gilbert and Buffett did seal a business deal. Quicken paid an estimated $10 million for the Berkshire insurance. Quicken, in turn, collected thousands of sales leads from participants for its mortgage originating business. Gilbert and Buffett continued to spend more time together throughout the year. In September, Gilbert interviewed Buffett

AARON ECKELS

Dan Gilbert (left) interviews Warren Buffett during the Detroit Homecoming. The relationship between the two began when Gilbert accepted the Giving Pledge in 2010.

on stage at the Detroit Homecoming, which Crain’s convened. The mutual admiration was transparent, and the two men complimented each other at various turns — one for his wisdom, the other for his investment into a troubled city. Gilbert suggested that Buffett help bring the annual meeting of The Giving Pledge to Detroit so the 127 members who have agreed to give away the majority of their wealth can see what is happening and get involved. “I’m just taking a shot here,” Gilbert said. “When you take a shot, it usually happens, Dan,” Buffett responded. But it was backstage in an interview with Crain’s where the admiration melted into the juvenile camaraderie more common among boyhood friends than billionaires. When asked about buying a Detroit busi-

ness, both men fell into a laughing fit over a practical joke pulled on Quicken Loans employees on April Fools’ Day this year. Gilbert assembled much of his Quicken management team to inform them that Buffett’s Berkshire Hathaway had acquired the company, which Buffett backed up in a video call. “I tried to buy Dan’s (business) on April 1st, but forgot he had his fingers crossed,” Buffett said. Gilbert rebutted, “But on April 2nd, I called you back and you didn’t answer the phone.” “I go along with whatever he (Gilbert) comes up with, and so far I haven’t gone to jail,” Buffett said. Dustin Walsh: (313) 446-6042, dwalsh@crain.com. Twitter: @dustinpwalsh

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ESSAY

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DAN DOCTOROFF

Taking the long view How Harlem’s rebirth can happen in Detroit, given time etroit is having a moment. With bankruptcy hopefully soon in the rearview mirror, I can’t open a newspaper or check my Twitter feed without seeing another hopeful story of the city’s rebirth — whether it’s a family moving to one of the city’s struggling neighborhoods to renovate an abandoned home or a new small business opening up in the West Village. Having grown up right outside of Detroit, I can’t remember a moment of greater excitement or opportunity. But one of my most important takeaways from my tenure as New York City’s deputy mayor for economic development is that “moments” pass. What counts is using those moments as opportunities to create structural and self-perpetuating change. This is crucial for Detroit. Today, many of the exciting investments we’re seeing are speculative. Homeowners are taking paper losses on their renovations on the hope that the real estate market will improve; entrepreneurs are losing money on their businesses while they wait for more customers to arrive. The optimism is real, but speculation is not a sustainable model. At the Detroit Homecoming, I discussed the rebirth of one of New York’s most historically significant neighborhoods, Harlem. There are very big differences between Detroit and Harlem. Harlem is a neighborhood, while Detroit is a major city with its own government. Detroit is a manufacturing center, which Harlem never was. Still, there are enough similarities to make the comparison instructive as Detroit looks to its post-bankruptcy future. From its highs in the early 1950s to its low point in the 1980s, Central Harlem’s population plummeted by 60 percent. In 1980, just 5 percent of residents had a college degree, and 40 percent were living below the poverty line. Today, though, Harlem is on the rise. There are four major lessons we can learn from Harlem’s rebirth. The first lesson is to think small. In the ’70s, the federal government provided more than $100 million (about $1 billion in today’s dollars), spread across a huge number of programs. It flopped.

Things began to change when local residents took action on a modest scale. One organization started by focusing on a single blighted street, negotiating with the city to turn over control of apartment buildings to tenants who formed cooperative associations. Over time, that one street came back to life — then another, then another — creating a ripple effect that spread across the neighborhood. An organization called Focus: Hope is deploying a similar model in Detroit, empowering communities to participate in local decision-making. Mayor Mike Duggan’s commitment to install 50,000 new streetlights is another example of how relatively modest investments can produce outsized results. The second lesson is to value diversity. Between 1940 and 1990, Central Harlem was more than 90 percent African-American. Today, as the neighborhood has grown, increased diversity of background, ethnicity and income contributes to Harlem’s vibrancy. Detroit, too, must attract a greater diversity of residents. Establishing pro-immigration policies is key. One of New York’s great strengths has been our steady stream of immigrants, bringing with them an energy, urgency and ingenuity.

AARON ECKELS

The optimism is real, but speculation is not a sustainable model.

For all the rhetoric around immigration, studies consistently show immigrants generate more revenue than they cost. Perhaps Michigan needs an Urban Homestead Act that encourages new Americans to purchase vacant homes in Detroit and set them on the path to becoming contributors to the city’s recovery. The third lesson is that Detroit can’t go it alone. For all the neighborhood-specific community work that contributed to Harlem’s rebirth, it couldn’t have happened without strong support from the rest of New York City — whether in the form of billions of dollars in housing aid supporting tens of thousands of units of affordable housing, or simply because the city’s economic rise over the past 25 years has contributed to Harlem’s success as well. The same holds true for Detroit. Detroit and the state of Michigan will rise or fall together, and public policy must reflect that unavoidable truth. The fourth lesson is that rebuilding takes patience. Creating lasting structural change doesn’t happen in a year or an election cycle; it’s measured in decades and generations. All the media attention on Detroit’s recovery is a wonderful thing, but it’s not without a downside. The news cycle moves much faster than recovery. How long will reporters keep writing the feel-good stories before sentiment turns and they start writing that the city missed its moment? At some point, investing in Detroit will no longer be the fashionable thing to do. That’s why it’s critical to take the long view. The steps to building a great neighborhood or city aren’t glamorous or headlinegrabbing. But by thinking small, embracing diversity, working hand-in-hand with the state and taking the long view, I am extremely confident that all the pieces of a successful and sustainable recovery are at hand. Dan Doctoroff is CEO of Bloomberg LP. A Michigan native, he served as New York City’s deputy mayor for economic development from 2002-2008. Follow Dan on Twitter @DanDoctoroff.

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Billion-d Gilbert quick to the punch; Ilitch opts for slow, hold BY BILL SHEA AND DUSTIN WALSH CRAIN’S DETROIT BUSINESS

uge swaths of Detroit are getting an extreme makeover courtesy of Dan Gilbert and the Ilitch family. And as divided as their geographical areas are — Ilitch in an entertainment district centered near Woodward Avenue and I-75, Gilbert in downtown — so are their styles. Gilbert has been fast and open with his wallet, often making media announcements about his purchases. Meanwhile, the Ilitches quietly and gradually acquired parcels, and then sat on them until the unveiling of the vision for the Ilitch-led arena district this summer. The differences in style are due, at least in part, to the nature of the projects. Gilbert’s purchases are independent of each other, although they are concentrated in a relatively small geographic area. But if the Ilitch family had announced it was purchasing property for such a largescale entertainment district years ago, prices likely would have escalated even further than they already did. Does the fact that so many properties are held by so few help or hurt Detroit? So far, real estate types think it’s helping to attract other investment rather than prompt bidding wars. Here’s a look at the two billionaires and their development philosophies:

Gilbert’s sphere of influence Welcome to Gilbertville — the unofficial name of Detroit’s central business district. Gilbert, chairman of Quicken Loans Inc., owns more than 60 properties — buildings and parking structures — totaling more than 9 million square feet in De-

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-dollar philosophies DAN GILBERT

Pictured on map 1. Madison Building, 1555 Broadway St. 2. 1550 Woodward Ave. 3. Arts League of Michigan building, 1528 Woodward Ave. 4. Lane Bryant Building, 1520 Woodward Ave. 5. Wright-Kay Building, 1500 Woodward Ave. 6. 1525 Broadway St. 7. Small Plates building, 1521 Broadway St. 8. 1505 Woodward Ave. 9. 1412 Woodward Ave. 10. Eastern Wig & Hair Co. building, 1400 Woodward Ave. 11. 45 W. Grand River Ave. 12. Industry Sound Studios building, 1250 Griswold St. 13. Detroit Institute of Music, 1265 Griswold St. 14. 1215 Griswold St. 15. 1217 Woodward Ave. 16. 1201 Woodward Ave. 17. 119 State St. 18. 1001 Woodward Ave.

troit. He has invested more than $1.3 billion buying and renovating property in the city, mostly in the central business district. Gilbert’s appetite for Detroit real estate has been insatiable since 2010 — when he

DOWNTOWN HOLDINGS

19. Chrysler House, 719 Griswold St. 20. Cary Building Lofts, 1301 Broadway St. 21. First National Building, 660 Woodward Ave. 22. 630 Woodward Ave. 23. 620 Woodward Ave. 24. Chase Tower, 611 Woodward Ave. 25. Vinton Building, 600 Woodward Ave. 26. One Woodward Avenue, 1 Woodward Ave.

Not pictured on map

䡲 1322 Broadway St. 䡲 1326 Broadway St. 䡲 1332 Broadway St. 䡲 Serman’s Building, 1238 Randolph St. 䡲 1401 Rosa Parks Blvd. 䡲 Greektown Casino-Hotel, 555 E. Lafayette St. 䡲 Detroit Media Partnership Building, 615 W.

Lafayette St. 䡲 Globe Tobacco Co. Building, 407 E. Fort St. 䡲 Federal Reserve Building, 160 W. Fort St.

moved Quicken from offices in Livonia, Farmington Hills and Troy to Campus Martius. The contrast is stark since Gilbert’s arrival. In the early 1990s, nearly 50 build-

Parking garages and lots (not pictured)

䡲 One Woodward Avenue Lot, 1 Woodward Ave. 䡲 Vinton Lot, 600 Woodward Ave. 䡲 First National Garage, 660 Woodward Ave. 䡲 1001 Woodward Garage, 1001 Woodward Ave. 䡲 Randolph Lot, 748 Randolph St. 䡲 Lafayette Lot, 422 E. Lafayette St. 䡲 Financial District Garage, 730 Shelby St. 䡲 Brush Street Garage, 1001 Brush St. 䡲 Fort Street Garage, 419 E. Fort St. 䡲 Vacant lot, 126 Monroe St. 䡲 New Valet Garage, 500 Macomb St. 䡲 2 Detroit Center Parking Garage, 160 E.

Congress St. 䡲 Vacant lot, 28 W. Grand River Ave. 䡲 Madison Building Lot, 1545 Broadway St. 䡲 Greektown Casino-Hotel Garage, 1200 St. Antoine St. 䡲 Federal Reserve Lot, 160 W. Fort St.

ings were vacant in the central business district. That figure is now about 13. Notable acquisitions include the MadiSEE PAGE 16

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THERE’S MORE THAN EVER TO LIKE ABOUT DETROIT. The General Motors Foundation proudly supports the efforts of the Detroit Homecoming as it showcases the beauty and promise of Detroit. Together, we can reimagine and rejuvenate the Motor City. gm.com/gmfoundation

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FROM PAGE 13

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son Building, $1.4 million; Chrysler House (formerly Dime Building), $15.4 million; 1001 Woodward Building, approximately $30 million; the One Woodward Building, $8.5 million; and the First National Building, $8.1 million. Gilbert also owns the former Hudson’s site, and has hired New York-based Shop Architects PC and Detroit-based Hamilton Anderson Associates to develop a mixed-use plan for it. In May 2013, Gilbert’s Athens Acquisition LLC subsidiary, Rock Gaming LLC, acquired Greektown Casino-Hotel. But the majority of Gilbert’s non-parking and casino portfolio is retail and office space — about 90 percent office space and 10 percent reGilbert tail. His plan has been to attract more companies downtown. Tenants include Twitter, Microsoft Ventures, Google for Entrepreneurs and Detroit Labs. The buying spree is designed to connect lower Woodward near Hart Plaza with Grand Circus Park and everything in between by the end of 2015. A lot of vacant downtown office space is composed of older Class B and C buildings without modern amenities people are looking for, said Erik Tungate, Oak Park city manager. He Tungate worked previously for the Detroit Economic Growth Corp., the Michigan Economic Development Corp. and the Wayne County Economic Development Growth Engine. Those properties often have old infrastructure, like elevators that can prove costly to maintain or replace. Gilbert’s strategy of buying and upgrading solves such problems, and he expects an office building boom because of it. “It’s taken that outdated inventory off the market. It’s going to lead the biggest jaunt of Class A construction we’ve had in 50 to 70 years,” said Tungate, who lives in Brush Park near the planned Ilitch arena development.

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THE ILITCHES

AREAS OF INVESTMENT

PIERRETTE DAGG/CDB

The Ilitch sphere of influence The Ilitch family — of the Little Caesars pizza chain along with two sports teams and a casino in Detroit — for decades has employed a mixture of development strategies. One strategy is to buy a property and renovate it. The family did that in 1988 with a $12 million refurbishment of the Fox Theatre, which became the headquarters of the Ilitch business empire. The other strategy is to buy land or properties for future development. The Ilitches formed Ilitch Olympia Development of Michigan in 1996 as the real estate arm of their business holdings. Their son, Chris, leads many of the projects, including the new Red Wings hockey arena slated to open in 2017. For nearly two decades Olympia has been acquiring not only land for the site of what’s now Comerica Park — home of the Ilitch-owned Detroit Tigers near the Fox,

DAVID HALL

A panorama of the site for the new Detroit Red Wings arena project as it looked in July.

which opened in 2000 — but also amassing parcels north of that area for the future hockey arena site. It’s estimated that Olympia spent nearly $50 million on land at Woodward Avenue and I-75 for the footprint of the $450 million arena. Some of the land was vacant and became surface parking lots, as was done with land behind the Fox Theatre. But, other parcels have structures that will be razed. The arena project is the centerpiece of a 45-block Olympia plan of $200 million in new housing, retail, entertainment and office space intended to become five new neighborhoods that stitch downtown and Midtown — an area some say has been artificially separated because of land purchases by Olympia and by speculators seeking a payday from Olympia. “If the development that they’re propos-

ing happens at that capacity they’re proposing, it’s an absolute game changer for the city of Detroit, no doubt about it,” said Erik Tungate, Oak Park’s city manager, who worked for the Detroit Economic Growth Corp. and other economic development groups. One downfall of the quietbut-slow style is that it “stymies momentum you could have gathered on the in-between projects,” he said But overall, Detroit is fortunate to have the Ilitches and Dan Gilbert spending vast sums, he said. “(Many cities) don’t have billionaires that put their heart and soul into the city even when it may be to their economic disadvantage sometimes,” Tungate said. Bill Shea: (313) 446-1626, bshea@crain.com. Twitter: @bill_shea19. Dustin Walsh: (313) 446-6042, dwalsh@crain.com. Twitter: @dustinpwalsh

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REAL ESTATE

BUILDING MOMENTUM

Building equity It’s getting easier to finance commercial real estate in Detroit BY KIRK PINHO CRAIN’S DETROIT BUSINESS

ight long, grueling years. That’s how long it’s been since one of the most complicated redevelopment financing structures in Motown’s history was cobbled together for the $180 million renovation of the Westin Book Cadillac Detroit on Washington Boulevard at Michigan Avenue. Involving 17 layers of financing, the deal was so complex that one real estate financing expert at the time said it could have been the subject of a master’s degree thesis. But the Book Cadillac wasn’t an anomaly. Labyrinthine financing plans are what it has taken to get projects done in the Motor City — even in the resurging downtown and Midtown districts. It took George Stewart and Michael Byrd 15 years and eight funding sources to complete the overhaul of the Woodward Garden block of Woodward Avenue into a $44 million mixed-use development with multifamily residential, retail and office space in Midtown. Richard Karp is redeveloping three Capitol Stewart Park buildings, and the financing for just one of the projects involves 11 different capital stacks. But the market is starting to shift. These days — post-recession, post-Kwame, soonto-be post-bankruptcy — the real estate community is noticing smoother paths to securing financing, particularly for in-demand multifamily housing in the booming downtown and Midtown areas. Richard Hosey III, a former senior vice president for Bank of America who is now the owner of Detroit-based Hosey Development LLC, said there is a sense among developers and lenders that most redevelopment projects are financially feasible, whereHosey

HOW THEY WERE FUNDED Where money came from for Woodward Garden Block, Wings arena and Book Cadillac: Pages 22, 23, 25 as just a few years ago questions were rampant about whether enough demand existed. “People talk about closing and financing gaps more so than ‘it’s just not possible’ or that there won’t be demand,” said Hosey, who worked on the financing for the $53 million redevelopment of the 35-story Broderick Tower into a 127-unit apartment building, another complex financing project, among others. “Even if it’s nine layers (of financing), it’s nine straight-forward and easy to replicate layers so we can pass it along to the next project,” he said. Part of what is helping is that average rental rates are slowly but steadily creeping toward the $2 per square foot levels, which makes traditional lenders more willing to finance projects. “After we clear that mark and have been doing that for a number of years, I think lenders will say it wasn’t a fluke, that there actually is a strong market for this product,” said James Van Dyke, vice president of development for the Detroit-based Roxbury Group, which redeveloped the David Whitney Building, the former Globe Trading Co. building for the VanDyke Michigan Department of Natural Resources, as well as a host of other projects. The David Whitney Building, which is scheduled to be completed this year after a two-year conversion into 108 multifamily units and a 135-room Aloft boutique hotel, is an $82.5 million project involving funding from the state, Bank of America, the Down-

town Development Authority and others. Earlier this year, the Detroit Economic Growth Corp. received approval from the DDA to negotiate a development agreement for The Griswold apartment development. Roxbury plans on using only three funding sources for the $22 million development, which would have 80 units atop a 10-story parking garage and retail building at Griswold Street and Michigan Avenue. Increased willingness to finance Motor City redevelopment efforts is welcome news to Joseph Kopietz, a member in the Detroit office of Clark Hill PLC, who advised the College for Creative Studies on financing for the A. Alfred Taubman Center for Design Education project, among many others. But still, it’s not like Kopietz lenders are frothing at the mouth to take what might still be a gamble on Detroit projects, he said. It remains a complex chess game, oftentimes involving many lenders and tax incentives, such as the U.S. Department of Housing and Urban Development’s 221(d)4 Program, Michigan Strategic Fund’s Community Revitalization Program, state brownfield tax credits and tax credits at the state and federal level for historic preservation. “Because of various factors, having seven layers of financing can sometimes be more complex than 12,” he said. “Each type of financing has its own complexity, and we still are not at a state here in Detroit, nor in many other major markets, where financing of significant projects is getting any easier.” Yet all told, Kopietz and others remain optimistic. “We are going to continue to get some questioning and scrutiny from lenders and equity partners, but things have been improving. What people are seeing is the successes in Detroit that we’ve had here recently, and that’s good for the market,” he said. Kirk Pinho: (313) 446-0412, kpinho@crain.com. Twitter: @kirkpinhoCDB

CDB Living In The D_New CD Magazine sized 10/3/2014 1:22 PM Page 1

Committed to the enduring spirit of Detroit, MERIDIAN H E A LT H P L A N is proud to support the revitalization of our city.

w w w . m h p l a n . c o m

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Moving our Corporate Headquarters to the heart of Downtown Detroit in 2007, Meridian is honored to be part of our city’s RENAISSANCE.

