Doing Development Differently in Metro Detroit 

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Welcome to D4’s New Blog Series: Views into Equitable Development!

October 9, 2017

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October 18th Recap: Gaming the System

 

The only thing better than advocating for equitable development in Detroit, is making board games about it instead.

 

Of course we’re kidding (are we?), and The D4 Developer Game [TM] was just one of the ways we discussed the development process in Detroit during our second Equitable Development Series event. Additionally, the game was prefaced by our speakers for the evening, local developers Kimberly Dowdell and Clifford Brown.

 

Dowdell is a Detroit native who has worked in architecture and development in several other cities before returning to the Motor City. She is now a partner at Century Partners, a mission based firm which is rehabbing homes on Atkinson Street in Boston-Edison, and was one of the teams named to redevelop the Fitzgerald neighborhood in Northwest Detroit. Clifford Brown, of Woodborn partners, helped lead the team that completed the Scott, a 199 unit apartment building on Woodward in Midtown, and is currently seeing the completion of the Coe, a 12 unit project in West Village.

 

Kimberly Dowdell and Clifford Brown both spoke to the unique challenges of delivering a high-quality residential product in a market that is sometimes not competitive with other cities nationwide. Projects still require some form of subsidy in most cases and the profitability of neighborhood projects continues to lag compared to their Downtown and Midtown counterparts. Ironically, it is more difficult to attach community benefits to projects in the neighborhoods, where they are more needed.

 

In the opening session of the Equitable Development series, we learned our community is deeply invested in remedying Detroit’s poverty and empowering the city’s more vulnerable populations. In our second session, that energy continued, and when it comes to development, the question on many Detroiters’ minds is affordable housing. In Detroit, 67% of renters are rent burdened, meaning that at least 30% of their income goes toward housing costs. For homeowners, housing cost burden stand at 36%. In September, City Council passed an inclusionary zoning ordinance to address this issue, but the law applies to projects above a certain size, and may take some time to bear out. So what is the challenge in building affordable housing?

 

“Right now it’s difficult to build at 100% [of AMI, or Average Median Income for the Metro Detroit area] let alone 80%,” Brown said. “Typically it doesn’t pay for itself.” That’s because rents have to offset the costs of construction, acquisition, debt service, and more. In Detroit, where rents are still low (albeit rising), it might not be enough to justify a project, especially when building below market rate.

 

Which brings us back to the D4 developer game. There is no better way to explain a complex process then by turning it into a board game - right? Or maybe we just like board games at D4.

 

Either way, D4 developed the game to help explain various public subsidies often used by developers in Detroit and illustrate the tensions that arise between constituency groups when developing real estate. Participant groups had to navigate obtaining financing (both public and private) for their project and agree upon the level of community benefits to be provided. To add an element of uncertainty (reality), groups had to choose random “chance” cards that could positively or negatively impact their project.

 

Participants were given a hypothetical development in either Downtown or in a neighborhood - and quickly realized that the Downtown projects had an advantage because they offered more favorable financing terms. Teams won the game by being the project with either the most profit, or the most community benefits offered. A Downtown project won the profit-prize (100 Grand candy bars) and surprisingly, a neighborhood project won the community benefits-prize (Butterfinger candy bars) with the help of some fortunate “chance” cards.

 

Achieving equitable development in Detroit is a journey that we are all embarking upon. This journey is convoluted with a multitude of factors including market appetite, social need, and environmental sustainability. The D4 Equitable Development Series is our attempt to foster an ongoing conversation across interest areas and constituencies to build toward a shared understanding and commitment to equitable development. Our next series of events will be our Jobs in the Districts presentations which will delve into the employment landscape in Detroit’s Council Districts. Stay tuned for more blog posts about that.

 

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