The Detroit Economic Growth Corporation (DEGC), the nonprofit group working to bring new development to the city, has come under fire for an agenda that favors white over black investors. The charge comes from politicians, community activists, and citizens alike: “Whites are trying to take back our city.”
The DEGC is accused of giving the city away. Its complainants want a “race” factor in the requisitioning and dispensing of development grants and loans. It’s difficult to see how such appeasement would enrich Detroit’s revitalization.
Development headlines are typically associated with Quicken Loans buying downtown buildings, Illitch’s mega-million sports and entertainment complex, and the M-1 group’s Woodward Avenue streetcar line. Those high-profile deals have the DEGC under pressure from black investor wannabes who insist on special dispensation. Some already have outstanding loans that are delinquent – resulting in a $5 million reduction in HUD’s Detroit block grant annual allocation.
That hasn’t stopped critics from demanding preferential treatment — not on how much “skin they’re willing to put in the game,” but on the color of their skin. The DEGC won’t play this game.
In the past, white investors were forced to accept prominent blacks as “fronts” in their deals. The minority partner had little real equity and no real decision-making authority. The DEGC has since raised the bar – not only serving as an advisor to black entrepreneurs who go it alone but also putting money into promising deals..
Instead of forecasting economic doom, for example, businessman Chris Jackson and Jim Jenkins – owners of Jenkins Construction – built an $18 million, five-story office/medical building in Midtown called the Queen Lillian Project. Detroit investor Gregory Jackson has purchased the twin 22-story, 584-unit apartment Lafayette Towers complex. George Stewart and Mike Byrd are quintessential entrepreneurs with a contagious “can do” spirit who have embarked on rehabbing an entire block of the Gardenview Project in Midtown. Michael Roberts has invested in the East Riverfront project and plans to renovate the former Omni Hotel.
One of the most influential minority investors is Andra Rush, the Native-American CEO of Detroit Manufacturing Systems which supplies Ford Motor Co. Her parent company is the largest Native American-owned business in America.
Marvin Beatty, Elliott Hall and Ricardo Solomon are the developers and owners of Gateway Marketplace, the nearly completed Meijer retail power center at 8 Mile and Woodward. Beatty also is a partner in the Magic Plus LLC that includes Earvin “Magic” Johnson. The latter plans to turn the former Michigan State Fairgrounds into a multi-use venue featuring a movie theater, housing and restaurants.
Beatty’s investment team was able to overcome obstacles because the DEGC was there to help at every step of a laborious process. With Gateway, the group needed pension funds, Michigan Economic Development Corp. new tax credits, etc. DEGC helped seal the deal with an initially reluctant Meijer, as well as with “bridge financing” to facilitate cash flow during the construction phase.
Because the DEGC understands the needs of the marketplace, he told me, the organization was an important conduit that worked with his group, never against them. “In my experience,” says Beatty, “nobody funds development projects based on people being black.”
Detroit will need a lot more of DEGC’s equal economic opportunity resolve – and investor risk-taking – on its road to recovery.