How Two Billionaires Are Remaking Detroit in Their Flawed Image

How Two Billionaires Are Remaking Detroit in Their Flawed Image

Jerome Robinson only got to live in the home of his dreams for five years before he was told to leave.

The 72-year-old had spent his life doing his small part turning Detroit into an economic powerhouse: Working the assembly line and spot welding cars for Chrysler and Ford. Robinson saw Detroit blossom into a bustling city of two million, and has experienced its decline into what it is now: A city that is hemorrhaging residents and struggling to retain those who’ve endured its toughest times. A recent survey found 40 percent of Detroiters planned to leave in the next five years.

Robinson isn’t one of those people. He was happy in Detroit. So when a Section 8-funded apartment in a Downtown building for the elderly opened up in 2007, he jumped at the opportunity.

“I thought, This is where I’m going to live until I die,” Robinson said. “I have bad eyes. I can’t drive. But I could go anywhere in the city I wanted from there. The bus was down the street, my bank was around the corner.”

Downtown Detroit is home to dozens of vacant buildings, but in 2013 developers set their eyes on 1214 Griswold, where Robinson and more than 100 other seniors lived. The developers, Broder & Sachse, wanted to convert the building into luxury condos. They told the residents they had to be out within the year.

As Detroit’s government has been hollowed out by forces beyond its control—emergency management, a fleeing tax base, cuts to federal funding—a small group of rich investors have descended on the city, filling in public sector gaps with personal funds, and remaking Detroit in their image. On top of this, local politicians—like Democratic Mayor Mike Duggan and Republican Governor Rick Snyder—as well as national media, have become enamored with these men, painting them as philanthropists on a mission to rescue Detroit.

Dan Gilbert, billionaire chairman of the mortgage company Quicken Loans, owns over 70 buildings Downtown and has been heralded as Detroit’s “new Superhero” and “missionary.” Mike Ilitch, the billionaire owner of Little Caesars Pizza, convinced the state to give him hundreds of millions for a new hockey arena because he has the “boldest” and “most innovative” plans for Detroit in decades (not because he’s grifting a poor state for personal profit).

If you read these stories, and only these stories, you’d be convinced that just months after emerging from a bankruptcy in which city workers had their pensions slashed and city department budgets were cut even further to the bone, Detroit is back. But beyond the new and restored gleaming skyscrapers of Downtown Detroit, and the puff pieces they inspire, is a grimmer reality.

The rest of Detroit has become a wasteland. Areas like Jefferson Chalmers, Delray, and 8 Mile have been ravaged by foreclosures on houses with mortgages that banks should’ve never made; pockmarked by foreclosures on houses owned by people who owe just a few hundred dollars in taxes to the county, which is just now beginning to clamp down on past-due bills, threatening residents with evictions; and slowly left to rot by corporations who couldn’t figure out how to pay people a living wage and remain in business.

As Downtown and Midtown gleam and bustle, residents of Detroit’s outer neighborhoods are fleeing. And instead of helping these people, the city seems to be courting those who need help the least—the Gilberts and the Ilitches, moneyed barons who can afford to buy up Detroit without regard for the people who made the Motor City what it is.

What Detroit is doing is not about indifference to the poor, but to the active support of projects that stand to benefit the rich the most. Detroit is perpetually short on cash—emerging from the largest municipal bankruptcy in U.S. history in December in which it began making deals to pay down its $18 billion in debtbut the city is spending what little they have on projects that, in all likelihood, will empower the rich and do little for everyone else. Meanwhile, people like Jerome Robinson have been left to figure out how to survive without much at all.

Last spring, Robinson left 1214 Griswold for an apartment further north in Cass Corridor, which he secured with the help of a coalition of nonprofits. There’s nothing around the corner from where he lives now: no pharmacy and scant transit options. It takes Robinson an hour of bus trips to get to and from the library.

His old apartment, 1214 Griswold, has been rechristened “The Albert.” Apartments now start at $1,200 a month, an astronomical sum for a city where the average income for a resident is $14,000, half of what developers Broder & Sachse received in a 10-year-tax abatement from the city for restoring the building. Representatives from Broder & Sachse did not return our calls for comment.

“These guys come in and start buying up stuff, tearing down and rebuilding stuff,” Robinson said, sitting in his new apartment and swigging a beer. “I was comfortable down there. I wanted to stay there. And they kicked me out.”