D R AW I N G PROFESSIONALS DOWNTOWN Our workforce has grown 500% since moving downtown! Learn more about how you can grow with us at www.mhplan.com.

PROVIDING THE H I G H E S T Q UA L I T Y C A R E , A L WA Y S Meridian Health Plan of Michigan is the number one Medicaid HMO in Michigan according to NCQA’s Medicaid Health Insurance Plan Rankings 2014–2015.

STRENGTHENING OUR COMMUNITY Hands-on engagement with local causes through sponsorships and employee volunteering

DB magazine spread_CDB magazine spread 10/3/2014 1:36 PM Page 1

Moving our Corporate Headquarters to the heart of Downtown Detroit in 2007, Meridian is honored to be part of our city’s RENAISSANCE.

D R AW I N G PROFESSIONALS DOWNTOWN Our workforce has grown 500% since moving downtown! Learn more about how you can grow with us at www.mhplan.com.

STRENGTHENING OUR COMMUNITY Hands-on engagement with local causes through sponsorships and employee volunteering

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HOW THE WOODWARD GARDEN BLOCK WAS FUNDED

DAVID HALL/CDB

Loans

$27 million

Equity/grants

䡲 U.S. Department of Housing and Urban Development: $27 million*

䡲 Detroit Economic Growth Corp.:

Tax credits

䡲 Private equity: $3.5 million

䡲䡲䡲

$18.5 million

U.S. Department of Treasury New Market tax credits: $10 million** State brownfield tax credits: $6 million State historic tax credits: $2.5 million

$3.72 million

$100,000 DEGC Smart Buildings grant $121,000 DEGC Creative Corridor Incentive Fund

Grand total

$49.2 million

* $19 million from the Section 108 Loan Guarantee Program; $8 million from 221(d)(4) program. ** Provided $4 million in equity.

Together, We Can

CELEBRATE DETROIT. PRIDE. IT’S THAT FEELING YOU GET WHEN YOU’RE PART OF SOMETHING GREAT. For nearly 100 years, Henry Ford Health System has been part of this amazing city. We’ve helped bring world-class health care to southeast Michigan and the patients and members we’re privileged to serve every day at Henry Ford and HAP. We’ve also brought the world to Detroit through our leadership in research, innovation and quality care. We’re proud to continue to invest in our hometown and look forward to what the next 100 years will bring.

To learn more, visit henryford.com and hap.org. Follow us on Facebook, Twitter and Instagram.

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HOW THE NEW RED WINGS ARENA WILL BE FUNDED

Bonds*

$450 million 䡲 Michigan Strategic Fund-issued Series A bonds: $250 million. Backed by property taxes already captured by the Detroit Development Authority 䡲 MSF-backed Series B bonds: $200 million. Backed by the $11.5 million Olympia Development has agreed to pay the DDA for bond retirement. How the bonds will be repaid: The Ilitches, through Olympia, will pay $200 million of the bond debt. Detroit’s DDA, via its property tax capture ability, will pay back $250 million of the bonds.

Equity

$85 million 䡲 Cash on hand in the DDA’s tax-capture account: $35 million 䡲 Land acquisition costs paid by Olympia Development: $50 million

Grand total

$535 million *Anything beyond $450 million must be paid by the Ilitches. The ancillary development — bars, restaurants, stores, apartments, townhomes — is at least $200 million, and will be privately financed by the Ilitches and their third-party business partners. The Ilitches are obligated to pay any arena costs beyond the $450 million.

Building Detroit’s Future Together Why does Honigman believe so deeply in Detroit? For 66 years, we have proudly been at the heart of Detroit’s greatness, resilience and resurgence as our clients turn to us for sound legal and business counsel. They are the deeply committed men and women ready to take the creative risks, launch new ventures, and realize the dreams on which a great city depends. Let us all work together on a shared vision for the Detroit of the future.

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CDB Living In The D_New CD Magazine sized 9/30/2014 1:22 PM Page 1

“WHAT’S DTE ENERGY DOING FOR MICHIGAN BUSINESS?” Last year alone, DTE spent $809 million with Michigan-based suppliers, far exceeding our target of $625 million. And as a key partner in the Pure Michigan Business Connect Initiative, we’ve spent more than $1.6 billion with Michigan businesses in the last two years. These dollars don’t just support business, they support jobs in our state and help people and communities thrive.

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HOW THE WESTIN BOOK CADILLAC REHAB WAS FUNDED

Loans

$103 million 䡲 iStar Financial Inc. first mortgage: $48 million 䡲 Section 108 HUD loan: $18 million (includes

$8.25 million Michigan Magnet Fund loan/New Markets Tax credits) 䡲 Detroit General Retirement System: $9 million 䡲 Downtown Development Authority (includes $1 million Wayne County grant) Development loan: $5.8 million

Tax credits

Authority loan: $6 million 䡲 National City New Markets tax credits loan*: $1 million 䡲 National City Bank condo loan: $6 million 䡲 Lower Woodward Housing Fund gap loan: $2.5 million

$33.1 million 䡲 State of Michigan historic tax credits: $4.6 million (includes Shorebank bridge loan) 䡲 Federal historic tax credits: $20 million

Equity

䡲 Single-business/brownfield tax credits: Hotel: $7.4 million Condos: $1.1 million

$43 million 䡲 Developer equity: $15 million (includes $12.5 million loan from First Independence National Bank)

Grand total

Remediation loan: $6.7 million

䡲 Michigan State Housing Development

䡲 Conservation easement equity (National City Community Development Corp.): $28 million

$179.1 million

*Converts to equity Updates since this 2006 deal came together: MSHDA became the senior lender on the condo part of the deal after PNC Bank (which acquired National City in 2008) and the Lower Woodward Housing Fund were repaid construction loans. Pension fund money also ended up in the deal; First Independence equity was backed by the Detroit Police & Fire Retirement System. The Carpenters Pension Fund was not an original lender, but committed $17.2 million to the project for letters of credit. This arrangement later led to a lawsuit (still ongoing) as an affiliate of the carpenters fund struck a deal to buy the primary iStar loan.

CDB Living In The D_New CD Magazine sized 10/3/2014 2:09 PM Page 1

The Richard and Jane Manoogian Foundation proudly supports the Detroit Homecoming and salutes the efforts of this significant gathering to help shape the future of our City of Detroit.

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REBUILDING THE D

HAMILTON ANDERSON ASSOCIATES

A lasting legacy Architectural firm makes its mark yesterday, tomorrow BY MATT LEWIS SPECIAL TO CRAIN’S DETROIT BUSINESS

or 20 years, Hamilton Anderson Associates has been changing the face of Detroit. Walked through the Wayne State University Welcome Center? That’s architect Rainy Hamilton Jr. and his team. Strolled down the wide sidewalks of Washington Boulevard or past the Wayne County Port Authority building? Hamilton Anderson Associates again. Now the firm is designing two of the city’s most anticipated projects: Orleans Landing, a $61 million 200-unit neighborhood development along the Detroit riverfront; and the redevelopment of the famed Hudson’s Department Store site in partnership with New York’s SHoP Architects PC. “No one knows the urban environment in Detroit better than HAA,” said Hamilton, 58, president and co-owner of HAA. “We’ve lived it, walked it, cried over it. We’ve been here 20 years; we didn’t leave and come back. Now it’s fashionable to be a Detroiter. It’s cool and exciting.” That connection to Detroit is what convinced St. Louis-based developer McCormack Baron Salazar to hire HAA to design Orleans Landing, its first Detroit project. “We’re not from Detroit; we don’t have those direct relationships with permitting, zoning and plan review, but Hamilton Anderson brings that,” said Jack Hambene, senior vice president and developer at McCormack Baron Salzar. “Orleans Landing will have a catalytic and transformational effect. By doing it with a high-quality urban design, we think that this will be a wonderful kickoff to a long-term transformation of the riverfront.” HAA got its start 20 years ago when Hamilton and landscape architect Kent Anderson rented a 1,000-square-foot office on the edge of downtown in Harmonie Park. Over the past two decades, the partners have grown the architecture and planning firm into one of the country’s largest African-American-owned practices. HAA takes in between $8 million and $12 million

GLENN TRIEST

Rainy Hamilton Jr. and his team at Hamilton Anderson Associates is designing Orleans Landing and the redevelopment of the Hudson’s Department Store site.

a year in revenue and still makes its home in the building where it started — although it did take over four other suites to make room for its 60-plus employees. HAA’s offices feel extremely current, featuring lofted ceilings and exposed ductwork and mechanicals, the kind of design popular in today’s lofts and live/work spaces. However, the design dates back to the early 1990s when Hamilton developed a plan for renovating the late 19th century building while an architect at Smith Group. It’s appropriate that Hamilton got a start in the heart of Detroit because the city’s schools and neighborhoods have had a profound influence on his life and career. He found his love for architecture at Charles

“We’ve been here 20 years; we didn’t leave and come back.” — RAINY HAMILTON JR. —

Drew Middle School, where he first studied drafting. He went on to Cass Technical High School, where he studied civil construction and technology, then to the School of Architecture at the University of Detroit Mercy. “Being a Detroiter, my focus has always been how I can contribute to the revitalization of Detroit,” Hamilton said. Anderson has been involved in any number of the city’s plans for revitalization. In 1979, he co-authored a plan for the riverfront called the “Linked Riverfront Parks Project,” which proposed many of the elements of the walkable, bikeable riverfront enjoyed today. In 1995, he created a master plan for Belle Isle on behalf of the parks department. Few elements of the plan were realized, but when the state took control of the park earlier this year, that changed. Now the Department of Natural Resources is using it. “When the governor’s office learned there was a master plan, they called us and had us present it,” Hamilton said. “It’s a good plan.”

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WHITE CONSTRUCTION

Building on 25 years White Construction a key player in arena project, M-1 Rail BY STACY COWLEY SPECIAL TO CRAIN’S DETROIT BUSINESS

he Detroit that W. Bernard White envisions contains a state-of-theart sports complex, a streetcar line that’s on a roll at last, and a newly constructed, 20-story office skyscraper to house some of the city’s growing workforce. The firm he founded 25 years ago, White Construction, is a key player in the first two projects, the Red Wings arena and the 20 stations slated to line the M-1 Rail route. The third is his dream project, the kind of commission he fantasizes about working on as a capstone to his career. “I’m extremely confident that the city is going to do well over the next five to 10 years,” he said. “There’s so much new investment and interest, which opens up all kinds of opportunities.” White Construction broke ground last month on one of its largest ventures to date: The new Red Wings arena, a $450 million, 20,000-seat arena tentatively scheduled to open in 2016. The firm is teaming up with two frequent partners, Southfield-based Barton Malow Co. and Indianapolis-based Hunt Construction Group, as the project’s general contractor. The major construction work will begin in March. For White, 59, it’s the latest in a series of jobs that have allowed him to help shape Detroit’s infrastructure. Everywhere he turns in the city, he sees projects his company has worked on: Campus Martius, Detroit RiverWalk, Detroit Public Safety headquarters, Eastern Market. White, a Detroit native and Lawrence Technological University graduate, started the company in 1989 after putting himself through college working at the Detroit Water & Sewerage Department. He decided to go into business for himself, he said, “because I didn’t want to wake up and be 60 and say I wish I’d given it a shot.” His firm has become a family business: His son Donovan, a 13-year company veteran, is the deputy operations manager; his nephew, Milton Jennings, is the deputy business development manager.

LARRY PEPLIN

W. Bernard White founded White Construction 25 years ago.

One early customer, Roberta Sanders of the New Center Community Health Services, recalls how her organization and White’s grew up together. Sanders, the mental health agency’s former executive director, hired White’s fledgling company in the early 1990s to work on the gut renovation of a decaying building — the first of many joint projects. “What impressed me the most is how they handle corrections,” Sanders said. “It’s construction; things sometimes go wrong. They were always immediately focused on ‘how do we make this right?’ They’re very, very interested in customer satisfaction.” White said he’s happiest being a midsize firm with annual revenue of $40 million to $50 million. That’s the size White Construction was during its peak years, from the mid-’90s to around 2005. Then the recession hit, decimating the construction indus-

“I’m extremely confident that the city is going to do well over the next five to 10 years.” — W. BERNARD WHITE —

try. Currently his 24-person firm posts around $28 million a year in revenue. “That was very challenging,” White said. “When you start losing your best and key people, it’s really hard to build your firm back up.” The tide has turned in the past few years, and White Construction is growing again. White expects to bring on another five employees over the next year. He’s also thinking about the next generation, both of his own business and others in Detroit. He looks for opportunities to support other community businesses, especially those led by African-Americans. “I think the mainstream community has provided and continues to provide opportunities for black-owned businesses like mine, but I also think we need to support each other more,” he said. “I have my business accounts at a black-owned bank. We buy our cars at black-owned dealerships, and I try to use black-owned subcontractors in my businesses as well as maintaining a diverse workforce.” White is also in the process of setting up an educational foundation to provide scholarships and grants for black students. “I think there’s three phases in your life: learn, earn and give back,” he said. “I’m transitioning into the phase where I’d like to give back to people who need opportunities.”

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fresh perspectives

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PATRICK THOMPSON DESIGN

Spaces to grow Thompson brings design eye to high-profile projects BY AMY HAIMERL CRAIN’S DETROIT BUSINESS

he Kresge Court inside the Detroit Institute of Arts is perhaps one of the city’s most glamorous locales. It has always been so — as evidenced by Bill Rauhauser’s photograph from the 1960s of a young woman smoking in the court, ropes of pearls draping around her and a coat set dashingly around her shoulders. It’s enough to make you want to light up. So when the DIA received a $268,500 grant last year to turn the court into the city’s “cultural living room,” skepticism ran rampant. How could the courtyard, which was originally outdoors and turned into a glassed-over atrium in the 1960s, evolve and still retain its sense of place? Enter Patrick Thompson Design, a Detroit interior design company that had only been open since 2009 and had recently come through the Detroit Creative Corridor Center’s incubator program. “We selected Patrick because his design was kind of the perfect integration of an indoor/outdoor space,” said Elliott Broom, vice president of museum operations. “It was his brilliance to pull all of the elements together.” Those include a pergola in the middle of the room that provides both an anchor and an outdoor sensibility. He used heavy Chesterfield couches that you would see in rich libraries, as well as white wire chairs you’d find on a patio. In short, he captured the spirit of the photograph but updated. As the city itself seeks to maintain its history and sense of place but also rehabilitate its buildings, Thompson, 36, is becoming the go-to interior designer. In five years, he has grown from one man in a spare bedroom into a team of five — looking to add two more — in a recently expanded 1,500square-foot showroom in the Auburn building in Midtown. Thompson’s name is attached to projects for Skidmore Studios, Grand Circus Detroit and TechTown Detroit. And he is developing the space for Sweet Lorraine’s

LARRY PEPLIN

In five years, Patrick Thompson’s interior design firm has grown from a spare bedroom to Midtown.

Fabulous Mac n’ Cheez in Midtown. “Patrick delivered exactly what we needed: brutal honesty and a set of interesting ideas that weren’t just recycled versions of other spaces downtown,” said Damien Rocchi, co-founder of Grand Circus. “We didn’t have the budget for (children’s) slides and flying foxes, so I particularly loved Patrick’s ‘residential theme’ idea to connect three otherwise disconnected floors.” Thompson also knows construction. He worked as a carpenter in high school and college and developed a love for building staircases and other projects. Being around architects and designers helped him appreciate design elements and how they integrated with what he was building. “That’s when it hit me that I want to be on the design end of this,” said Thompson, who has degrees in historic preservation and interior design. “I wanted to be the

“It was his brilliance to pull all of the elements together.” — DIA’s ELLIOTT BROOM —

one creating the spaces, though not always with my hands.” The firm does just under $1 million a year in revenue. Most clients are local, but Thompson is looking for interesting projects nationwide as well. “Detroit has many programs that foster the growth and success of a business,” he said. “For me, it was Detroit Creative Corridor Center at the startup phase. Midtown (Detroit) Inc. helped me to find and move into my office space. And then the big new one is the Detroit Development Fund, which is helping me with my office expansion.” Thompson loves living and working in Midtown near where other design businesses have clustered. His dream building, however, is a bit farther down Woodward Avenue, a crumbling facade on the back side of the Fox Theatre on West Elizabeth Street. “It’s kind of my dream space to design and hopefully have my office,” said Thompson, who grew up in Rochester. “I feel like you can design a space on a 20th floor with all glass and make it look beautiful and cool. That’s easy. “But to find the tiny little hidden gem or back office in a gas station and make that something special, that’s big.”

