Downtown Detroit group makes residential inroads

August 6, 2012
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The top priority for Jay Fowler, longtime executive director of the Downtown Development Authority who retired from the city last week, was to expand residential opportunities in the district with the hope of drawing more residents to it.

From 2001 to 2009 as he pursued that goal, more than 1,100 condos and apartments were built within the DDA’s boundary, and most were filled with new residents.

Fowler helped support those construction projects through financial incentives he suggested and that the board backed. He also supplied developers with the marketing data they needed to find buyers and renters through two housing studies he recommended and the DDA commissioned.

Now 135 additional apartments are on the drawing board along Ionia Avenue in the district’s southeast corner, not far from where the DDA and the Grand Action Committee are developing the Downtown Market, a project Fowler and Grand Action’s David Frey, Dick DeVos and John Canepa all predicted would fuel further development downtown.

Across the state, an organization in Detroit is also on a mission to bring residents downtown. But the Downtown Detroit Partnership, a coalition of private companies and public agencies, is using a different strategy to accomplish its goal, and it happens to be one that hasn’t been used here — at least, not in the past 15 years. What also is different about the Detroit game plan is it isn’t funded by tax dollars or foundation grants. Employers have voluntarily agreed to endow programs in their areas.

The DDP calls its residential program “Live Downtown” and it follows a nearly identical effort called “Live Midtown,” which is also supported by funding from employers in Detroit’s Midtown sector.

The Detroit Medical Center, Henry Ford Health System and Wayne State University invested $1.2 million in the Midtown program last year and continued it this year because it has been a success in drawing employees to live in that revitalized area.

Then in July, Blue Cross Blue Shield of Michigan, Compuware Corp., DTE Energy, Quicken Loans, Strategic Staffing Solutions and Marketing Associates pooled $4 million and launched Live Downtown for at least the next five years.

Both programs came about because the employers are bringing “record numbers of employees” to their respective districts, and both programs provide cash incentives to employees who choose to live in Midtown and downtown.

“Those are two separate incentives, but both are administered by the same group. So Live Midtown came out first and it has a different group of stakeholders, and then Live Downtown was second with our group of stakeholders. But we use the infrastructure that Live Midtown put in place to process all of our applications and paperwork,” said Cynthia Pasky, DDP chairwoman and president and CEO of Strategic Staffing Solutions, a participant in Live Downtown.

“And we work together well, so there wasn’t a reason to completely reinvent the wheel. We wanted to take a good idea and extend it to a new area,” she added.

Pasky said the DDP decided to get its program going after seeing how employees responded to the Midtown offering. At the same time, BCBSM President and CEO Dan Loepp, who also chairs the DDP Executive Committee, was starting to move employees to downtown and he asked the DDP board if it could get the program up and running while his firm was making its move. “Then the other participants said, ‘Yes, let’s just start doing it now,’ and so we did,” said Pasky.

The Live Downtown effort offers workers of participating companies cash to help buy a home or rent an apartment in the designated area. The program also provides cash to employees who already own houses downtown, which they can use to make exterior improvements to their homes. The awards are grants, or as Pasky pointed out, “forgivable loans,” and don’t have to be repaid.

“Each of the participating companies put funds aside in escrow. So the funds were already there when we started the program, and it was based on our size and the number of participants we thought we would have. It’s a good amount of investment and each company’s share is a little different. But the idea is that we all said we were going to do this,” said Pasky. “Then our individual employees apply for whatever fits for them.”

For Pasky’s company, Strategic Staffing Solutions, Live Downtown works nicely. S3, as the firm is known, primarily has two types of workers: core employees and consultants. Each group has different housing needs. “The consultants are going to be a little more transient with us to where they may live, where their next assignment may be. So we targeted the rental program toward our consultants and we targeted the purchasing program to our employees that are here in our corporate office,” she said.

Most people are aware of the financial difficulties Detroit’s city government has gone through and continues to tackle. Yet, despite that ongoing public fiscal turmoil, employers in two key Detroit neighborhoods didn’t wait for the uncertainty surrounding the city’s financial position to be settled before proceeding with the residential incentives. Pasky felt there was a reason for that.

“A distinguishing point for Detroit is we have significant CEO involvement, and it was really the CEOs of each of these participating companies that said, ‘We understand this. We know we need density. We believe that, if we get this started, it will take on a life of its own. So we’ll commit the dollars to do it,” said Pasky.

In just a year, 187 employees have become new downtown residents. Another 54 workers have been approved for the incentives and are shopping for a residence. Forty-five others have filed applications. Overall, 286 employees have become involved in the programs in a fairly short amount of time.

Of those employees who have moved, 88 percent rented while the rest bought. The average monthly rent was $1,037 and the average purchase price was $64,000. Downtown, Lafayette Park and Midtown have drawn the most moves. Seventy-two percent of the movers came from the suburbs and 5 percent came from out-of-state. The rest came from other parts of Detroit. Pasky said the programs handed out $800,000 through last month for an average of $4,278 for each of the 187 employees who have already moved. Most of the new residents are between 21-35 years old.

“It’s been amazing,” said Pasky of the results. “The total program pipeline is 286 individuals, and more than $800,000 of employer incentives have been funded to date. We have a waiting list. It’s just huge and, more important, when you’re out you see that there are clearly more individuals living here. They’re riding their bikes, they’re walking their dogs, they’re roller skating, they’re shopping.”

Pasky has lived downtown since 1986 and has owned S3 for roughly the same amount of time. “The program has worked because we made changes in Detroit to make it safer, cleaner and more inviting,” she said.

Pasky noted that the employers have given Live Downtown a five-year timeframe. But since the program has started, she said more businesses have expressed an interest in becoming involved in it so the effort might exceed its projected lifespan. But then again …

“The idea is as you drive this change, and as you drive this mindset of availability, it may not be needed five years from now,” she said. “Or what we may do is we may be able to take it and expand it as our core area continues to grow and we continue to add blocks of improvement. We may expand the program and pick up areas that didn’t have available units at the time, but now are part of our redevelopment effort. It’s exciting.”

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