If you take a walk or drive through Downtown Detroit, you’re likely to see large signs written in a faded-urban font that read, OPPORTUNITY DETROIT. The signs are everywhere—on buildings, buses, billboards. And they’re all part of an attempt by the man most synonymous with Detroit’s recovery to rebrand the city as a place where wealth, jobs, are recovery are in arm’s reach. That man—Dan Gilbert—is not a politician, a community leader, or an activist, but a billionaire who has a personal economic interest in seeing the city comeback in a very particular way.

Quicken Loans is the country’s largest online lender, and Gilbert moved the company’s headquarters from the suburbs to Downtown Detroit in 2010, bringing thousands of young, mostly white professional workers with him. The state gave Gilbert’s company a $50 million tax break for the move. Since then, he has taken advantage of the city’s emptiness, buying 70 buildings at rock-bottom prices, including property from the city. One, the Bates Garage, sits on prime land in the heart of Downtown. It’s now likely to become a mixed-used development worth hundreds of millions of dollars. The city sold it to Gilbert for $1.5 million.

Gilbert bought another building, the iconic Art Deco One Detroit Center, after Mayor Duggan called him and asked him to convince Ally Bank to move its headquarters downtown.

“I’m excited that somebody successful is acquiring all these properties,” Duggan said at a joint press conference held against a backdrop emblazoned with Opportunity Detroit’s logo. The local press cooed over the deal, calling it a “major coup” for Gilbert.

The press is so over-eager about Gilbert’s grand plans for Detroit that when his company released a proposal to take over a half-finished, county-owned jail in the middle of the city (which the county has already spent $300 million on) for the bargain price of $50 million, the press misreported that he’d already bought it. As local writer Anna Clark pointed out, the fanboys let their expectations to get ahead of the facts.

Gilbert has also coordinated the acquisition of public services by his private companies. His private security force now patrols and monitors via a network of security cameras Downtown. His company has also spearheaded the M-1 Rail, a streetcar that will run from the “Gilbertville” section of Downtown (as some residents call it), to the city’s rapidly-gentrifying Midtown.

The M-1 was originally pitched by the city as a sorely needed public transit project that would connect Detroit’s northern suburbs to its core. Slowly, it was whittled down from a planned 20-plus miles to about 3.3. It’ll now cost $179.4 million to build, funded almost completely by corporations like Quicken, Ilitch Holdings, and nonprofits backed by Detroit’s richest, such as the Kresge Foundation.

“Corporations and foundations contributing the money to create public infrastructure—I take that as a great credit to our community and something we should be proud of,” said Matt Cullen, the head of Rock Ventures, the umbrella group for companies owned by Gilbert. “It doesn’t happen in other places.”

But even though the city has been happy to hand over the responsibility of designing and running public infrastructure to people like Gilbert, even M-1’s biggest backers acknowledge that it is more a real estate development tool meant to enrich those who have a stake in the neighborhoods surrounding it than it is a viable public transit option for the majority of Detroit’s residents.

“It’s a circulator to get people in Midtown and people in Downtown circulating in a bigger marketplace,” said Sue Mosey, the head of Midtown Detroit Inc., a neighborhood economic development organization that works closely with Gilbert. “It isn’t the responsibility of M-1 to do the public sector job to get transit for the region or the rest of the city. That isn’t M-1’s job. That’s the city’s job. That’s the regional government’s job, the federal government’s job, the state’s job. Our jobs are not to solve everybody else’s problems in the city.”


Maybe the hundreds of millions Detroit, Wayne County, and the state of Michigan are handing out to the city’s richest would be less infuriating if there weren’t so many other areas of the city begging for an infusion of cash.

As many as 100,000 people could lose their homes as the county cracks down on people who owe as little as a few hundred dollars in back taxes. The county had for years allowed taxes to pile up, choosing not to go after tens of thousands of properties. It allowed people to go further into debt, increasing the likelihood they would not be able to pay off such large sums.

“Is that fair?” Wayne County deputy treasurer Dave Szymanski asked recently. “It’s the reality of the situation.”

The city’s water department is also planning on shutting off over 70,000 past-due accounts to make up its own budget shortfalls. That means 43 percent of Detroit homes could be without water in the coming months.