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BARTON MALOW

Help wanted Hiring Detroiters is job No. 1 for the Red Wings arena BY VICKIE ELMER SPECIAL TO CRAIN’S DETROIT BUSINESS

annis Mitchell can barely keep up with all the calls from subcontractors and others eager to help with construction of the $450 million Detroit Red Wings arena. She leads Barton Malow’s efforts to recruit and qualify Detroit subcontractors and city residents to jobs on the Olympia Development of Michigan project. Since midsummer, more than 1,000 contractors have expressed interest, and Mitchell is running like crazy to make sure they meet qualifications to bid on demolition, site work and construction tasks. “It’s challenging. There are only so many hours in the day,” she said. The company started considering how to win the arena project two years ago and quickly realized it needed to expand its reach into the Detroit subcontractor community. Managers were “shocked” at how few of its 15,000 contractor firms had city of Detroit certification, said Alex Ivanikiw, a senior vice president and 25-year veteran of the Southfield-based construction management company. The number had dwindled when the economy hit the skids and contractors either closed or did not renew their certification. Yet a bigger problem is finding enough skilled labor for its construction sites. Barton Malow and its partners — Detroit-based White Construction and Indianapolis-based Hunt Construction Group — are looking to hire thousands of carpenters, electricians and demolition workers to meet Olympia Development’s ambitious goal that 51 percent of jobs and 30 percent of contracts are to go to Detroit residents and Detroit businesses, respectively. “Our greatest limitation today is people,” said Ivanikiw. “We are rapidly approaching a point where we are saying ‘no’ to new opportunities.” In particular the company, which employs about 1,300 people, is “pretty stretched” for estimators and project managers, electricians and construction trades people. “Clearly this is the beginning of a contin-

ued expansion of construction work in the city of Detroit,” Ivanikiw said. Barton Malow has been a part of building Detroit since it was founded in 1924. It took its current name in 1932 and was based in Detroit until it moved to a new Southfield headquarters in 2001. The company built the Joe Louis Arena in 1979 and the Boll Family YMCA in 2005; it expanded both wings of the Detroit Institute of Arts (in 1966 and 1971). The company posted 2013 revenue of about $1.1 billion. Currently its team oversees construction of Wayne State University’s Biomedical Research Building, which is the tree-covered glass building on Woodward Avenue, and Detroit Medical Center’s critical care tower for Children’s Hospital. “Barton Malow has that intricate project management expertise,” said Ron Henry, chief facility and construction officer for Detroit Medical Center. “They keep all of our users of the space happy through the process.” That’s no small task on a tiny campus where you need to manage needs of patients, visitors and doctors. GLENN TRIEST Mitchell, who joined Barton Malow Dannis Mitchell is at the forefront of Barton Malow’s in 2013, is excited to be a part of the efforts to recruit Detroit subcontractors and residents for city’s future. She grew up in Detroit jobs with Olympia Development of Michigan’s Red Wings and got interested in the construction arena construction project. field through a program at Renaissance High School, which led her to most of her work has been in marketing, but an internship then a job at Brinker Group, a she recently started seeking new challenges. Detroit-based construction company. When the job of outreach for the arena proShe has been in the field a decade, and ject came up, “of course, I jumped at it,” she said. “I love to be out in the community.” She’s worked through many resources, from the Detroit City Council to a minoritysupplier organization, to locate Detroit subcontractors. She’s even driven around industrial neighborhoods in the city and noted promising companies to follow up with later. That outreach has brought in hundreds of contractors, some of which she’s convinced will end up with a long career working with Barton Malow. — ALEX IVANIKIW —

“Clearly this is the beginning of a continued expansion of construction work in the city of Detroit.”

CDB Living In The D_New CD Magazine sized 10/6/2014 3:08 PM Page 1

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Michigan State University is connected to Metropolitan Detroit through its many alumni, MSU Extension programs, arts and economic development initiatives, and partnerships in teaching and education. But what Spartans love most about the city are Detroiters like Sherronia Dorsey-Walker, a student currently studying social work at MSU thanks to the Steve Smith/Pershing High/MSU Scholarship for Academic Achievement. We couldnâ&#x20AC;&#x2122;t be prouder of Sherronia, and more thankful of Steve Smith and his passion for investing in students and Detroitâ&#x20AC;&#x2122;s future.

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NEIGHBORHOODS

GENTRIFICATION

The ‘G’ word Income diversity seen as path to vibrant city,neighborhoods

mbrace the “G” word. That’s what automotive dealer and real estate investor Greg Jackson told attendees at the Detroit Homecoming. “The word doesn’t scare me,” Jackson said. We need more diversity of incomes in Detroit, said Jackson, who is one of four African-Americans to own a Mercedes-Benz dealership and owns Lafayette Towers, an apartment complex on the eastern fringe of downtown Detroit. “Gentrification” is a term used to describe the reinvestment in deteriorating urban centers in a way that attracts higher-income people. In some Detroit circles, it puts “hipsters” in conflict with low-income residents, leading some residents to push for mandated “community benefit” pacts from developers. The topic was also addressed at the Detroit Homecoming in September. Dan Doctoroff, a Detroit “expat” and former deputy mayor of New York City, compared Detroit’s opportunities to the resurgence in Harlem. Central Harlem was 90 percent African-American between 1940 and 1990, said Doctoroff, now CEO of Bloomberg LP, in his Homecoming keynote address. As Harlem’s racial, ethnic and income diversity increased, the area became even more vibrant. For Shirley Stancato, CEO of New Detroit Inc., a nonprofit devoted to advancing race relations, the important issue is to make sure people’s voices are heard. “We do need additional population and a stronger tax base in the city,” Stancato says. “I’m a former banker. I know that.” But many Detroit residents “don’t see themselves in what’s happening” in robust areas like downtown and Midtown. They need to see how these investments will benefit them, she said, with better schools, blight removal and jobs for working-class and lowincome residents. It’s not a zero-sum game, added “expat” Gwendolyn Butler, a Mumford High School graduate and president/COO of Chicagobased Capri Capital Partners. “When I think about Detroit, the discussion needs to change and focus away from

AARON ECKELS

Greg Jackson, an owner of a Mercedes-Benz dealership and the Lafayette Towers apartment complex, said Detroit needs the diversity of incomes that comes with gentrification.

the racial aspect of gentrification to the economic issue of gentrification,” Butler said. “Under-served communities in Detroit need increased economic resources that more residents with higher levels of disposable income can bring. Those residents can be black, brown, yellow, white — doesn’t matter. Retailers are just looking for higher levels of disposable incomes. Butler “I am tired of the racial element of the discussion. That’s not the point. It’s making sure neighborhoods are vibrant enough that property values increase. For those who own homes now, their wealth increases, too.”

Butler said her firm has a specialty in urban retail development and has faced gentrification debates. Seven years ago, it acquired Baldwin Hills Crenshaw Plaza in south-central Los Angeles. “We spent more than $30 million, upgrading it from a Class C to a Class A property,” she said. “But we started by sitting down with the community and asking, ‘What do you want? What do you need?’ ” Today, it has national retail anchors and restaurants even foodies patronize, as well as a mix of local retailers and an upgraded food court that has given food truck entrepreneurs like Southern Girl Desserts a fixed location. Its shoppers include Asian, African-Americans and Hispanic residents from the surrounding areas, she said. — Mary Kramer

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DAVID FEEHAN

Stepping lively Afternoon walk reveals ‘new’ downtown, opportunity

n early 1994, after directing Kalamazoo’s downtown organization for five years, I was offered the opportunity to return to my hometown of Minneapolis, where I was expecting to lead the city’s community development agency. However, newly elected Detroit Mayor Dennis Archer called with a pitch I found too enticing to pass up. He said, “You can go back to Minneapolis and make a nice town even nicer, or you can come to Detroit and help me rebuild a great American city.” I was soon working for Detroit Renaissance as executive director of downtown and community development, and wondering exactly where to start. Downtown Detroit was on life support. More than a quarter of the commercial buildings were totally vacant, another quarter was less than 50 percent occupied. That left half the commercial real estate economically nonfunctional. Some retail stores (and there were few) were heated with kerosene space heaters. Even the better restaurants were not that good, and one, located near Harmonie Park, refused to put a sign on the exterior and kept the door locked. You had to knock to get in. Woodward Avenue was 10 lanes of potholes with little traffic. Pedestrian traffic was virtually nil, even at lunchtime. The Hudson’s building loomed like a foreboding castle, stripped by scrappers and open to anyone who might have the courage to wander into its abyss. Islands of activity existed — City Hall, the Renaissance Center and Greektown — but they were exceptions. Detroit’s neighborhoods were also facing massive challenges. Some community organizations, especially the Warren-Conner Development Coalition and the Southwest Detroit Business Association, struggled to overcome a tsunami of negative media coverage and failing city services, but most neighborhoods had simply lost the struggle and returned to prairie grass. Working with the CEO of Detroit Renaissance and city officials, I was assigned three priorities: Figure out a plan for the Hudson’s build-

ing, create a new “greater downtown” organization, and provide support to community development corporations in the neighborhoods. Working closely with Bob Larson, CEO of the Taubman Cos., and Jim Tervo, Mayor Archer’s top development adviser, we hatched a plan to acquire the Hudson’s building and much of the surrounding real estate, eventually totaling about 16 acres. With commitments of $2 million from local corporations and help from the Honigman law firm and Vigliotti Realty, we secured options and purchase agreements on about 80 percent of the buildings within our target area in less than a year. Those options were transferred to the city of Detroit once the project became public, and today Compuware, Quicken Loans and many other companies occupy the site. Rather than attempt a merger of the four downtown organizations that existed at that time, we elected to create the Downtown Detroit Partnership with a focus on the central business district but allied with and supporting the other groups along the riverfront and up into Midtown and New Center. I left Detroit in 1996 to become president of the newly created Downtown Partnership in Des Moines, Iowa, a move precipitated by the death of my father in Minneapolis and the failing health of my mother. My return trips to Detroit were infrequent, most recently a few years ago to visit with Dave Blaskiewicz, who was then president of the DDP and pointed out some of the noticeable public space improvements. Still, nothing quite prepared me for the change I experienced when I returned for the Detroit Homecoming event. It was, in a word,

stunning. A quick drive from Jefferson up Washington Boulevard, around the theater district and the ballparks, then to the New Center on Woodward revealed all kinds of new projects. I thought, “This is what transit-oriented development, Detroit-style, looks like.” Once I checked in at the Westin Book Cadillac — an unbelievable transformation, and one I thought I would never see — I strolled down through Hart Plaza to see the riverfront walkway. There I met a middle-aged couple, tourists from Frankfurt. German tourists? Further along the “international riverfront,” as it’s called, I encountered another group of tourists, this time from Sweden. I walked around the Renaissance Center, where my office used to be, and into Greektown; I paused for a brief conversation with a young couple from Spain. Diversity was taking on a whole new meaning in Detroit. My afternoon walk lasted about three hours. Sidewalks were clean. Planters were filled with colorful flowers and decorative plants. Bikes were nearly everywhere. Despite what appeared to be a slew of apartment and condo conversions, I was told that the vacancy rate for downtown units was approaching 1 percent, and waiting lists were as long as 18 months for good apartments. Coffeehouses and appealing restaurants seemed to beckon the much-increased pedestrian traffic. Lunch in Eastern Market with Dan Carmody confirmed what I had been reading: Eastern Market is arguably the premier market of its kind in the country. Carmody has gained a reputation as a visionary when it comes to connecting food, public health and community development. In the heart of downtown, I used to see vacant lots and empty buildings and think, “What a tragedy!” I look at those same buildings and surface parking lots and I now think, “What an opportunity!” But what of the neighborhoods beyond downtown? While housing initiatives are to be applauded, and while urban gardens and

Nothing quite prepared me for the change I experienced. It was, in a word, stunning.

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green space will offer some respite from painfully empty blocks, a real opportunity may be present along Detroit’s commercial corridors. Most cities have figured out how to revitalize downtown, but neighborhoods will not return to health until progress is also made in terms of bringing back commercial corridors such as Gratiot and Grand River. Cities such as Pittsburgh and Washington, D.C., are evolving new and creative strategies for bringing these business streets back to life, and Detroit might learn from them. No one wants to buy a home in a neighborhood where the local Main Street is abandoned and scary-looking.

One piece of concrete advice for Detroit: Find neighborhoods where there is still some good housing stock and social fabric, then concentrate on just a couple blocks of commercial storefronts at first. Work to build an alliance between business and property owners and neighborhood residents. Try to find locally owned businesses, not Walgreens and Subways. The chain stores will come later, but build a unique set of shops if you can. And create a local organization that can do the three M’s: manage, market and maintain. As I departed Detroit for a few days in the Upper Peninsula, I had to appreciate that with all of the actors, big and small, engaged in reviving Detroit, a corner had been turned. The clouds have broken, and once again, the sun is shining on Detroit. David Feehan is the president of Civitas Consultants LLC in Silver Spring, Md. He worked with Detroit Renaissance — the precursor to Business Leaders for Michigan — to revitalize the city’s core business district. Today he helps cities expand revitalization efforts beyond downtowns and into neighborhoods.

Invest. Engage. Revitalize. KPMG LLP is proud to be an integral part of Detroit’s future vision. We believe that empowering change comes from making positive strides toward transformation. Investing in our community not only energizes its corporate and urban culture, but also connects its people and processes to the results that will reshape our city. kpmg.com

© 2014 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in the U.S.A. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International. NDPPS 301642

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NEIGHBORHOODS

CORKTOWN

Progress, and a hangover As spotlight shines on new biz, longtime shops feel left out BY AARON FOLEY SPECIAL TO CRAIN’S DETROIT BUSINESS

year ago this week, Crain’s Detroit Business reported that Paul “PJ” Ryder was going into his sixth year of running PJ’s Lager House in Corktown in deep debt. Ryder had run up $30,000 in credit-card debt and owed more than $24,000 in back taxes. What a difference a year — and some inadvertent publicity — can make. When contacted for a follow-up, Ryder was out buying restaurant equipment, “if that’s any indication” of how business has picked up lately, he said. His debts are down. He was able to pay taxes on time for the first time in two years. Some menu changes — a price change here, an eliminated item there — helped. So did reviewing expenses line by line: Changing trash-hauling services, for example, helped the Lager House save $100 a month. What really helped business pick up, Ryder said, were new businesses opening nearby, including the Brooklyn Street Local deli, the Detroit Tough gym and the Detroit Institute of Bagels, all of which opened within the last year. “I just walk out, and all of a sudden I’ve got neighbors now,” Ryder said. PJ’s Lager House is on the eastern end of Michigan Avenue closer to downtown. “We like to call ourselves the gateway to Corktown,” Ryder said. The eastern end seems to be catching up with the western side, which has seen an influx in foot traffic thanks to new places like Mercury Burger Bar and Astro Coffee. The number of new businesses has strengthened the area’s reputation as one of Detroit’s thriving small-business neighborhoods. But there are also challenges: Business owners pool money for security patrols and parking lot guards. Petty crimes, such as larceny, are chief among the neighborhood’s issues. The city could also step up

ANJANA SCHROEDER

Many Corktown business owners aren’t certain what Corktown’s boundaries actually are. J. Xavier Slade, one of Corktown’s longtime business owners, sums it up this way: “I call it Corklandia.” the little things, such as improved litter pickup and snow removal, and not be overzealous on others, such as parking enforcement along metered streets.

SUZETTE HACKNEY

Paul “PJ” Ryder of PJ’s Lager House: “It’s a challenge every single day, but I still very much enjoy what I do.”

But Corktown is also grappling with who is included in its future progress — and who feels left out. As the national media continue to shine their lights on the neighborhood, some longtime businesses are growing frustrated at being passed over. Adding to the confusion, most of the owners themselves aren’t sure what the neighborhood’s boundaries actually are. Ryder assumed he was too far outside the prime Corktown bubble surrounding Slows Bar BQ and Astro Coffee to claim the moniker, but he still gets included in media reports. “I call it Corklandia,” said J. Xavier Slade, one of Corktown’s veteran business owners. He has operated Xavier’s 20th Century Modern Furnishings for two decades on Michigan Avenue at 18th Street, near the newly opened Two James Distillery. His clientele ranges from well-heeled suburbanites to collectors worldwide; he recently shipped off a $2,100 lamp to a New York buyer. But despite his success and longevity, Slade said some business owners have told him that he’s not a part of the neighborhood,

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Attractive business fronts can be found along Michigan Avenue on the west end of Corktown.

