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Helping Ensure Minority Developers Participate in Detroit's Economic Comeback
As Detroit reemerges as a vibrant urban center, barriers to entry remain for Black entrepreneurs trying to develop real estate. An innovative program by JPMorgan Chase is funding and training the next generation of Black developers.
Detroit, 2009. National and international headlines proclaimed the demise of a once-great city, from its economy (“How Detroit Went Bottom-Up”) to the emptying out of its population (“How Detroit, the Motor City, Turned into a Ghost Town”) to its real-estate market (“How Low Can Homes Go? Try $0”) and its crumbling infrastructure (“Feral Detroit: Nature is Reclaiming the Motor City”). The city would declare bankruptcy four years later. “For decades it just seemed like everything was taken away from us,” Detroit Mayor Mike Duggan said. “Businesses moved out, auto plants moved out, gas stations and movie theaters moved out, and people moved out.”
The city’s majority-Black neighborhoods were plagued by vacancies, some 70,000 of them, but Detroit’s handful of Black developers couldn’t find traction. “There were two to four of us who were trying,” says Clifford Brown, a longtime real-estate entrepreneur and Detroit resident, “and all the deals we were looking at were partnerships. We weren’t driving the developments ourselves and couldn’t secure access to capital.”
In a city in which eighty-five percent of the population identified as Black, there was an abundance of talented Black professionals—real-estate brokers, architects, lawyers, bankers, urban planners carpenters, electricians, and plumbers. Yet there were scarcely any Black developers. This was, and still is, in keeping with the rest of the United States, where only 5 percent of real estate developers identify as Black.
The biggest barrier to entry for Black real-estate entrepreneurs has always been a lack of access to capital. This is a problem for numerous reasons. It reinforces the racial wealth gap for another generation of young Black men and women. In an increasingly heated real-estate market, it opens the city’s communities to development by outsiders who have no knowledge of, loyalty to, or love for them. Finally, it means that many of the people who kept their faith in Detroit during its most difficult years may not share in the rewards of its comeback. In his 2022 State of the City speech, Mayor Duggan asked the question directly: “Will Black entrepreneurs benefit fairly from Detroit’s recovery?”
To make certain they do, JPMorgan Chase is working closely with local Community Development Financial Institutions (CDFIs)—including Capital Impact Partners and Invest Detroit. These partnerships are providing funding, expertise, and inspiration to help a new generation of Black developers rebuild Detroit.
In 2014, JPMorgan Chase made a landmark $100 million commitment (which it has since doubled to $200 million) to help finance the city’s economic resurgence. But first it listened to Detroiters—community partners, civic leaders, local experts and residents. “We learned early on the importance of equity within the community—from residents being able to build their own neighborhoods to supporting developers who reflect the population of the city,” says Pierre Batton, a JPMorgan Chase Program Officer for Global Philanthropy based in Detroit.
Today, Detroit’s residential and commercial neighborhoods are coming back to life, one at a time. What’s occurring, with the help of Capital Impact and Invest Detroit, is the opposite of gentrification: developers—increasingly, Black developers—are revitalizing communities, not for affluent newcomers, but for the people who live in them.
To support those developers, Capital Impact, along with JPMorgan Chase, launched the Equitable Development Initiative (EDI), an annual training program, in 2018. EDI’s mentors and advisors, including Clifford Brown, educate early- and mid-career BIPOC developers in every stage of project development and financing, help demystify the market for them, and—critically—provide them with access to low-cost capital after they graduate. Capital Impact leveraged JPMorgan Chase's support into more than $32.5 million in dedicated loan funds for Capital Impact’s national programming. In 2017, as part of its ongoing investment in Detroit’s recovery, JPMorgan Chase committed $500,000 over two years to the EDI. The firm continues to support the program, not only in Detroit but also in the metro areas to which it has expanded: Washington, D.C., San Francisco, and Dallas.
In four years, more than 200 developers have been trained by the EDI or are currently participating in its programming. The Detroit program alone has more than 100 alumni.
“Already we’re starting to see graduates scale up, doing their second, third, and fourth projects,” says Batton.
Graduates of the program bring specific values and objectives to their undertakings. “They have a commitment not only to growing as developers,” says Jeff Mosley, Capital Impact’s national program lead for EDI, “but also to create housing that fits the needs of their communities—so that there is a social relevance to their work.”
This is evident in EDI alumnus Marcus Jones’s $1.3 million development project, funded by Invest Detroit and JPMorgan Chase through the Strategic Neighborhood Fund, in a long-abandoned commercial building in the city’s Livernois-McNichols neighborhood.
The project, which Jones undertook with his partner and fellow Detroit resident, Akunna Olumba, shows exactly why local developers are so important to Detroit’s recovery. The construction crew was over 98 percent Detroit-based. The subcontractors—welders, plumbers, and electricians—were 90 percent Black. The 6,000-square-foot restaurant, the Detroit Pizza Bar, opened in 2022, and 97 percent of its staff live within a two-mile radius. “We knew that not having a car, a license, or insurance to drive often prohibits people from having access to a quality job,” Jones says.
The restaurant’s energy costs are partly offset by solar panels and high energy efficient equipment; its operating costs are partly offset by tax abatements from the city of Detroit. “Invest Detroit really believed in us,” says Jones, “and they also convinced the city to get behind us.” The rooftop deck looks out on a new $7 million overhaul of the McNichols streetscape.
The picture in Detroit is brightening. The city’s housing market is stabilizing, with more than 50 percent of units owner occupied, a 7 percent increase over 2019, and Black developers like Brown and Jones are playing an increasingly important role. Near the close of his 2022 State of the City Address, Mayor Duggan celebrated 33 Black developers in Detroit who have collectively invested more than $500 million in housing, mixed-use, and commercial real estate across the city. “Black developers with Black ownership are rebuilding this city,” he declared.
To date, Clifford Brown has completed projects in four different Detroit neighborhoods, and continues to invest in properties across the city. Recently, he broke ground on the Brooke on Bagley, a $23 million development projected to include 78 apartments—with 80 percent of them designated as rent restricted—and 2,105 square feet of retail space. “I would argue that Detroit is probably the best place in the U.S. for developers of color to get started,” he says. “Obviously there are amazing opportunities in other places. The challenge is you don't have Capital Impact and Invest Detroit. I was trying to make a $23 million deal happen for six months. I called up Capital Impact Partners, and within two weeks they said, ‘We'll be a senior lender.’”
In an increasingly prosperous Detroit, there are significantly more Black real-estate entrepreneurs than there were in 2009, and there’s a growing training and financing infrastructure that helps them succeed. “We’re creating equitable and inclusive opportunities that didn’t previously exist for Black developers, architects, designers, and trades,” Batton says. “Now we’re just going to keep building more momentum.