April 27, 2016

Brookings Draws Lessons From Detroit's Resurgence

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While outside media and public perception may still view it as a city in decline, Detroit has emerged from the largest municipal bankruptcy in American history and is on increasingly stable financial and economic footing. In an event on April 26 at The Brookings Institution titled “How philanthropy, business, and government sparked Detroit’s resurgence,” panelists discussed Detroit’s burgeoning economic turnaround and how the non-profit, private and public sectors can cooperate to reinvest in Detroit’s neighborhoods and economy.

On the panel were: Rip Rapson, President and CEO, The Kresge Foundation (moderator); Sandy Baruah, President and CEO, Detroit Regional Chamber; Stephen Henderson, Editorial Page Editor, The Detroit Free Press; Quintin Primo, Co-founder, Chairman and CEO, Capri Capital Partners, LLC; and Jennifer Vey, Fellow & Co-Diector of the Bass Initiative on Innovation and Placemaking, The Brookings Institution.

The event used the Kresge Foundation’s Detroit Reinvestment Index as a road map for how Detroit’s stakeholders can draw investment to housing, transportation and the economy. The Index lays out pillars for reinvestment including:

  1. cooperation among the non-profit, public and private sectors;
  2. investment in neighborhoods;
  3. housing policy and blight removal; and
  4. quality and equitable transit that connects where people live to employment opportunities.

Cooperative investment in Detroit’s downtown has produced a resurgence in the urban core, Rip Rapson explained. While companies such as Quicken Loans have relocated and created jobs downtown, decades of disinvestment have left a severe housing shortage both downtown and in surrounding neighborhoods, Quintin Primo explained. Detroit’s rental vacancy rate is 2.7%, leaving few rental options for millennials and empty-nesters looking to locate to the city. He noted that downtown has a daytime population of 180,000 but only has 20,000 units of housing, a 7.5:1 job to housing ratio. By comparison, downtown Los Angeles has a working population of 200,000 and has 40,000 housing units, a 5:1 job to housing ratio—which is considered a ‘hot residential market.’ Primo inferred that market rents are more than adequate to provide returns on development. Furthermore, Jennifer Vey posited that Detroit is becoming increasingly well-placed to benefit from the trends of the ‘innovative sharing economy’ in which firms, people and resources congregate in urban centers.

Stephen Henderson cautioned against focusing solely on Detroit’s downtown. Detroit cannot have a vibrant core surrounded by deteriorating neighborhoods, he warned. The city’s business and philanthropic leaders must spur investment in surrounding neighborhoods in order for the city’s resurgence to be sustainable. He argued that the city’s existing, largely African American and low-income population need to have access to better public transportation that takes them from their homes to employment opportunities, which are often outside the city. Residential blight and abandoned neighborhoods, Henderson expressed, exist at a scale not seen in other American cities. He agreed with an audience member statement that Detroit has no excuse not to utilize programs such as the New Markets Tax Credit, Tax Increment Financing and HUBZones as a way to invest more in its surrounding neighborhoods.

Detroit’s economic revitalization efforts are just beginning, and investment in housing plays a central role in maintaining its momentum. While solutions to Detroit's challenges are sometimes experimental, there is agreement that partnership across the non-profit, business and government sectors is critical to Detroit’s sustainable resurgence.