KENNY CORBIN

that his end of Michigan Avenue isn’t part of Corktown, even though Two James bills itself as a Corktown establishment. “I thought I was in Corktown all the time,” Slade said. “I figured Corktown’s boundaries went all the way up to the freeway.” The Corktown Business Association would agree that his shop falls within its informal boundaries, which stretch from Martin Luther King Boulevard to the north, Fort Street to the south, the Lodge to the east and I-75 to the west. Formed 18 months ago, the organization has 80 members and accepts both businesses in the area as well as their suppliers. “The more people we have in the association, the stronger our voice is in City Hall and the sooner we can get things done,” said Ron Cooley, who runs the CBA and father of Phil Cooley, who is arguably Corktown’s most famous business owner as a proprietor of Slows Bar BQ, Ponyride and Gold Cash Gold. Sometimes, Slade said, it’s the little things that make him feel left out of all the coverage and excitement about Corktown. During the annual St. Patrick’s Day parade, decorative shamrocks are hung up and down Michigan Avenue. In the years Slade has been in business — he also owns his building, the building next door, and a parking lot — he said no shamrocks were ever hung on his block. But, he said, “in (Two James’)

first year of business, they got a shamrock. I never got a damn shamrock.” The shamrocks, however, are given out by the Fraternal Order of United Irishmen, not the CBA, as part of their annual parade and run. Businesses along the run route are given Shamrocks; this year, the event grew so large that the route was extended up Michigan Avenue. Still, Slade feels left out because the spotlight seems to only fall on newcomer businesses. Slade said Phil Cooley has yet to visit his store. “How would you not know that my store is down there if I’ve been here for 20 years?” he asked. Rachel Leggs, owner of vintage-clothing store Rachel’s Place, stamps her business cards with contact information and the word “Corktown” underneath, but said she doesn’t feel like she’s truly part of the action going on just blocks away despite owning both a business and properties in the area. “Do you want the truth?” Leggs asked, pausing from flipping through the December 1979 issue of Ebony with soul singer Teddy Pendergrass on the cover. “They don’t want to deal with us. “I don’t think they’ve met black people with money.” But Ron Cooley said everyone is welcome in the Corktown Business Association and that he’s frequented Rachel’s Place on a

number of occasions. “We would love to have Xavier’s and Rachel’s as members,” he said. “Many of our members are businesses that have been here for more than 20 years. We welcome everyone.” One boon to being in the neighborhood is being situated in one of the city’s most bikeable neighborhoods. Both foot and bike traffic have increased dramatically in the past few years. “People bike from here to Midtown, and I saw a definite increase in traffic through my door as a result,” said Wade Kergan, owner of Hello Records on Bagley Street, with a laugh. What he’d like to see come to Corktown as a result is more retail, like Rachel’s Place. “There are a lot of places to eat,” he said with a laugh. The success of Hello Records has allowed Kergan to pursue a second location on the east side of the city or an eastern suburb. It was the diversity and energy of Detroit that drew Roger Dyjak, a lifelong Detroiter, to open up his gym, Detroit Muscle, on Beech Street. “I wouldn’t have done it in Clinton Township or Canton. I would have been bored,” he said. Detroit Muscle needed an entertainment license since it occasionally hosts live acts, something that wasn’t a problem getting from the city. “The city’s been on point,” Dyjak said. One of Dyjak’s other efforts is working with the city to address a growing homeless veteran problem. Detroit Muscle has hosted giveaways and drives for veterans in the city, about 500 of which are in Corktown alone, Dyjak estimated. “It’s one of the areas people don’t want to talk about,” he said, noting the city could stand to be more receptive to it. “People want to talk about, ‘Oh, Dan Gilbert’s building this.’ ” Back at the Lager House, Ryder is still dealing with the slow burn that comes with an influx of business. He sleeps a little easier, and he’s been able to pay himself a little bit, as opposed to last year, when he wasn’t paying himself at all. There are still some problems, like paying for someone to watch his parking lot and dealing with insurance costs for the building after a recent fire. “My insurance agent just decided he didn’t want anything to do with Detroit,” he said. “It’s a challenge every single day, but I still very much enjoy what I do,” he said. “I very much enjoy the people who come through here. If you have the passion for whatever it is doing, you’re going to persevere through whatever it takes to become successful.”

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NEIGHBORHOODS

STAKING THE FUTURE ON GRATIOT

BY AARON FOLEY SPECIAL TO CRAIN’S DETROIT BUSINESS

‘W

hat’s with all these damn cheesecakes?” asks a woman carefully dividing cheesecake into equal, triangular slices. The night’s crowd at Capers Steakhouse on the city’s northeast side ate all of its famous carrot cake, so tonight they’re getting by with an all-cheesecake dessert offering. It would be easy to miss Capers, hidden as it is along Gratiot Avenue between Seven and Eight Mile roads. This stretch of the city isn’t exactly barren, but it’s not the powerhouse business district it once was. Few familyowned businesses, such as the custom-rug dealer across the street, remain. But Capers has stayed, selling steak by the ounce to a packed house since 1982. In walks Gary Jacobs, dressed in a newsboy cap and smelling of Clubman. He greets each employee, giving the woman slicing the cheesecake a kiss on the cheek. To his mind, he hasn’t “stuck it out” at Capers as much as not given up on a good thing. Jacobs was a golfer who was on his way to a career on the green but needed a winter job to pass the time when the courses were closed. He started working at General Motors but left in the late 1970s after reading a book by real estate guru Al Lowry. He sold his Camaro Z28 and used the money to buy the building that now houses Capers, his first income property. Lowry filed for a headline-grabbing bankruptcy in the 1980s, but Jacobs has continued to grow his business holdings and investments. Over the years, he has owned dozens of properties across the city, but now holds only Capers and the two adjacent properties. Now his main investment is in East Lansing-based HRC Hotels LLC, which owns and operates several hotels nationwide. Jacobs initially assumed he would do a quick flip of the Capers building, but the project nearly ran him dry. The owner of Cheers, a nearby bar, was hosting steak dinners on Mondays and suggested Jacobs do the same on Sundays. “So I bought a loin — 15 pounds,” Jacobs said. “Scared me to death. I thought, ‘What am I going to do with this?’ ” He sold every ounce, weighing the cuts with a scale on the bar. The next Sunday, he sold 22 pounds of steak; his wife, Janina, coowner and a well-known golf writer, joined

MICHAEL JACKMAN

Gary Jacobs, with help from wife Janina, has been operating Capers Steakhouse on Gratiot Avenue south of Eight Mile since 1982. And why does the Gratiot corridor matter? “It’s closer to the money,” he said.

Hungry for more Steakhouse owner looks to invest in, making the now-popular desserts. On the third Sunday, bartender Sue Taormino — who still works there — told Jacobs that the staff at the now-defunct Big Bill’s Saloon planned to stop by for steak. Again, Jacobs sold out. The same thing happened in the middle of a 1983 snowstorm that dumped almost a foot of snow on Detroit. “That’s when I truly knew we had something,” he said. The crowds still come, daily now, for the T-bones at 70 cents an ounce — 80 cents togo — and filet for $1.50. He sells 2,800 pounds of steak on good weeks.

“I’m a Detroiter. I’d rather do it all here. It’s just my home.”

The success at Capers let Jacobs buy more properties, including the two adjacent to the steakhouse. “The buildings around us were just in such disarray,” he said. “There was a drug den and a chop shop. It was despicable.” Now he’s in discussions with the Detroit Land Bank about what the future of this area might look like — and what his next investments might be. “I am strongly considering — depending on what is said downtown, which is of course always a challenge — what we can do with it,” Jacobs said. “I’m no longer interested in waiting on the city or waiting on the government or anyone else.” He’s cautious, though, because he’s seen how previous city administrations treated small-business owners. “The best word my mother used to use was ‘discombobulated,’ ” he said. “It’s almost like it’s anti-business instead of pro-business.”

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He’s taking a wait-and-see approach with Mayor Mike Duggan but says he has seen some improvement, which he credits to Lisa Howze, the mayor’s director of governmental affairs, an eastside resident and longtime Capers customer. He also has been impressed with the manager of nearby City Airport, Jason Watt, and Air Traffic Manager Greg Williams. Jacobs said the trio approached him and a handful of others with a plan on what to do with the airport and the areas surrounding it, should the city remain in control of the space after it exits bankruptcy. Currently, the plan of adjustment includes a $28.5 million investment in the facility. The idea is to bring job development and community rebuilding to the area, with the airport as its nucleus. More industrial-focused

clients would be attracted, including plane builders and engine builders, to the site, as well as a potential increase in commercial flights. “I’m strongly looking at doing an airline myself,” Jacobs said. Because of his investment with HRC Hotels, he’s also strongly considering building lodging in the area. What’s key to Jacobs, though, is employment. “People truly want jobs here. They want to work. They don’t want to be on the government dole,” Jacobs said. “That’s one of the wonderful offshoots about being here for nearly 40 years. These things are now possible, and I think a lot of that has to do with Mayor Duggan’s attitude and certainly Lisa Howze.” Howze, who lives near Capers in the Eight Mile-Gratiot area, first met Jacobs during her first term in the state Legislature when the restaurant was undergoing renovations. “It’s one of those places that’s always been there, but I never took the opportunity to go,” Howze said. “When I saw how many people were coming in, even from the west side of town, it’s like, ‘Wow, OK, they have a good thing going here.’ ” When Howze passed her first bill in the House, she asked Jacobs and his crew to pre-

pare legislators a lunch, including her favorite dish: rice pilaf. It’s tradition for rookie legislators to bring in a symbol from their district upon passage of their first bill. They’ve built a rapport through the years. “He recognizes that Gratiot is an artery into our city, into downtown,” Howze said of Jacobs. “When you have individuals like Gary who are committed in the neighborhood, who choose to be in the neighborhood, you hope that it will become contagious.” Jacobs echoes the importance of the Gratiot corridor. “It’s closer to the money,” he said. “I hear it every day, ‘I’m not going to drive from Eight Mile to downtown and take a chance on my car breaking down,’ and we want to change that.” Some things have to change in the city first. Besides working on the east side, Jacobs and HRC are working on building hotels in North Dakota, where he’s been spending time lately. “I’d much rather build it here,” he said. “The difference between acquiring, permitting, inspections and final occupancy is night and day between North Dakota and Detroit. “But I’m a Detroiter,” he added. “I’d rather do it all here. It’s just my home. I was born here, raised here; this is me.”

CDB Living In The D_New CD Magazine sized 10/3/2014 12:42 PM Page 1

The Kresge Foundation works to expand opportunity for low-income people in America’s cities through grantmaking and investing in arts and culture, education, environment, health, human services and community development efforts in Detroit. Kresge’s Detroit Program is proud to partner with organizations promoting long-term economic opportunity that advances social equity, promotes cultural expression, and re-establishes Kresge’s hometown as the center of a vibrant region.

3215 W. Big Beaver Road | Troy, Mich. 48084 | 248-643-9630 | kresge.org

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ESSAY

BARBARA GERVIN-HAWKINS

Ready to reconnect Homecoming inspires ‘expat’ to commit to city’s future

hrough the years, I always wondered what I could do to make a meaningful contribution to my home, Detroit. Well, the Detroit Homecoming crystallized my thoughts and brought into focus not what I can do but what I will do. I am committed to contributing a significant amount of intellectual knowledge, financial resources and time to support an improved quality of life for Detroiters. And I’m committed to reconnecting with other local and ex-Detroiters to make this happen. I am a daughter of Detroit, and feel I owe my city so much from the many years of community support, the education I received as a student in the Detroit Public Schools system, my collegiate days at Eastern Michigan University and even my early professional years at businesses such as Allstate Insurance Co., Ford Motor Co. and the Detroit Edison Co. All of my successes can be attributed to my experiences in the great city of Detroit. It is time for me to roll up my sleeves for my city and take on some heavy lifting along with sharing a continuous positive message.

GEORGEGERVIN44.COM

Former NBA great George Gervin and his sister Barbara Gervin-Hawkins both attended the Detroit Homecoming in September and both are alums of Martin Luther King Jr. Senior High School in Detroit.

All of my successes can be attributed to my experiences in the great city of Detroit. When I travel all over the country and see other “expats,” I hear of the wonderful stories of the past; now I can talk to them about how they can assist with the future development of Detroit. During the short week I just had in Detroit through the Homecoming, I now plan to purchase a condo, hopefully to help the tax base, and establish a presence. I have met with community and business leaders and have put together a 40-member plan-

ning team of local Detroiters who will be participating in meetings via email, Skype and other technological devices. Our next face-to-face planning meeting will occur in December 2014, where we will unveil much-needed community-based initiatives. My brother (former Eastern Michigan University and National Basketball Association great George Gervin) and I are now reconnected to Detroit, and we are committed to doing our part in the revitalization and transformation of our hometown. Barbara Gervin-Hawkins is president and CEO of George Gervin Youth Center Inc. in San Antonio. She has raised more than $150 million in revenue to provide services to at-risk youth and their families. She attended Martin Luther King Jr. Senior High School.

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“WHO BRINGS ENERGY TO THIS COMMUNITY?” Strong communities are the foundation of a healthy, thriving environment for all people. That’s why DTE Energy helps power communities through supporting projects and programs that enhance life. We take pride in our efforts to provide positive youth development. We partner with local leaders to promote community initiatives from environmental education to economic development, including community outreach services. We’re using our energy to serve.

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EAST JEFFERSON DISTRICT

PHOTOS BY KENNY CORBIN

Left: Jefferson and Chalmers avenues intersect in the area that bears the street names. Above: Craft Work is among the small businesses that have opened in the West Village in the past year.

Cash in the corridor Investors choose East Jefferson despite challenges BY ANNA CLARK SPECIAL TO CRAIN’S DETROIT BUSINESS

ou could call Detroit’s East Jefferson corridor a museum of curiosities. It is five diverse neighborhoods along the river: Lafayette Park, Rivertown, The Villages, the Marina District and JeffersonChalmers. Together, they envelop the Dequindre Cut, the Jefferson North Assembly Plant, the Detroit Waldorf School and Belle Isle, among other destinations, offering an eclectic window into life in the city. “What’s unique about the East Jefferson

Seafoam Palace, now in development, will display collections from folklore, mythology, the natural sciences, astronomy and more.

corridor is that you’ve got five distinct neighborhoods … and each has various types of investment happening,” said Joshua Elling, executive director of Jefferson East Inc., the community development corporation. But now, an actual museum of curiosities is coming. The Seafoam Palace is in development in the 13,000-square-foot building of a

former lumber company office on Kercheval Avenue in Islandview Village, just east of Eastern Market and near the Heidelberg Project. The museum’s team found the building, which had been vacant for two decades, posted on Craigslist. They bought it for $26,000. Seafoam Palace will display collections of artifacts from folklore, mythology, the natural sciences, anatomy, astronomy, mineralogy and map-making. The museum, which has filed for nonprofit status, will also feature work from mixed-media artists, presentations about “historic adventurers,” and community workshops. “We would like the space to offer narratives about natural and unnatural phenomena and invite our visitors to explore new perspectives and ideas about the world around them,” said photographer Julia Solis, the museum’s co-founder. SEE PAGE 46

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Q&A/JOSHUA ELLING Executive director Jefferson East Inc. How would you describe investment along East Jefferson? What’s unique about the East Jefferson corridor is that you’ve got five distinct neighborhoods and each has various types of investment happening. Obviously, the two hottest areas we’re seeing (are) Rivertown, where there’s a lot of energy for largerscale new development, Elling and The Villages, which is a hot real estate center right now. Jefferson-Chalmers probably has the weakest (investment) demand, but even here, there’s the success of the Chalmers Square Project. What is stalling investment in the district? What’s limiting growth throughout the corridor is ready-to-go retail space, so businesses like the Parker Street Market and Sister Pie, they’ve really had to go in and prepare to fully renovate their space. Especially in Jefferson-Chalmers, retail space is so antiquated that it needs a lot of work. It’s good if landlords are communicative and flexible with rents so that it can get good build-outs with quality tenants. We still have a problem in the far eastern area with landlords sitting on property and waiting for their big payday. What is your biggest worry? I still worry about the people who want to get rid of blight by just knocking down all the buildings. We have a lot of very historical districts with their traditional frontage maintained, like the Agnes Street intersection in the West Village, and Jefferson-Chalmers. That’s what people seem to be craving; they don’t want to see it demolished for another strip designed for motor-centered retail. People are drawn to denser commercial districts; they want to be able to walk to get a cup of coffee, walk to the grocery store, take a quick bus ride downtown. We value the density and walkability of the urban form, and historic preservation is one part of that.

EAST JEFFERSON DISTRICT

FROM PAGE 45 But opening a business in the East Jefferson corridor comes with unexpected challenges. Solis’ building was built in 1917 and is on the National Register of Historic Places; it has good wood and interesting plasterwork, but after years of vacancy, it requires unusual attention — and expense. A recent successful Kickstarter will fund repairs on the roof and exhibition space, but money for additional work — like linoleum floor removal, hardwood floor finishing, installation of heating vents, electricity updates and new staircase railings — is not yet secured. “Getting the place ready for the public will end up costing much more than we thought,” said Solis. The Seafoam team is seeking a grant writer to move it forward. Its optimistic date for opening is in late 2015, though Seafoam will begin programming “in or outside of the building” by summer. It already had one outdoor event this year: “Animated Curiosities,” a screening of short animated films from around the world. 102

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JEFFERSON DISTRICT

INVESTING IN THE HOOD Selected recent investments in East Jefferson: ■ DuCharme Place Area: Lafayette Park Type: Residential (185 units) Developer: Birmingham-based McIntosh Poris Associates and Walter Cohen Investment: $30 million Status: Fall 2014 expected construction start, late 2015 opening ■ Globe Building: Outdoor Adventure & Discovery Center Area: Rivertown Type: State-run nature center Developer: Michigan Department of Natural Resources, Detroit-based Roxbury Group, Detroit Economic Growth Corp. Investment: $16 million Status: February 2015 expected opening

Is it worth the effort? Solis said that support in the East Jefferson corridor helps them build momentum. “We have a strong community that is actively working on making the neighborhood safer and more attractive to new arts and business projects, and we’ve received a warm welcome from the residents who are excited to see a long abandoned building put to new use,” Solis said. More and more investors are making that optimistic leap in East Jefferson, both on a small scale, like the Seafoam Palace, or as a massive operation, like the $60 million Orleans Landing retail and residential development in Rivertown. Rivertown is further benefiting from the completion of the RiverWalk, including Mount Elliott Park, which opened in June as part of a $44 million east riverfront investment by the Detroit Riverfront Conservancy. In Jefferson Chalmers, the Chalmers Square Project reconstructed three vacant buildings, enlivening a historic district with family-style apartments and commercial space. In the Marina District, Parkway Foods opened a 47,000-square-foot store in a vacant shopping center. This comes in addition to much-celebrated small businesses opening in the past year, including Craft Work and Detroit Vegan Soul in West Village, Rose’s Fine Food in the Marina District and Coffee and (___) in Jefferson-Chalmers. Joshua Elling, executive director of Jefferson East Inc., said investment is multifaceted in the neighborhood.

