Detroit faces tough odds. Since 2000, the city has experienced a drastic drop in population. Thousands of abandoned homes and vacant lots create a desolate urban landscape in an area where the average home value is well below the state’s average. And residents, disproportionately low-to-moderate income, confront a 20% unemployment rate. Yet in this seemingly hopeless situation, Capital Impact sees tremendous opportunity, and it is working to revitalize the city that at one time embodied the American dream.
With a proven track record of helping to solve what are on the surface insurmountable problems of poverty across the U.S. Capital Impact has deployed nearly $70 million in financing in Detroit for education, affordable housing, and mixed-use projects. Such support is critical in this city with a virtually nonexistent credit market, where real estate developers and small businesses struggle to access financing.
“Some would say the problems in Detroit are so complex that we can’t hope to make a difference,” says Terry Simonette, president and CEO of Capital Impact. “But we understand the difference between risk and perceived risk and are able to assemble and deploy capital to situations where others can’t.” Known for its cooperative approach, Capital Impact partnered in 2010 with on-the-ground organizations, businesses, and foundations to focus on the revitalization of Detroit’s Woodward Corridor, the city’s main central artery. The partnership successfully supported six initial projects that will serve as an anchor for further growth.
“Capital Impact’s expertise and capacity focuses on the systems and sectors necessary to the overall health of a community,” Simonette explains. “We’re leveraging this to redensify the Woodward Corridor, which will lead the way to the revitalization of the rest of the city.”
With the NEXT Award, Capital Impact will increase its commitment to Detroit by expanding its place based strategy. This includes opening an office in the Midtown neighborhood and establishing a new fund that will provide long-term, flexible financing—in the form of 15-year loans—for key projects. This expansion strategy will help develop 300-400 units of new affordable housing; generate more than 500 jobs; support more than 20 small businesses; and deploy $40 million of loan financing and $2 million of predevelopment financing in the next two to three years. And, ultimately, it will improve the odds for the once-thriving metropolis.