One might call what’s happening the product of a government focused on austerity: Slashing wherever they can to ensure it doesn’t slip back into economic free fall. But that would ignore the fact that the city, county, and state seem eager to open their purse strings for the rich as they shut off water for the poor.

Marathon Petroleum, for example, received a $175 million tax break to expand their mammoth refinery in one of the city’s poorest and most polluted neighborhoods, Delray, to process tar sands oil. That tax break only brought the area 15 new jobs. And perhaps the most egregious example of this public-private-profiteering is the new Detroit Red Wings stadium. Mike Ilitch, the pizza billionaire, received an estimated public subsidy of $284.5 million when he decided to build the new stadium and “entertainment district” up the block from their old arena. The area will be demolished at the cost of $6 million, paid for by the city. The city will then hand over that land to one of its creditors as part of its bankruptcy deal.

The local press, of course, praised Ilitch for his “amazing vision.

“The Ilitches and the Gilberts, the foundations they back, they wield tremendous power in the city even though they’re not elected,” said George Galster, a professor of urban studies at Wayne State University. “We’re going toward the privatized city here.”

Marathon and the Red Wings stadium are far from the only examples of the government’s lavish incentives: A New York Times investigation found that 30 cents of every dollar of the state’s money goes to subsidies for corporations.

Local activists in Detroit have accepted that these kinds of blockbuster, budget-busting deals will be made. But, they believe, they should at least have a say in how they’re done. Detroit’s various governing bodies seem to not only want to give away millions to the rich, but ensure democratic development is reserved for them as well.

A city ordinance being pushed for by the Detroit People’s Platform was floated in City Council last year. It would require developers to enter into community benefits agreements if they want more than $300,000 in subsidies for any one project. The ordinance would give community organizations a voice in the planning of the city’s biggest projects—possibly guaranteeing employment opportunities remain local and setting minimum wages for specific projects. But the ordinance was met with a swift backlash from the corporate community, and then squashed by the council.

The ordinance’s failure wasn’t enough for some. State legislator Earl Poleski now wants to make sure such a law never passes. Poleski, who is republican, introduced a bill twice, most recently in January, that would ban every city in Michigan from requiring developers to enter into a community benefits agreement, even though Detroit seems to be the only city considering one.

“We won’t get it right all the time, but we should be able to work through developments without having formal ordinances that make our environment less attractive for outside investors,” said Eric Larson, a prominent private developer whose company is remaking the former Tiger Stadium site into condos and high-end shops (the Tigers, owned by Ilitch, also moved thanks to a slew of tax breaks and other public incentives). “We can’t make the city too restrictive.”


As Gilbert and Illitch pave the streets of Midtown and Downtown Detroit anew, the neighborhoods where the vast majority of the city’s residents still live are falling apart, one dilapidated home at a time.

Lauren Hood navigates both Detroits. She’s the community engagement manager at Loveland Technologies, a local tech firm with a mission to map every parcel of land in the United States, starting with Detroit. The company’s technology has been used by the city to find blighted properties, by community organizations to better plan neighborhood development, and by developers to find property to buy on the cheap. Gilbert is one of Loveland’s biggest funders, but Hood isn’t a supporter of Gilbert.

Hood’s own parents were part of the black middle class that held the fabric of Detroit together for so many years. And they stuck it out in their rapidly deteriorating neighborhood near 7 Mile for decades as trash pickups got worse and as police took longer and longer to arrive after a break-in on the block. Finally, after being held-up in broad daylight two years ago, they decided to call it quits.

Ida and Lawrence Hood don’t set foot in Detroit anymore. They’ve moved, like so many, to the suburb. They now call Farmington Hills home.

Hood usually drives past her childhood home once a week to see how it’s doing. Right now the paint is chipped and the grass needs to be trimmed. The house is occupied, rented out to someone by its new owners. It’s a little beaten up, sure, but at least there’s someone in it, unlike the dozens of vacant properties surrounding it.

“The [Downtown core] is turning into the Hunger Games,” Hood said on a drive between her parents’ old house and her apartment, a block away from the new Red Wings arena. “They might as well put a barbed wire fence around it, and everyone else can fight for scraps.”

Peter Moskowitz is a writer based in New York. He’s writing a book about gentrification.

[Photo via the author]

Source : gawker[dot]com
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