■ Chalmers Square Project Area: Jefferson-Chalmers Type: Residential/commercial (47 housing units, 17,000-square-feet retail) Developer: Detroit-based Shelborne Development Investment: $7 million Status: Complete ■ Rivertown Senior Neighborhood Area: Rivertown Type: Residential: 80 assisted-living units (phase one); 50 independent-living units (phase two), 10unit nursing home (phase three) Developer: Presbyterian Villages of Michigan, United Methodist Retirement Communities Investment: $40 million Status: Phase one complete; phase two in process ■ Alden Park Towers Area: The Villages Type: Residential renovation (380 units) Developer: Denver-based Triton Management Investment: $8 million Status: Three of four towers complete

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“We always want to have third-place amenities, like bars and restaurants, places where residents and visitors can go,” he said. “But we also think the next frontier is diving into the Marina District and the Mount Elliott business corridor. We really want to support light manufacturing industries that create jobs not in the twos or threes or fives, but 15 or 25 residents at a time.” Elling pointed out that the Marina District has a great deal of vacant land, making it possible to build a strong industrial district that is buffered from residential areas. “Jefferson-Chalmers is a neighborhood whose growth we want to see, and the exciting Agnes (Street) strip has just blossomed,” Elling said, “but we want to see a broad cross-section of our residents employed here, especially longtime residents of the neighborhoods.” For residents, housing options are growing. In The Villages, Alden Park Towers has come back to life. The Villages are also seeing a lot of rehabilitation on single-family homes. “It’s hard to find a house in West Village,” Elling said. “They’ll go quickly, even the ones that need a lot of work.” And after being on hold for years, DuCharme Place is a $30 million Lafayette Park residential project, one of the few fromscratch developments in the city. The hope, then, is for East Jefferson to not only become a hub for play and work, but also, for a broad cross-section of the city, a place to call home.

■ Orleans Landing Area: Rivertown Type: Residential/commercial (278 housing units, 10,500 square feet of retail) Developer: St. Louis-based McCormack Baron Salazar Investment: $61 million Status: Site preparation

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That’s why we’ve committed up to $1 million in forgivable grants for homebuyers taking part in the Marygrove revitalization program. We salute the many organizations, businesses and residents who are working together for the good of Detroit. As a community bank, Talmer is here to support the committed partnership that is moving our city forward.

■ Border Patrol facility Area: Marina District Type: Federal security center Developer: Department of Homeland Security Investment: $17 million Status: Under construction ■ Whittier Manor Area: Rivertown Type: Residential (150-unit affordable senior housing in phase one) Developer: Detroit-based Phoenix Group Investment: $40 million for phase one Status: Phase one complete; phase two (Whittier Hotel) in planning

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EQUAL HOUSING

LENDER

CDB Living In The D_New CD Magazine sized 10/8/2014 3:59 PM Page 1

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GRANDMONT ROSEDALE

of Detroit’s most stable areas. The stately housing stock has for decades attracted middleclass families to the area that is technically five distinct neighborhoods that spread across 2.5 miles that centers on Grand River and Southfield Highway. In recent years, however, the area has become one of the key areas for reinvestment. The Detroit Economic Growth Corp. named Grandmont Rosedale as one of the districts to which it would bring its Revolve Detroit program, using pop-up shops as a way to revitalize vacant commercial areas. That has turned into WorkPlace. A new Meijer is under construction at Grand River and McNichols Road. Even Detroit Soup started offering dinners in the neighborhood. Attendees pay $5 for soup, which volunKENNY CORBIN teers make, and listen to pitches The business district along Grand River Avenue between Evergreen Road and Asbury Park has been hit-or-miss for community projects over over the years. A new co-working space, called WorkPlace, is an effort to change that by giving small businesses a dinner. Afterward, everyone place to test their concepts. votes on which project should collect the kitty from the night’s dinner. Still, the business district along Grand River, between Evergreen Road and Asbury Park, has been hit-or-miss over the years. Naturally, residents were a bit skeptical when they saw Amanda Brewington slingBY SUZETTE HACKNEY 102 53 ing coffee from a homemade pour stand SPECIAL TO CRAIN’S DETROIT BUSINESS 5 10 with three electric kettles. Her pop-up 1 75 o-working spaces have popped opened on Grand River for 28 days in No96 S TATE up all over downtown and Mid3 ED S vember and December 2012. Brewington UNIT A D A 39 CAN town, offering people the ability answered a lot of questions, served the hot to share Wi-Fi, conference facilijava and convinced herself that a permanent 12 75 94 ties and workspace without havGRANDMONT coffee shop was her destiny. 24 ing to invest in private office ROSEDALE Always Brewing Detroit opened in July space. This month, just such a spot is com2013, and she has experienced a 5 percent Down Grand River, several other businesses ing to northwest Detroit in a large, renovatgrowth in profit month over month. To ed commercial building on Grand River Av- are popping up, including a yoga studio; an open, she secured two loans — $15,000 event-planning and decorating company; a enue. from TechTown’s Thrive One Fund, for mithrift and resale clothing shop; and a com“This is the first of its kind out in the nority- and woman-owned businesses, and pany that offers social painting classes. neighborhood,” said Tom Goddeeris, exec$5,000 from the Detroit Micro-Enterprise “There’s been a lot of success with these utive director of the Grandmont Rosedale Fund, which helps small businesses in Detypes of models in other parts of Detroit, Development Corp. “It will also serve as a troit obtain financing unavailable to them and we’re hoping to start the same kind of business incubator with a retail compofrom traditional banks. investment on Grand River,” Goddeeris nent.” Brewington, 29, still waits tables at a said. “We’re just starting to get things off WorkPlace, as it is being called, will offer downtown restaurant to make ends meet, the ground. We feel like we need to be a both workspace and a spot for small busibut she’s confident that the coffee shop will complete neighborhood to stay competinesses to pop up and test their concepts. support itself, both the overhead costs and tive.” The first popup within WorkPlace will be repayment of the loans, before too long. Entrepreneurship is trickling into the Love Travel Imports, a boutique that sells SEE PAGE 50 Grandmont Rosedale neighborhoods, one handcrafted jewelry, scarves and handbags.

Hot spot for pop-ups

Grand River ready to open as co-working space for entrepreneurs

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FROM PAGE 49 She had fleeting thoughts of opening a coffee shop downtown or in Midtown, but the over-saturation and high rents ended that fancy. She said she always wanted a community gathering spot that happened to serve coffee. To that end, Always Brewing Detroit hosts an open mic night for musicians, poQ&A/ TOM GODDEERIS ets and comedians every Executive director, Thursday. There’s also Grandmont Rosedale craft night, and a Bring Development Corp.: Your Own Board Game crainsdetroit.com/detroit2.0 night. This summer, Brewington and her fiancé left their downtown Detroit apartment and bought a home in North Rosedale Park. “I realized I wanted my business to be in a neighborhood where I would meet people,” she said. Pop-ups are all the rage in Detroit. It allows entrepreneurs like Brewington to test the water before putting down roots. But for Regina Ward and Nicole Martin, they plan to spend the next 90 days convincing residents that Anahata Yoga should be a permanent neighborhood fixture. In Sanskrit, Anahata means “unstruck, unhurt and unbeaten,” exactly how they view Detroit and its residents. “Detroit is an awesome place,” Ward said. “We just never stop in Detroit — no matter what Detroit is going through, we persevere.”

ON THE WEB

INVESTING Selected recent investments in Grandmont Rosedale area:

䡲 Two-year grant to the Grandmont Rosedale Development Corp. to acquire, renovate and resell vacant single-family homes Investment: $225,000 Investor: The Kresge Foundation Status: Grant awarded in 2013

䡲

IN THE HOOD Streetscape, landscape improvements Investment: $1.2 million Investor: Michigan Department of Transportation Status: Completed in 2005

䡲 Streetlighting upgrade

Investment: $900,000 Investor: Detroit Public Lighting Department Status: Completed in 2005

䡲

Grant for community improvement projects, including neighborhood welcome signs, security Investment: $50,000 Investor: The Kresge Foundation Status: Grant awarded in 2010

Pop-up project to promote economic development Investment: $30,000 Investor: Revolve Detroit Status: In progress

䡲

Develop WorkPlace, a coworking space and business incubator Investment: $250,000 Investors: Revolve Detroit, ProsperUs, New Economy Initiative Status: In progress

䡲

New Meijer store on Grand River just west of Grandmont Rosedale Investment: $20 million Investor: Meijer Inc. Status: In progress

U-M CELEBRATES DETROIT’S HISTORY, IMPACT AND FUTURE

The U-M Detroit Center

Founded in Detroit in 1817, the University of Michigan’s long-standing relationship with the city includes the U-M Detroit Center with classrooms and spaces for exhibitions and project-based research; our popular Semester in Detroit program, designed for Michigan students to live, learn and work in the city; a tremendous tradition of cultural exchange especially with the Michigan Opera Theatre and the U-M School of Music, Theatre & Dance; strong relationships with the business community and the non-proﬁt sector featuring hundreds of students and faculty members engaging with Detroit-based initiatives each year.

U-M Stamps School of Art and Design student volunteers

U-M Ross School of Business student organizers

CDB Living In The D_New CD Magazine sized 9/30/2014 8:11 AM Page 1

Detroit is home.

Deloitte has been honored to call Detroit its home since 1947. The inaugural Detroit Homecoming event was a huge success. Thank you to Crain’s Detroit Business for making it possible. Deloitte is a proud to have served as a sponsor for such an impactful event in our great city. www.deloitte.com

As used in this document, “Deloitte” means Deloitte LLP and its subsidiaries. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. Certain services may not be available to attest clients under the rules and regulations of public accounting. Copyright © 2014 Deloitte Development LLC. All rights reserved. Member of Deloitte Touche Tohmatsu Limited

CDB Living In The D_New CD Magazine sized 9/30/2014 1:58 PM Page 1

Our reach is global. Our roots are unmistakably Detroit. +

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SOUTHWEST DETROIT

Where resiliency calls home Southwest Detroit mixes hard work, entrepreneurship BY AARON MONDRY SPECIAL TO CRAIN’S DETROIT BUSINESS

he Michigan Central Station stands sentry at the entrance to Southwest Detroit. Drive West Vernor Highway underneath the colossal ruin and you’ll emerge into one of the city’s most vibrant districts: Mexicantown. Here, just five minutes from downtown, West Vernor rolls through a strip of Mexican restaurants that attract crowds: Honey Bee Market, which is known for its exceptional produce; the popular Café Con Leche coffee shop; and the dense residential neighborhood of Hubbard Farms, which is filled with Victorians and other gracious homes along West Grand Boulevard. “We have a thoroughfare on Vernor that’s absolutely thriving,” said Hector Hernandez, executive director of Southwest Economic Solutions. But this well-known stretch of Southwest Detroit represents a mere fraction of a neighborhood that sprawls across approximately three zip codes. Beyond Mexicantown lies a collection of stable neighborhoods that are mostly populated by Latinos and other immigrants. There is a strong tradition of smallbusiness ownership, whether it’s one of the many restaurants or clothing stores selling beautiful embroidered guayabera shirts. “We’re resilient; we’re vibrant,” said Lydia Gutierrez, owner of Hacienda Mexican Foods, which produces tortillas and other foods. “Lots of people who were laid off from automobile companies started their own businesses. They opened up restaurants and jewelry stores. “We know what work is. We rolled up our sleeves and will continue to do so. Being open to immigrants has certainly helped our community. Anywhere in the country, where you see immigrants, you’ll also see growth.” Jose DeJesus Lopez, who owns Mi Pueblo restaurant at Dix Street and Vernor Highway, believes the symbiosis between business and community is what makes the area special. Without the support, he said he would not have been able to expand from a humble home operation into a 60-table restaurant.

This section of West Vernor Highway in Mexicantown offers storefronts next to Detroit Cristo Rey High School (far left). KENNY CORBIN

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“Everything we do here is local,” Lopez said. “The people who work for me are incredible.” In fact, Southwest Detroit was the first area in the state to form a business improvement district. By electing to tax themselves, commercial property owners have generated funds for streetscape improvements, garbage pickup, extra security patrols. Last year the improvement district hauled 500,000 gallons of rubbish out of trash cans and another 36,000 gallons from the street. It removed 1,257 instances of graffiti, swept 644 miles of sidewalk and mowed 60 miles of grass. The biggest project to date, however, has been the effort to get the 200 streetlights along a 2.3 mile stretch of Vernor relit. It took six years to raise the $6.4 million necessary and get all the approvals, but this spring the Southwest Detroit Business Association

Q&A/ LYDIA GUTIERREZ Owner of Hacienda Mexican Foods: crainsdetroit.com/detroit2.0 broke ground on the project. “This is a Latino neighborhood, and one of the things about Latino families is they often shop as a family,” said Theresa Zajac, vice president of SDBA, which operates the BID. “They all go shopping when dad comes home. So if you don’t have lights at night, you lose customers. And they didn’t have any lights.” That is slowly changing as two blocks of Vernor are illuminated at a time. It is also making the area more attractive to new residents who are attracted to an area that is “edgier than downtown or Midtown, but also more affordable,” said Kathy Wendler, president of SDBA. The largest employer in Southwest, both historically and at present, is manufacturing. The scrap yards may have replaced the automobile industry as the primary employers, but manufacturing is and likely will reSEE PAGE 54

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FROM PAGE 53 main a major part of its future. “There’s a great pool of employees nearby — people here have a tremendous work ethic. 95 percent of our employees live within three miles of Hacienda,” Gutierrez said. Because of open spaces like those at the site of the former Cadillac Plant on Clark Street and others in the once industry-saturated neighborhood of Delray, there’s room to grow. “If you have an interesting product and are willing to experiment in this vibrant community, you’ll attract visitors interested in learning and exploring,” said Olga Stella, vice president of business development at the Detroit Economic Growth Corp. “There really are places for businesses to land,” she added. “Land assembly in Detroit is difficult, but there’s better and bigger sites in Southwest.” Southwest Detroit is already a locus of transportation mediums — it has easy access to major freeways, the Ambassador Bridge, rail yards, and the Detroit River. Along with the Detroit Intermodal Freight Terminal, plans are currently underway to build a second span to Canada, the New International Trade Crossing, which would land in Southwest. “I see huge investments coming into the neighborhood as a direct result of the NITC,” Wendler said. “It’s crucial that when people arrive (from Canada) they see a very beautiful place.”

INVESTING IN THE HOOD

Selected investments in Southwest Detroit:

West Vernor streetlights Plan: The Southwest Detroit Business Association is relighting 2.3 miles of West Vernor Highway, from Clark Park to Patton Street, with 200 new streetlights and poles, and new sidewalks and landscaping. Investors: SDBA raised funds from Michigan Department of Transportation, city of Detroit, Southeast Michigan Council of Governments, Kresge Foundation, W.K. Kellogg Foundation, J.P. Morgan Chase & Co., Community Foundation for Southeast Michigan and Detroit LISC. Investment: $6.4 million Detroit Intermodal Freight

Terminal

Plan: Michigan Department of Transportation plans to build a massive hub to facilitate transfer of rail to road freight exchange at the Livernois-Junction Yard. Developer: MDOT Investment: Estimated at tens of millions; 4,500 jobs expected Status: Proposed; still in planning phase

Building rehab projects Plan: Restoration of the Odd Fellows and Rebert buildings Developer: Southwest Detroit Business Association Investment: $6.2 million Status: Complete

Vernor Square Plan: Retail space, public square, light industrial development of an abandoned 6.9-acre parcel at West Vernor and Livernois Avenue Developer: Southwest Detroit Business Association, Detroit Economic Growth Corp., Michigan Municipal League and Detroit-based Archive Design Studio Investment: More than $17 million Status: Estimated completion in 2017

Microloans for small business Plan: Southwest Solutions and ProsperUS offer microloans to businesses in Southwest Detroit as well as technical assistance and entrepreneurial training. Funders: Kresge Foundation and the New Economy Initiative Investment: $500 to $15,000 per business Investor: Southwest Solutions and ProsperUS business training program

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BRIGHTMOOR

KENNY CORBIN

Businesses such as Motor City Java & Tea House and the Redford Theatre, along Lahser Road, are in the most stable pocket of retail in Brightmoor.

Meijer magnetism New store expected to help boost urban revitalization BY SUZETTE HACKNEY

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hat’s all the buzz in Brightmoor? Meijer, of course. Residents of the 4-squaremile enclave in northwest Detroit say the addition of a superstore to the neighborhood will only enhance the urban revitalization that has taken hold in recent years. Brightmoor isn’t overrun with new commerce, but the new Meijer store (set to open in 2015), along with strategic investment-established businesses, is creating a certain energy. “I expect a lot of development to come

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next year; generally, people are looking to see what Meijer is going to generate,” said Soummer Crawford, vice chair of the Brightmoor Alliance. The most stable pocket of retail exists at Lahser Road and Grand River Avenue,

where Sweet Potato Sensations, the Redford Theatre, Motor City Java & Tea House and the newest tenant, Artist’s Village, are located. TechTown Detroit, which has invested about $300,000 in the area, has been coaching these businesses and merchants toward stabilization and growth. TechTown is best known for being a hightech incubator attached to Wayne State University, but its smaller SWOT City program assists new and existing small-business owners across the city as a way to preserve — and grow — jobs. Brightmoor has been hit hard by crime, SEE PAGE 58

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FROM PAGE 57 blight and abandoned homes, poverty and a declining population. But a community-based effort to rebound has yielded positive results. Community gardens are thriving in Brightmoor. Thousands of dilapidated homes and commercial buildings have been demolished. Homeownership programs are encouraging those with some do-it-yourself skills to rehabilitate the area’s housing stock. There’s even a new effort by an Oregon-based human milk startup to establish a hub in Brightmoor to encourage African-American lactating women to donate their breast milk to other infants in need. The company wants to bolster low breastfeeding rates among black women living in poverty. The idea may seem unconventional, but Brightmoor is building from the ground up, and a focus on the hyperlocal economy is appropriate there, said Michelle Welsh, director of marketing and communication for

TechTown Detroit. “We’ve been trying to fill any void that we can to help the community,” Welsh said. “There are some struggles there, and social and civic engagement is important to this community. The business engagement is one part of the puzzle, but creating a community partnership is critical as well.” The Artist’s Village, for example, a series of converted warehouses, is being used as a large community center. Sometimes it houses pop-ups, hosts karate classes and opens its doors for artists who create pieces to display in the area. “There are a lot of things starting to pop up,” said Crawford, 37, who has lived in Brightmoor for 15 years. “A lot of people are starting small businesses out of their basements, and they are starting to collaborate with other businesses. They are opening their space up to them and letting them get a feel for having a real business.”

INVESTING IN THE HOOD Select recent investments in Brightmoor:

䡲 Aid to transform Brightmoor into a healthy, safe and supportive environment for families Investment: $10 million Investor: Skillman Foundation Good Neighbors Initiative Status: 2006-ongoing 䡲 Business coaching services for small-business owners Investment: About $350,000 Investor: TechTown Detroit Status: 2012-ongoing

䡲 Blight removal from nearly 500 lots Investment: $500,000 Investor: Detroit Blight Authority Status: Completed

䡲 Demolition of commercial buildings and homes Investment: $700,000-$900,000 Investor: Detroit Blight Authority Status: In progress 䡲 New Meijer store

Investment: $20 million Investor: Meijer Inc. Status: Under construction on Grand River Avenue

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Welcoming You Back to the City That Moves the World As one of the worldâ&#x20AC;&#x2122;s leading automotive suppliers, we know the kind of dedication it takes to be successful, whether itâ&#x20AC;&#x2122;s delivering outstanding seating and electrical distribution systems to the global automotive industry or showcasing the future of the city that revolutionized the world. Lear Corporation is proud to sponsor the Detroit 2.0 Homecoming Event as part of our continuing and demonstrated dedication to support the communities in which we do business. Detroit has always been about the power of opportunity and drive unleashing our combined potential and we welcome you home to even greater avenues to reconnect, recharge and reinvest.

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BY SUZETTE HACKNEY SPECIAL TO CRAIN’S DETROIT BUSINESS

ave a taste for some corned beef sliders? Maybe you’re shopping for some city-centric streetwear for a son or nephew? Or are you in the market for a hand-painted, one-of-a-kind piece of art for a living room wall? Look no farther than Detroit’s Avenue of Fashion, a former stronghold for luxury shopping that fell on hard times. Now, however, the stretch of Livernois Avenue between Seven and Eight Mile roads is becoming an urban hub where Detroiters from the surrounding neighborhoods, such as Sherwood Forest and the University District, can shop. The Avenue has experienced an infusion of cash from nonprofits for improvements and attracted entrepreneurs who, with that nudge of encouragement, are remaking the area. In spring 2013, the Detroit Economic Growth Corp. won a $200,000 prize from ArtPlace to install art in the vacant storefronts and medians. Its Revolve Detroit program also worked with neighborhood groups to put pop-up shops — some of which became permanent — in vacant storefronts. “This is a very special place in Detroit,” Michael Forsyth, manager of retail development at the DEGC, said at the time. “And blending art with economic development is an exciting thing. It’s important for Detroit to have great design. That’s the new nature of retail: You have to give people an experience, a reason to come out and not do all of their shopping online.” The Detroit Lions also have been active on the avenue as part of its Living for the City philanthropic initiative. The Lions partnered with Hatch Detroit to do district cleanups and install much-needed new signs for businesses. The investment helped entice April Anderson, co-owner of Anderson Good Cakes and Bakes, to open on the Avenue of Fashion. “I grew up in Detroit — being on Livernois is like coming back home,” Anderson said. “My parents used to shop over here.” Anderson, 41, is part of the Avenue’s

KENNY CORBIN

Detroit’s Avenue of Fashion, a stretch of Livernois between Seven Mile and Eight Mile, is making a comeback with the help of cash for improvements from nonprofits, and new entrepreneurs.

Back in fashion Livernois Avenue district overcomes hard times 102

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new generation. She and her wife, Michelle Anderson, who were recently married in New York, just marked their one-year anniversary as business owners. After hosting a successful pop-up as part of the Revolve Detroit program, she permanently opened in July 2013. Think gourmet, all natural, homemade and sinful cupcakes, brownies,

cakes and cookies — though you can request a vegan option. Good Cakes did about $100,000 in sales its first year, more than doubling the $40,000 investment it took to open the store. Anderson said her goal for year two is $250,000 in revenue. “Business is going great,” Anderson said. “The community has been very supportive of us. “Livernois has this buzz like Midtown used to have — everything doesn’t have to be downtown or in Midtown,” she said. “We’re starting to coin the phrase ‘uptown.’ Come uptown to shop. Come uptown to eat. People want something different, and they SEE PAGE 62

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FROM PAGE 61 want it in their neighborhoods.” For Donald Studvent, vice president of the Avenue of Fashion Business Association and a restaurateur, life on Livernois has become about interception. He’s intercepting folks who had become accustomed to driving to Troy to dine at, say, Ruth’s Chris Steak House. That happened not long ago, when Bishop Edgar Vann, pastor of Second Ebenezer Church, and his wife were headed to Troy and noticed Studvent’s Livernois restaurant, 1917 American Bistro. They turned their car around and had dinner there. “That was huge,” Studvent said. “And then they told me how much they enjoyed it. I was just so grateful.” Studvent has been in business nearly five years. He took a buyout from Chrysler and used the money to purchase the space on Livernois. He and his wife, Katrina, were some of the first to reinvest in Livernois. They hit revenue close to $700,000 in 2011 but have experienced a 35 percent decline in the past year and a half. “It’s been a roller-coaster ride the last couple years,” he said. “We’ve experienced

ON THE WEB Q&A/ DONALD STUDVENT Vice president of the Avenue of Fashion Business Association: crainsdetroit.com/detroit2.0

Select recent investments in the Avenue of Fashion

some bumps in the road, and we’ve had to make some adjustments.” But there is no talk of shutting down; instead, Studvent said he is energized by the new life on the Avenue and bringing it into the bistro through new menu items and improved service. The changes along Livernois are being noticed by area residents, too. Maurice Telesford, president of the Sherwood Forest Association, has lived in his neighborhood for five years. He’s a 30-year-old Ferndale High School physics teacher who wants a business district geared more toward active and younger Detroiters. “I think some of the businesses are unique, and are working to engage and meet the needs of the community,” Telesford said. “They’re increasing the diversity of businesses and doing a better job in organizing and promoting their businesses together.”

䡲

Install art and open pop-up shops in vacant storefronts, plus host events and an outpost of the Detroit Design Festival Investment: $286,000 Investor: $200,000 grant from ArtPlace America; $50,000 from Michigan Economic Development Corp.; $30,000 from the Knight Foundation; $6,000 from Detroit Design Festival. All managed through the Detroit Ecnonomic Growth Corp.’s Revolve Detroit program. Status: Completed

䡲 Streetscaping

Investment: $1.5 million Investor: Michigan Department of Transportation overseeing dollars raised from several sources Status: Completed

䡲 Street cleanup and new signs

Investment: $75,000 Investor: Detroit Lions and Hatch Detroit Status: Completed

ETROIT

CARHARTT. BORN IN DETROIT 1889.

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“HOW CAN WE ALL HELP RE-ENERGIZE DETROIT?” As a sponsor of the Detroit Homecoming event, DTE Energy is looking to encourage more engagement and investment in the city. And we are doing our part, serving as advisors to the Public Lighting Authority of Detroit to help improve street lighting and make our neighborhoods safer. More than 25,000 LED lights will be added by year-end. We’ve also been enhancing and improving the areas around our DTE headquarters and reworking the energy infrastructure to support construction of the new M-1 light rail system. For over 150 years, DTE Energy has been powering Detroit. Now, we are proud to partner with others to empower Detroit.

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INVESTED IN DETROIT’S FUTURE JPMorgan Chase believes in Detroit. We’ve been doing business there for more than 80 years, and with our new $100 million investment, we’ll be working hand in hand with great local partners to revitalize neighborhoods, tackle blight, strengthen the workforce, grow small businesses, and seed future economic growth. Working with local partners, $20 million in philanthropic investments were already being put to work just 50 days after our commitment.

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Urgency of resurgence Build on momentum with intentionality, opportunity, walkability

he Homecoming gathering of the “expatriates” came at an interesting crossroad for the city and its storied history. In recent years, Detroit has been much maligned by the national media. There have been too many jokes about Detroit. And many of us are growing skeptical of the value of more “feel good” stories. For Detroit to solidify its resurgence, it must have a vibrant urban core. And that should not occur by default, but rather by people making a conscious choice to live and work in Detroit and raise their families there. That goal starts with removing blight, establishing crimefree neighborhoods and paving the way for ambitious projects to take

hold — including the 50-block redevelopment around the new Red Wings’ arena and Orleans Landing, a $60 million residential project in Rivertown. Above all, it must be done with a sense of urgency, otherwise the positive momentum will stall. If Detroit simply retained a healthy portion of its home-state graduates, it would yield enormous dividends. Nearly 40 percent

of recent Michigan public university graduates have moved out of state, with many citing an “urban experience” and convenient public transportation as motivating factors. Considering the roster of Homecoming expats — Bloomberg CEO Dan Doctoroff, Groupon CEO Eric Lefkofsky, Method Home Products co-founder Eric Ryan, to name a few — it’s clear that metro Detroit produces some of the brightest and mosttalented minds in the country. Sadly, that talent is all too often looking to escape, as the opportunities closer to home have been limited. For that trend to reverse course, Detroit must help create attractive opportunities and em-

For Detroit to solidify its resurgence, it must have a vibrant urban core. And that should not occur by default.

SEE PAGE 66

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Shinola is one example of the diverse businesses that Detroit needs to attract young workers today.

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FROM PAGE 65

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ployers. A starting point would be to incentivize and recruit to the city diverse businesses, Shinola being one example, that are appealing to today’s youth. Perhaps public and private partnerships can aid in that effort and emphasize the importance of techrelated business getting established in the city. Just imagine the exponential benefits of the next Uber or Airbnb claiming the title “founded in Detroit.” Detroit must also become a more walkable city. Let’s create an infrastructure where a car is not needed to live in Detroit. More pedestrian-friendly areas will naturally fuel a spurt of small businesses that make cities desirable. Add to that an expansive bike program, with dedicated bike-friendly lanes, more green spaces, privatized (and reliable) bus transit options, and the groundwork will be in place. Detroit is not for everyone. But it has cache and distinct advantages over most U.S. cities. It is entrepreneurial, creative, inspiring, urban and fertile for growth and new opportunities. Its revered history points to it being a hallmark for innovation. Detroit can be a great city again. But it requires substantial capital, patience, calculated risk-taking, businesses relocating to the city, and the return of a lot of brainpower that’s been on loan to the rest of the country. So, when will you return? Vahe Tazian is a lawyer currently residing in Stamford, Conn. He attended Groves High School in Birmingham and the University of Michigan.

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The Downtown Detroit Partnership is proud to celebrate Detroitâ&#x20AC;&#x2122;s exciting future by driving a clean, safe and inviting Downtown community. We encourage you to join us in shaping the future.

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ADAM FINKEL

Time to build a legacy Expats urged to help make a positive change in Detroit

hree of America’s leading public health advocates have roots in the small Detroit enclave of Northlawn. Jeff Sachs, Columbia University’s leading public health thought-leader, is one; his mother, Joan Abrams Sachs, grew up in the neighborhood. Nathan Wolfe, a visiting professor at Stanford University who tracks the spread of infectious diseases worldwide, is another; his father, Chuck Wolfe, called that street home. Lawrence Brent Brilliant, president of the Skoll Urgent Threats Fund, lived nearby. He is now 70 and listed among Time magazine’s 2008 100 Scientists and Thinkers. His father owned Brilliant Music, on West Eight Mile Road and Livernois Avenue in Detroit, 5,500 miles from his Russian roots. All three have devoted their lives to a calling that makes their hometown proud and have been back to visit their hometown over the past few years. Like millions of former Detroiters with pride in the land where they were born, they can see that there is something special here. The time is ripe for expats like them to lend a hand back to their hometown. Not only because it’s a meaningful thing to do, but because America’s ability to empower future generations of leaders that care is one clear way the United States will set itself apart in the 21st century. Our city is not without examples of dedicated leaders and role models who have left a legacy for future generations. So, too, there are many working tirelessly right now to let future generations inherit a more promising future. Think about the legacy of Eleanor Josaitis. Her creation of Focus: Hope showed Michigan the importance of empowering entrepreneurs so that positive initiative could help to fight adversity, create jobs and chart a better life for thousands. Judge Damon Keith, who sits on the U.S. 6th Circuit Court of Appeals, is a role model for thousands through his commitment to justice, inspiring others to build bridges between generations and groups that

wouldn’t otherwise forge common bonds. Ben Falik took his passion for volunteerism to new heights by building Summer in the City into a one-stop route for young adults in the area to give back to the city of Detroit. Tens of thousands of volunteer hours later, it’s still going strong. Dug Song, CEO of Duo Security, has the relentless focus to go well beyond building one of the state’s most promising ventures. The highly technical entrepreneur isn’t just creating jobs, and mentoring younger entrepreneurs, but also turned his twodecade dream of an Ann Arbor-skate park into a reality this past summer. Faye Nelson showed the power of our collective engagement through her years leading the Detroit Riverfront Conservancy, turning our waterfront into a welcome mat for residents and visitors from around the world. She continues that work while now leading the DTE Energy Foundation. Noam Kimelman, another social entrepreneur, moved to Detroit after his graduation from the University of Michigan to start Detroit Food Academy and Fresh Corner Café, a nonprofit and for-profit endeavor that create healthier food options for Detroiters. The Boston native is showing how creative thinking can fill large, unmet needs.

Our city is not without examples of dedicated leaders and role models who have left a legacy.

Bryan Barnhill is a role model for young adults who desire a career in civic service. The Detroit native graduated from Harvard University and then returned home to help rebuild his city. He now leads talent development for Mayor Mike Duggan. We all can be active participants in Michigan’s philanthropic community. The 21st century has not only made it easier for entrepreneurs to ship meaningful ideas, it’s allowed everyday donors and doers to impact our world in a meaningful way. Let us define ourselves as a state full of citizens who care so much about doing things better and shipping something meaningful. Sometimes leaders spend a lifetime building their dreams into a legacy. Now there’s also an increasing amount of philanthropists who use their time and money in more entrepreneurial ways. They understand a few minutes at a coffee stop in the morning can be used to invent a better way. Four years ago, a few minutes of relentless focus helped raise the funds to launch the Moishe House, a local residential community that created a welcome mat for other young adults. The house planned 100 programs that led to many positive connections, including a marriage. Last week, a financier with no connections to Detroit stepped up to subsidize three years of this house’s existence in Detroit. Why would a very successful financier with zero Detroit connections choose Detroit right now? He recognizes how important it is in the 21st century to create a platform in Detroit where others can spark positive ideas, here and now. And he sees the correlation between strong communities and a prosperous nation. It’s a mindset to empower community leadership for future generations. Donors make it possible. Leaders make it happen. Adam Finkel is a partner at Orfin Ventures in Bloomfield Hills. He grew up in metro Detroit, where he serves on several local boards and assisted with outreach for the Detroit Homecoming.

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EDUCATION

1990-2014

Making the grade Quality schools crucial for Detroit to thrive

n 1990, more than 200,000 children in Detroit attended one of 275 schools led under a centralized Detroit Public Schools system. In time, many of those schools were failing children. Charter schools — and competition — were supposed to be the panacea, forcing traditional public schools to improve and compete for students as parents shopped for better outcomes for their kids. That hasn’t happened — at least not to the level originally envisioned. And Detroit’s population loss has reduced the number of school-age children, too. Today, more than half of the 100,000 children in Detroit attend a charter school. (See chart, Page 72). The math does not add up: Detroit has 50 percent fewer kids than in 1990, but they are spread across 230 buildings — or 85 percent of the number Detroit

had in 1990. Yet some of the best-performing schools still have empty seats. “Supply and demand are not aligned,” according to a briefing paper by the Detroitbased Skillman Foundation. To make it worse, “school success is incentivized by enrollment, not academic outcomes for kids. We have no strong standards; Michigan has some of the poorest quality standards in the country.” Despite a handful of high-performing K-8 and high schools, the outcomes are just not what they should be. But there are promising signs: High school graduation rates are up 10 percent citywide, and in some neighborhoods by 30 percent. About 50 percent of high school students have been exposed to the workplace through programs, internships or projectbased programs. Some schools are use “blended” learning models, incorporating technology to bring students to grade level.

Everyone agrees that without quality schools, Detroit cannot thrive. So what can fix this picture? Excellent Schools Detroit is a nonprofit that measures quality among the city’s schools and helps parents find good choices for their children. Its CEO, Dan Varner, has spoken publicly about having Detroit’s mayor play more of a central role in education, with an ability to open and close schools (including charters) and coordinate transportation. Currently, Varner said, if population growth or poor-quality existing schools in a sector of the city would point to a need for a new school, as many as 12 authorizers — mostly state universities — might be in the mix. Having a central authorizer could ensure the best-performing school operators would operate in Detroit, he said. The idea is far from reality, he cautioned.

Butzel Long proudly celebrates 160 years of trusted service. Committed to Detroit for 160 years.

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“The mayor has got to want it (the authority),” Varner said. And any change in charter authorization or school administration would require legislative approval in Lansing. Varner acknowledged there is skepticism about having a Detroit mayor play a role. “Some are asking: ‘What if there’s a bad mayor?’ ” Gwendolyn Butler, a Mumford High School graduate who is president of Chicago-based Capri Capital, specializes in urban real estate development. After attending The Detroit Homecoming in September, she hopes the city can focus on creating strong educational opportunities in key neighborhoods to attract more residents. “I would say to my own family not to fear gentrification. It brings people with more resources who can help parents who have been trying to find the best school options for their kids demand more attention for the schools. … Parents with resources combined with parents without economic resources but a keen interest in the best public education for their kids can make things better for every child.” — Mary Kramer

DPS charter

12 schools 6,500 students

Ferris State

Northern Mich.

Suburban Dist.

1 school 360 students 12 schools 3,500 students

12 schools 4,200 students

EAA charter

Wayne RESA

3 schools 1,000 students

8 schools 1,000 students

Oakland Univ.

11 schools 2,400 students

6 schools 3,900 students

Private schools

Saginaw Valley

Bay Mills Grand Valley 2 schools 1,400 students CMU

95 schools 48,600 students

17 schools 8,600 students

Detroit’s public education system

19 schools 7,300 students 21 schools 9,400 students

Eastern Mich.

Lake State

6 schools 1,600 students

22 schools ? students

5 schools 3,700 students

230 schools | 103,356 students Courtesy of the Skillman Foundation

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EDUCATION

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Q&A: RALPH BLAND, NEW PARADIGM FOR EDUCATION

Upward bound Detroit Edison Academy sets students’sights solely on college he acceptance letters — all 94 of them — line the wall of the school. Proof that the Detroit Edison Public School Academy (DEPSA) is what’s right with education in the city of Detroit. The letters are from all over the country: Brown University, the University of Michigan, Amherst College, Howard University and the U.S. Military Academy, to name a few. Not only did every member of the 2014 graduating class, DEPSA’s first, get accepted to college, they also generated $4.5 million in scholarships. The charter school brainchild of Michigan Bland Future, a nonpartisan nonprofit funded by Michigan foundations, is east of Detroit’s Eastern Market. Crain’s Detroit Business sat down with Ralph Bland, superintendent of the New Paradigm for Education, which manages DEPSA, to talk about education. Answers have been edited for length and clarity.

Where do you see education going in the city? I think it’s crucial that when we look at the landscape of education in Detroit, we have to be cognizant not to look at education only from a perspective of grades nine through 12, and instead really start to focus on college graduation. Here at Detroit Edison, that’s all we focus on — college graduation. We don’t speak of high school. We don’t speak of the credits that you have to earn to get your high school diploma. That’s rarely mentioned because we focus on college graduation and the skills you will need to obtain for that. For example, we send kids to Harvard University (for a seven-week summer program) and they earn eight college credits, where they’re actually in class with other students who are in college. In addition to that, students are able to enroll at the University of Michigan-Dearborn during the

school year. We chose that as opposed to a community college because we wanted them to see the rigor that they will see in the postsecondary environment sooner. Some of our students in our first graduating class have already graduated with 16 credits from Harvard and 16 from the University of Michigan, which are enough credits to be considered a sophomore at any university that they will attend. How will schools of the future be structured? I think students will have more freedom, more independence, when it comes to courses. I don’t think there will be a regular structured day where you will arrive at 8 in the morning, then go to your next period at 9. I think they will be able to gain more access to anytime, anywhere learning from home, the library, anywhere that they are. They will be able to learn at their own pace. I think they will be technology driven. I still think, as I mentioned earlier, you can’t cut out the liberal arts. I think coding will become as important as math. I think that will be a critical area. I think you will still have theme schools, where kids can go if they want to focus on medicine to become a doctor or they want to focus on the performing arts. Do you think our educators in the city get the best out of people? No. We need to put the adults as well as students in the best environments that they can learn and think in. In the future, we definitely have to close the gap on the link between schools and careers. Schools moving forward need to really focus on those innovative jobs of the future. We have to get students more exposure. We have to get them more into the worlds of the Dan Gilberts and Warren Buffetts and look at what’s driving them and their movement to business and entrepreneurship. We have to dig deeper and expose students to that. We also have to expose students to wildlife, the arts and travel. Because at the end of the day it’s going to take more than a

student having a 4.0 in order for them to survive and be successful. What challenges will students face? The challenges they will face will definitely be magnified 10 to 20 times more than the challenges we’re facing today. I don’t just look at Detroit, I look at it on a global scale. They might need to fly to China tomorrow, and then fly back to Ohio, and end up back in Detroit by Friday. That can be a regular week. A student is going have to know more than one language to be successful. What does every child need? Every child needs a good, quality education — a good foundation. If a child receives a good, quality education, then they are going to be able to be a critical thinker, an analytical thinker. Every child deserves to be in a good environment. What are the economics of education today? I think we are definitely not providing the proper resources to our educators. I think resources are scarce … and I think they do not have to be scarce. We have to look at what we really want at the end of the day. Are kids going to forget what a library is in the next decade? I think kids have forgotten them now, but I hope not. Because libraries are essential to helping our students become well-rounded. I think they are essential if our students are going to move forward and continue to be competitive. Are the city government and school board doing their jobs when it comes to education in this city? I don’t think it’s a matter of them doing their job right or wrong. I think it’s a matter of the adults being accountable and being responsible, making sure that the students receive the quality education that is their civil right. — Zack Burgess

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EDUCATION

FIXING K-12

Back to schools Broad’s mission evolves to focus on education leaders li Broad’s best-known educational investments here are perhaps the $20 million he spent in 1991 to endow the Eli Broad College of Business at Michigan State University, followed later by $33 million to help launch and improve the Eli and Edythe Broad Art Museum there. But the Detroit Public Schools have received his persistent efforts. Broad, the son of immigrant parents, and his wife, Edythe, are both products of DPS. He’s a Central High graduate; she’s a Mumford alum. “You get the biggest bang for the buck by improving K-12 education,” Broad said in a panel discussion at the Detroit Homecoming. “My wife and I attended Detroit Public Schools, and I went on to MSU. … I thank my education for my success in the world of business. … We want to give back.” And that emphasis is on the types of schools the Broads attended. The mission of the Los Angeles-based Eli and Edythe Broad Foundation is “working to ensure that every student in an urban public school has the opportunity to succeed.” Broad, 79, approaches philanthropy like an entrepreneur: He funds ideas that seem promising but is willing to walk away if they don’t work out. A $6 million gift a decade ago to MSU provided scholarships for DPS students to come back and teach in the district. While the gift did in fact train teachers, it had limited success because DPS enrollment was declining and most graduates couldn’t get hired. Broad also attempted to meet with Gov. Jennifer Granholm to discuss possible educational initiatives, but “I couldn’t get anywhere.” He then approached Gov. Rick Snyder — “I’m a lifelong Democrat, but we need to be party-blind on education,” he said — and had discussions that led to the Education Achievement Authority of Michigan. The EAA took on the worst-performing 15 schools in Detroit — nine elementary/middle schools, three of which are charters, and six high schools — with the goal of improving them. EAA manage-

AARON ECKELS

Eli Broad, shown while speaking last month at the Detroit Homecoming, says his goal is to give back to urban public schools based on his own experience as a Detroit Public Schools graduate.

ment began in August 2012, and students attend 210 days a year, 40 more than most other Michigan students. Individual learning plans are developed with an emphasis of mastery of current lessons before moving on to the next. The Michigan Educational Excellence Foundation was created as the fundraising entity for the program. Broad said his foundation contributed $10 million and that another $10 million came from New York City-based Bloomberg Philanthropies, $6 million from the New York City-based Robertson Foundation and $1 million from the New York City-based Carnegie Foundation. It also has received grants from major foundations, including the Seattle-based Bill and Melinda Gates Foundation. The EAA has had some ups and downs

since it began operating three years ago. Its controversial superintendent resigned abruptly in August, and also that month it mailed letters to parents in suburban school districts inaccurately implying their children had been “assigned” to an EAA school. Broad said the EAA is a good idea but is still a work in progress, demonstrating some “destructive competition” for students, but also with schools showing academic progress. The Broad Foundation also has pledged $1 million in matching funds to the Detroit Scholarship Fund, created by the state and administered by the Detroit Regional Chamber. SEE PAGE 76

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EDUCATION FROM PAGE 75 The fund creates a tuition-free path to an associate degree or technical certificate to any Detroit student graduating from a Detroit high school. Broad said heâ&#x20AC;&#x2122;d like to see more highlevel national charter operators in Detroit and also endorsed a plan floated by Excellent Schools Detroit that would create a â&#x20AC;&#x153;portfolio districtâ&#x20AC;? for DPS, which would coordinate enrollment, safety, transportation and other common infrastructure for all public schools in the city, including charters. The DPS opposes the plan, which would require legal changes, but Broad said he believes a proposal for such a district will happen by February. Dave Murray, deputy press secretary for Gov. Rick Snyder, would not comment directly on the proposal, but said Snyder â&#x20AC;&#x153;has said it is important to consider all options concerning the Detroit Public Schools and looks forward to having a broader dialogue about alternatives at the end of the year or beyond. He wants to meet with the community to hear its opinions and concerns,

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FIXING K-12 as well as study what has worked and not worked in other challenged urban environment.â&#x20AC;? Broad has been pursing philanthropy since 1999. He began a career as an accountant after graduating from MSU in 1954, but soon branched out into homebuilding, creating Kaufman and Broad in Detroit in 1956, with Donald Kaufman, the husband of a cousin of Edytheâ&#x20AC;&#x2122;s. The company went public in 1986 and now is known as KB Home, based in Westwood, Calif. In 1971, Broad and Kaufman acquired an insurance company for $65 million that became SunAmerica. The company was sold to AIG in 1999 for $18 billion. â&#x20AC;&#x153;When we sold our company to AIG, we put a lot of money into our foundation, and then we looked at defining what is our biggest problem?â&#x20AC;? Broad said in an interview with Crainâ&#x20AC;&#x2122;s. After looking at China, Japan and other countries, â&#x20AC;&#x153;we realized we needed to educate our children,â&#x20AC;? Broad said. The result has been evolving investments as various approaches were tried, tested and sometimes discarded.

! " # ! # ! !

â&#x20AC;&#x153;We decided not to look at what was happening in the classroom, but in local governance and management,â&#x20AC;? Broad said. â&#x20AC;&#x153;We started looking at school boards and were appalled. They were filled with political wannabes, well-meaning parents or union representatives.â&#x20AC;? So the Broads decided to create an institute to train school board members, which did not have the hoped-for results. They then turned to school district management. That effort has been more successful. The Broad portfolio now includes a residency in urban education and a leadership development program aimed at school leaders. The foundation also awards $1 million in scholarship money each year to urban school districts that have shown high performance in reducing the achievement gap experienced by low-income students and students of color. A $250,000 prize honors charter schools. It also offers toolkits for districts for things such as evaluating charter applications, evaluating employees and creating metrics dashboards. â&#x20AC;&#x201D; Cindy Goodaker

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7KDQN <RX Crain’s Detroit Business was proud to convene The Detroit Homecoming Sept. 17-19 where 160 expats returned to Detroit to reconnect and reinvest. We are grateful to the companies and organizations who contributed to the success of the program. Learn more at detroithomecoming.com

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EDUCATION

Q&A: KYLE SMITLEY, DETROIT ACHIEVEMENT ACADEMY

Smaller is better Achievement Academy focuses on class size, teachers n an old church in the Grandmont Rosedale section of the city, Kyle Smitley founded the Detroit Achievement Academy with one vision: to meet — and exceed — the basic needs of small children. So far, so good. The school, in its second year, has added a second-grade class after starting with four kindergarten and first grade-level classes and one arts class. Most importantly, Smitley’s students are testing in the 95th percentile nationally in math. The 29-year-old lawyer and entrepreneur has even drawn the attention of Ellen DeGeneres, for whom the school’s library has been named, after receiving a $50,000 donation from “The Ellen DeGeneres Show” and Shutterfly, an Internet-based image publishing service. Thanks to their efforts, the DAA is stocked with supplies and books. Crain’s Detroit Business sat down with Smitley to talk about the future of education in the city of Detroit. Answers have been edited for length and clarity.

Your kids are testing very high; they’re doing very well. Yeah … I always say it’s not rocket science to do the right thing and make decisions with kids at the center. It’s really simple how you deliver results with kids: great teachers, small class sizes and a really holistic level of support system for them and their families. That’s expensive. So many education networks are clogged with for-profit networks where they really can’t do that because they are in it for the margins. We just put all of our money into the classrooms and invest heavily in their success. How do you think schools of the future will be structured? How do we move through a system that’s under fire? I don’t know … being really optimistic, if I could write my own future for Detroit, the schools would start taking note of really small schools and how they are successfully educating students. I think the big part of being successful is the school culture. The

ZACK BURGESS

Defiance, Ohio, native Kyle Smitley launched and ran barley & birch, an organic children’s clothing company in California, before moving to Detroit.

It’s really simple how you deliver results with kids: great teachers,small class sizes and a really holistic level of support system for them and their families. secret sauce for our school is that we have created a culture where our kids have become obsessed with coming to school. They love coming to school. When you pay

attention to school culture and put kids first, everything will come into line. Do you think we get the best out of people here in Detroit, from an educational standpoint? I don’t know. I think when the average isn’t exceptional, I think it’s really easy for everybody to consider mediocrity OK. I think it’s really hard when there aren’t a couple of models of excellence holding everybody accountable, holding their feet to fire. Competition is always a good thing. I think it makes everybody better. I think it’s tricky. What challenges will current students face? I think that’s something that we struggle with as a school … a lot. Thinking about where our kids will fit in with the context

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of the city. For example, people talk about talent draining from Michigan so frequently. And we want to make sure that we’re not adding to that. I hope my kids are the ones driving the bus of the turnaround. I hope that our kids are the ones that make the best choices. The ones who believe in their neighborhoods. The ones who don’t leave for greener pastures to California or New York. I hope that they stay and get their hands dirty and lead their communities. What are the economics of education? The economics of education are brutal in Michigan. It is expensive to run a charter school — doing things right. I used to really get frustrated with myself that I couldn’t keep our budget within the state aid, that we spend more per pupil than we receive from the state. I’m responsible for raising that myself. And I used to say this isn’t scalable or sustainable. Then I realized that other states in the country fund their schools (much more) than Michigan does. So it’s important that we rely on private donations.

Does the charter school model increase creativity overall vs. the public school model? I always say that stereotyping on the type of governance of education is like stereotyping based on eye color, because you never know what you’re going to get. Charters historically have given schools the liberty to choose how they educate kids. Often this means, for example, in a district with 14,000 kids, it’s going to be a lot harder for a teacher to come to an administrator and say, “I think this curriculum that we’re using for our kids is not working and can we change it.” That’s just never going to happen. But here a teacher can just walk into this room and say, “Hey, Kyle, this curriculum that we’re choosing is just not working and I want to do something different.” And I always say, great, then do something different. Because for us, it’s not a big deal, because we always want to do what’s best for our kids. Creativity is very important, and we can adapt very easily whereas bigger districts can’t.

What is your main concern about education for students all across the city? I lose sleep at night thinking about the future of Detroit’s kids. I want every kid not to have to ride the bus two hours every morning to get to school. And I want the teachers to know that student and the names of their parents. I want the class sizes to be manageable. My biggest concern is that it’s becoming a factory and not a well-oiled one in Detroit. What should be done to increase the awareness that kids have to become better educated? It starts with schools and the support and the messaging that they send home with students. How we talk to parents about how they can get their kids excited about school. We say how a parent treats school when their kids are in kindergarten is a big indicator of how they will treat school down the road and for the rest of their lives. It starts with the parents and with us. — Zack Burgess

A Partner With Communities Where Children Come First WKKF is proud to partner with diverse leaders, grassroots organizations, institutions and other community partners in Detroit to ensure that all children are well educated, healthy and living in economically secure families.

wkkf.org

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COMMUNITY

DOERS IN DETROIT

Small programs,big ideas 8 groups with limited resources make mark in Detroit BY AMANDA LEWAN SPECIAL TO CRAIN’S DETROIT BUSINESS

etroit’s billionaires may capture the headlines, but they are only part of the story of Detroit’s future. This is a city of doers making outsized impacts with limited resources. Meet eight small organizations that make the city a better place to live.

Back Alley Bikes thehubofdetroit.com What it does, in a Tweet: Teaches more than 400 youths per year how to build and repair bikes so they can hit the roads of #Detroit. #BackAlleyBikes With recent bike lanes opening in Midtown and the popularity of the weekly Slow Roll rides, the Motor City is starting to move on another set of wheels. To make sure the love of two wheels doesn’t escape kids, Back Alley Bikes teaches youths how to repair old bicycles — and then lets them keep their project. The program, which is a part of the Hub of Detroit bike shop, has put more 400 kids on bikes this past year. “When you give a kid a bike, you give them freedom to go somewhere,” said Director Heather Nugen. Many of the youths Nugen sees are stuck relying on rides or needing money to pay for transportation. Back Alley Bikes gives them an opportunity to take responsibility for their freedom. Participants under 10 can receive a bike for free; those over 10 years old, however, must earn their bike by learning how to fix it up. “We’re teaching them skills and they often go back to their own neighborhoods to continue to teach these skills to other youth,” Nugen said. Profits from the Hub’s sale of used bikes and parts help support the nonprofit, and together both entities are led by more than 100 volunteers. “We’re a collectively owned organization. I’m just one part of the wheel,” Nugen said.

LARRY PEPLIN

As director of Back Alley Bikes, Heather Nugen hopes youths who learn how to repair old bicycles pass along those skills in their neighborhoods.

Deep Dive Detroit deepdivedetroit.com What it does, in a Tweet: The @Deep DiveDetroit acts as a bridge between new and old #Detroit by getting them talking and building trust. Lauren Hood lives a life through two identities: one as a “new Detroiter” and one as an “old Detroiter.” She was born and raised on the northwest side of Detroit and now works for one of Detroit’s most prominent tech firms, Loveland Technologies, as its community engagement manager. Every day, she sees the divide between her two worlds and wants to bring them together. So Hood started Deep Dive Detroit as a series of weekend-long events about issues in the city, including race, equality and gentrification. Hood would ask: What happens to old Detroiters, those living in the city for years, when their city embraces rebuilding initiatives? And then let the group engage in open, authentic dialogue. “I’ve been on both sides of the problem,” Hood said. “I’m a native Detroiter and I un-

derstand how you feel when your voice isn’t heard and you’re left out of processes to improve your neighborhood.” Hood now extends her skills as a consultant addressing cultural issues at play in the workplace. Organizations such as the Skillman Foundation and Challenge Detroit have hired Hood for internal team building and communication exercises. “The organization has grown into providing solutions to organizations,” Hood said. “Really the solution is always opening up or creating space for safe conversation. Then the organization takes it from there.” To date, several hundred Detroiters have participated in conversations led by Hood, and she hopes to continue to bring together those who need their voices heard with those who are making change happen.

Detroit Food Academy detroitfoodacademy.com What it does, in a Tweet: The @DETFood Academy teaches hundreds of youth leadership and entrepreneurship skills through growing food businesses in #Detroit.

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let them drive the conversations, pick the food we cook with and manage their own budgets.” The nonprofit has reached almost 300 youths, employed 150 young people, and assisted 20 students in the Rusciano Small Batch program to further develop their businesses. One of the businesses, Mitten Bite, sells a no-bake oatmeal snack that is being offered to local coffee shops and online retail stores. Rusciano believes it will grow more this fall. “As they grow their businesses, we support students who want to grow to the next level,” Rusciano said. “We are looking to help make their products more available.” Over the next year, DFA is looking to expand its reach into more schools. “We want to step up the number of young people stepping up to leadership roles. It’s very exciting for us,” Rusciano said.

Detroit Repertory Theatre detroitreptheatre.com What it does, in a Tweet: Serves up thought-provoking theater in #Detroit’s forgotten core. #DetroitRepertoryTheatre

LARRY PEPLIN

Lauren Hood’s dual identity as a “new” and “old” Detroiter helps her build bridges between city residents in Deep Dive Detroit.

Jen Rusciano returned to Detroit to feed her passion for improving food systems but soon realized there was a greater need for teaching youths. She was working with school cafeterias, hoping to increase locally grown and healthier food options, but discovered that students needed to understand more about these options before they wanted to eat them. In 2011 she co-founded Detroit Food Academy as a nonprofit leadership development and entrepreneurship training program for Detroit high schoolers. The acade-

my now works with 10 local schools, offering an after-school program and a summer employment option, where students learn to cook, plan large community dinners, and operate their own pop-up food markets. DFA also offers a six-week summer program for academy graduates, called Small Batch Entrepreneurship Camp, that pays a stipend and helps them develop their own food business with a social mission. “We want students to develop their own leadership skills building their own triple bottom line business,” Rusciano said. “We

Barbara Busby chose to start a theater in Detroit more than 50 years ago, when she had just finished her degree in stage theater from Wayne State University. The Detroit Repertory Theatre has become the oldest alternative professional theater in Michigan, reaching an attendance of 60,000 in the past two years. Each season, Busby hires local theater profesBusby sionals, stage managers and a crew to put on four shows and about 180 performances. The theater is not in downtown but in the Dexter-Linwood neighborhood, just west of Highland Park at the Davison. The theater has played a vital role in stabilizing the area, which helps draw some funding from local corporations and foundations. But it’s still a struggle to stay afloat and keep up attendance numbers. “It’s been especially challenging the last three or four years when everything flopped over,” Busby said. “Everyone is struggling. SEE PAGE 82

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COMMUNITY FROM PAGE 81 We bail out banks and automotive companies, but we don’t bail out the arts.” This upcoming season features four world premieres, including “Curtain Times” and a humorous show titled “Buzz.” Busby, who was born in Detroit, acts in and directs many of the plays and said she believes theater can thrive in Detroit. “I would think it would be an attraction as we are now kind of resurging again,” she said.

Girl Develop It Detroit girldevelopit.com/chapters/detroit What it does, in a Tweet: Coding is sexy with @GDIDet, which has taught 600 Detroiters computer-programming skills. When Michelle Srbinovich, general manager of WDET 101.9 FM, wanted to learn computer programming, she knew she needed help — and assumed other women might, too. She reached out to acquaintance Erika Carlson to launch a Detroit chapter of Girl Develop It, a national nonprofit dedicated to teaching affordable coding classes. That was almost two years ago, and to-

DOERS IN DETROIT gether they’ve helped more than 600 Detroiters learn basic programming skills that are applicable to most programming jobs. The group has hosted 75 classes on topics that include Intro to Wordpress Development, Carlson CSS and HTML. Carlson herself was just beginning to learn to code, and through the program she learned enough skills to land herself a job as a developer. She currently works at Detroit Labs and is the director of its newly created apprenticeship program. “My favorite thing about Girl Develop It is that students come through our doors for all kinds of reasons, but we can offer something meaningful to each one of them,” Carlson said. You’ll find Girl Develop It hosting classes at places like Great Lakes Coffee and Socra Tea in Midtown as well as the headquarters of software development firm Atomic Object. Most classes are at an introductory level, but the impact has been tremendous. The group has 1,150 members, and many have landed computer programming jobs

JUMP IN WITH US.

after taking classes.

Green Living Science greenlivingscience.com What it does, in a Tweet: The @GLS Detroit teaches kids science and recycling as a step toward a cleaner #Detroit and stronger communities. #GreenLiving Detroit is the largest city in the United States without a recycling program. Yes, curbside recycling is coming, but it’s not here yet. For years, the lack of service meant that tens of thousands of children were growing up without basic recycling knowledge. That started to change in 2006 when Matthew Naimi launched Recycle Here, a free drop-off recycling option for Detroiters. He also started working with youths and in Detroit Public Schools to teach the importance of recycling but realized the mission needed to be supercharged if he wanted to reach enough kids to make an impact. So in 2010, Recycle Here formed the nonprofit Green Living Science just to work with kids and community. “Over and over we hear parents say they never thought they’d start recycling, but

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Fall productions wrapped up last month, and the 2015 season starts next spring. “My favorite show is always the next one. You have to keep looking forward,” White said.

Eight Mile Boulevard Association eightmile.org What it does, in a Tweet: EMBA shows the region that Eight Mile is a destination for business, from Meijer to newly renovated Knudsen Park. #Detroit

KENNY CORBIN

Says Rachel Klegon, executive director for Green Living Science: “Recycling is something youth can practice every day, and they can see the difference it makes.”

their kids learned about it in school and just kept talking about,” said GLS Executive Director Rachel Klegon. GLS now works in 22 Detroit schools teaching both recycling and science — all on a shoestring budget of just $60,000. “Recycling is something youth can practice every day, and they can see the difference it makes,” Klegon said. “Once that starts, the practice of recycling can lead to other things, like cleaning trash and caring more for their neighborhoods.” Students learn the basics of recycling and are invited to think creatively with the materials at hand. It also engages with the Lincoln Street Art Park to teach students and the community about creative ways to reuse. Now, Green Living Science is working with the city to train parents and create awareness for the new curbside recycling program. Residents will have the chance to opt in to the program but have to pay a onetime $25 to participate. “We’re really helping that program get off the ground,” Klegon said. “We’re working closely with them so residents know they can be a part of it.”

Shakespeare in Detroit Shakespeareindetroit.com What it does, in a Tweet: Where art thou, #Detroit? More than 3,000 Detroiters find #Shakespeare outdoors via @ShakesintheD. Sam White, founder of Shakespeare in Detroit, firmly believes that there is no bet-

ter time for Detroiters to engage with Shakespeare. The stories are timeless for the Motor City. “Shakespeare makes sense as a business because it is great bait for tourism — a critical element to a thriving, healthy city,” White said. “And Shakespeare has centuries of proven consumer engagement all around the world.” White formed the outdoor theater company in 2013 to bring the arts into Detroit’s parks. The group has performed four shows, White among themaudience favorite “A Midsummer Night’s Dream” and the more challenging “Othello,” in five venues, including Grand Circus Park, New Center Park, Mumford High School, The Whitney and Recycle Here. More than 3,000 people have attended the performances. “The summer has been great because we often have the opportunity to perform at least one show for free, which means people who may not otherwise have the chance can engage with Shakespeare,” White said. But White isn’t just an artist; she is also an entrepreneur. She graduated from TechTown Detroit’s accelerator program and was able to start raising initial funds for production through crowd funding and local organizations. White also hires local talent to produce and perform each show, working with more than 40 different local artists.

The infamous Eight Mile Road is a border that beckons change. Jordan Twardy, executive director of the Eight Mile Boulevard Association, sees it as a connection point for the city and nearby communities, and vital for business growth. The association was founded two decades ago to function as an economic development engine and business organization. It has many interested parties because the organization serves 11 communities and three counties. “Eight Mile Road is sort of a jurisdiction jungle,” Twardy said. Much of the association’s work is focused on helping local businesses and changing perception of the area and the city. Since the Gateway Marketplace development opened at Eight Mile and Woodward Avenue, that’s been a little easier. Retailers thought there wasn’t a need for shopping in Detroit, but the success of the Meijer and Marshalls stores quickly proved them wrong. “Marshalls is now No. 1 in sales in the state,” Twardy said. “We’re chipping away the perceptions of Eight Mile Twardy and showing that it’s a regional connection point.” The association’s projects include facade incentives for local businesses, cleaning the neighborhoods, and more recently the rehabilitation of Knudsen Park, which is at the intersection of Eight Mile and I-75. They’ve raised $75,000 to improve the park and enticed Tom’s of Maine and singer/songwriter Mike Posner to the cause. The big makeover debuts on Halloween. “There was a half-dozen residents holding the park together and mowing this thing, even with dilapidated fence and equipment,” Twardy said. “We can’t wait to show the improvements this Halloween.”

PROUD ARCHITECTS OF THE DESIGN AND EXECUTION OF THE DETROIT HOMECOMING

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ESSAY

SCOTT SELLERS

Food for success Expat private equity investor sees advantages in Detroit

wenty-four years ago, I flew out of Detroit and headed to Northern California for college. I have been in the Bay Area ever since and have spent the past 17 years in private equity, investing in food and consumer products companies. As part of the Detroit Homecoming conference for expats like me, I had an opportunity to return to Detroit to assess the business climate and to determine whether Detroit is an attractive place for our foodfocused private equity fund to invest. With a few exceptions, food processing has not been a major part of the economy in Southeast Michigan. However, the area is well-positioned to attract food processors. Detroit is in a great location to be cost-competitive because of its proximity to raw materials from the Midwestern farm belt, its ample supply of water resources and its numerous transportation lanes that allow for distribution to both U.S. and Canadian markets. Detroit has always had those advantages, so why is now a better time to attract food processors to the area? I found four signs. Entrepreneurial culture: When I visited, I expected to see a downtrodden city with a stressed business culture fretting about bankruptcy and additional job losses, but I was absolutely blown away by the optimism from all of the entrepreneurs that I met. I heard from auto parts suppliers, a gluten-free pasta manufacturer and even cab drivers a genuine belief that Detroit is an attractive place to do business. There is nothing more powerful than an American entrepreneur who is committed to make something happen. I have seen the combination of willpower and talent lead to the creation of successful companies in Silicon Valley for the past 20 years, and I now see a similar unbridled optimism and entrepreneurial environment that is attracting young, smart and driven entrepreneurs to Detroit. Branding: “Made in Detroit” is a brand advantage. Detroit is hip. This country wants to see Detroit succeed. Look what “Made in Detroit” did for Shinola watches. McClure’s Pickles is seeing a similar benefit

SUZANNE JANIK

Whole Foods opened a store in Detroit in 2013 and has a second on its way.

by promoting its Detroit roots. Whole Foods opens up a lot of stores each year, but the Detroit location (with a second on its way) is the one that it talks about most often with investors. Whole Foods wants to buy local from Detroit companies for its Michigan stores, but it also wants those brands to expand to Whole Foods across the country. The products need to meet quality standards and deliver on their brand promises, but Detroit products will be given preferential treatment by both retailers and consumers. Cost competitiveness: The food-supply chain in this country is incredibly efficient and competitive. A successful company

must be cost competitive. Detroit’s labor costs are competitive today. Detroit also has advantages with its low costs of industrial real estate and cheap residential costs that enable food-processing workers to afford a home, which isn’t possible in many parts of the country. Available resources: From government officials helping companies relocate to Detroit to successful business owners mentoring rookie entrepreneurs, there is a culture of cooperation and assistance that hasn’t always existed in the area. Organizations such as FoodLab Detroit provide guidance and networking opportunities for food industry entrepreneurs. The biggest growth area in the food industry right now is the natural food industry and better-for-you products. The companies in this sector tend to be entrepreneurial in nature. Detroit is well-positioned to attract these types of companies. Brian Rudolph, who moved to Detroit from New York to start his chickpea pasta company, Banza, does not need to look very far for inspiration. Up the road in Ferndale, Dave Zilko, who mentors Brian, has helped Garden Fresh Gourmet become the No. 1 fresh salsa company in the United States, proving that food processors can be successful in Southeastern Michigan. It can happen, Detroit. I am a believer. Scott Sellers is the co-founder and managing director of the private equity firm Encore Consumer Capital in San Francisco. He grew up in suburban Detroit and graduated from Detroit Country Day School in 1990.

I expected to see a downtrodden city with a stressed business culture, but I was absolutely blown away by the optimism.

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Above: Quicken Loans Chairman Dan Gilbert (left) and Berkshire Hathaway Chairman and CEO Warren Buffett chat during their hour on stage together at the Detroit Homecoming. Right: “Expat” Nicole Curtis, host of “Rehab Addict,” takes batting practice at Comerica Park.

FALL 2014

A GALLERY OF A GATHERING

From left: Bloomberg LP CEO Dan Doctoroff, philanthropist and entrepreneur Eli Broad

Ideal Group CEO Frank Venegas and Capri Capital President Gwen Butler (above) participate in a panel discussion on diversity, and Carla WalkerMiller (left) talks about her company, Detroit-based Walker-Miller Energy Services LLC, at a Homecoming pitch session.

Photos by Aaron Eckels

and

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General Motors Co. CEO Mary Barra (left) and Detroit Mayor Mike Duggan (below) had words of wisdom for the Homecoming attendees.

road

and Capri Capital Partners CEO Quintin Primo III take the stage to open the Detroit Homecoming.

ANJANA SCHROEDER

This sign featured a word aimed frequently at expats during the three days of the Detroit Homecoming, Sept. 17-19.

he inaugural Detroit Homecoming exceeded expectations for our planning team and host committee. Because of the support from sponsors and our host committee, we helped reintroduce a lot of successful people to their own hometown in a dramatic and exciting way. We are tracking more than 20 action steps various attendees have made since Sept. 19, and if even half come to fruition, it means new investment in Detroit. We are continuing to add to our database of successful expats so we can invite new people back home for future events. And we’ve received inquiries from around the country from people who’d like to try and replicate Homecoming in their own communities. But our focus is The D.

Mary Kramer Publisher, Crain’s Detroit Business Co-Director, Detroit Homecoming

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MARTHA MILLER BOUDREAU

‘Innovation’central to brand Through highs and lows, city continues to change

ecently I spent several days at the Detroit Homecoming, surrounded by accomplished Detroit expatriates. As we all listened to the remarkable progress our beloved hometown is making in neighborhood renewal, business investment, design for future development, urban farming and educational partnerships, I found myself marveling at the sheer power of innovation to spawn creative ideas, ideas that are working. But then it struck me: The story of Detroit has always been a story of continuous change. We’re starting a new chapter for sure, but for more than 300 years, Detroit has been an icon of invention and reinvention. Innovation is a way of life in Detroit; it’s in our blood and in our hearts. Yes, there have been pauses along the way, but Detroit and Detroiters always find their way back to innovation as the way forward. What I’m talking about is deeper than the copy used in tourism campaigns and economic development brochures. And we need to make the rest of the world understand that. From automotive research and manufacturing to music and cultural institutions to the burgeoning tech sector and all the way to long-standing community organizations, our city was and is built on innovation and invention. It’s a roadmap, an approach to city management, a business strategy. It’s the fundamental underpinning of our entire way of life. And, it’s a big part of our collective soul. Detroiters believe in our city’s prowess, and we’re optimistic about the future. No one is expecting a magic moment of complete transformation. But our citywide mindset, our belief in the power of innovation and our history of invention are fueling our determination to get things done and succeed in new ways. Henry Ford, Mary Chase Perry Stratton, Henry Leland, Horace Dodge, Elijah McCoy, Sebastian Kresge, the Ilitch family, Dan Gilbert and Berry Gordy are great examples of Detroit visionaries who couldn’t stand still. Their ideas, products, risk taking

Berry Gordy Jr., known for creating the fundamentals of the Motown style of music, was presented the inaugural “Detroit Legend” award during Detroit Homecoming. AARON ECKELS

and creativity were, and are, shining examples of the power of innovative thinking and are the bedrock of our confidence. But vision and great ideas are nothing without a sound system of implementation. And that implementation has to come from the ground up. Luckily for us, Detroit’s workforce breathes innovation in the creative ways it has always made ideas come to life. It is the workers — yesterday’s and today’s — that keep changing, innovating, evolving and rebounding and ultimately providing the acid test of what works and what doesn’t. It may seem hard to believe, but the entire country is rooting for Detroit and watching how we are remaking our city. The country is paying attention to the rising home prices, our magnificent waterfront, the use of our open spaces, world-class sports franchises

It’s time to own innovation and claim it as central to our city’s brand. — MARTHA MILLER BOUDREAU —

and our fantastic entertainment scene. What they can’t see — but they can feel — is our determination to keep innovating for the sake of the city’s future. At Homecoming, Berry Gordy said it all when he said “Detroit makes you strong.” Detroiters are strong, willing to face change and do what it takes to ride out hardships. When times got tough, when our hold slipped, we changed, we innovated and we kept going. Branding experts will tell you that a brand — whether a beverage, a bank, a car or a city — must be authentic. It must speak the truth, and it must stand the test of time. Well, I think it’s time to own innovation and claim it as central to our city’s brand. After all, it is a time tested part of the way we do business and how we get things done. There is no more authentic quality to Detroit than innovation. It’s more than part of our brand; it’s part of our soul. Innovation, invention and forward motion have made Detroiters who we are. And, who we are is mighty strong. Martha Miller Boudreau is the chief communications and marketing officer for AARP. She attended Detroit’s Redford High School and the University of Michigan.

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