Business community 'impressed' by Detroit
Detroit — Who says Chapter 9 bankruptcy is a municipal death sentence?
Not 64 small business owners who graduated Thursday from the Goldman Sachs-backed 10,000 Small Businesses program, which aims to grow companies and create jobs in Detroit and neighboring localities by teaching practical business skills.
Not legendary investor Warren Buffett, who punctuated his customary mix of self-deprecation and financial advice with the observation that Detroit possesses the building blocks for meaningful investment and a credible turnaround.
"It was important Detroit clear the slate, and it looks like they're doing it properly," he told mortgage impresario Dan Gilbert at the "Detroit Homecoming" event. "We'd buy a company in Detroit today, and we'd be happy to do it. You've got prosperous home office companies here" — Gilbert's Quicken Loans Inc. empire included.
Detroit's also got opportunity, a tagline marketed a few years ago by the Gilbert machine that is being realized thanks to a confluence of events controlled by no single entity or person: a downtown revival financed by private capital; a bankruptcy delivering certainty and discipline; a mayor focused on fixing basic services.
"This is real," Mayor Mike Duggan told more than 150 former Detroiters invited back for what amounts to a three-day exposition touting the city's investment potential. His wasn't a pitch so much as a description of what Detroit is doing, how it's doing it and where it's going.
He's right. It is real — streetlights replaced by the thousands, neglected parks newly maintained, vacant lots mowed, abandoned homes razed or auctioned, rehabbed and returned to tax rolls. This as private investors, and those who would be, continue plans to invest what amounts to billions in an allegedly moribund city.
Real money seeking profit is looking for a home. Denver-based Triton Properties Inc. buys downtown apartment buildings and rehabs them. JPMorgan Chase pledges $100 million to invest in companies that create jobs in Detroit. Potential investors, encouraged by the bankruptcy, are looking for riskier bets to diversify portfolios.
There was Eli Broad, the Los Angeles philanthropist and entrepreneur who founded two Fortune 500 companies and got his start building houses in suburban Detroit. And Quintin Primo III, the Detroit native whose Chicago-based Capri Capital Partners invests in urban commercial and residential communities.
Detroit's Whole Foods store on Mack east of Woodward is proving such a success that the Denver-based upscale grocer now wants to open a second store in Detroit, Co-CEO Walter Robb confirmed without offering any details.
And a homegrown mega-project is poised to begin. Christopher Ilitch, CEO of Ilitch Holdings Inc., reprised plans for the family company's 45-block, $650 million entertainment district anchored by a new arena for the Red Wings that would connect Midtown with downtown.
"We're a comeback in the making," Ilitch said in an interview. "It's going to be difficult to stop the momentum in our city because a lot of it is organic."
To punctuate his point, just down the road Wayne State hosted the first local graduation from Goldman Sachs' 10,000 Small Businesses program, an effort backed by $20 million from the investment banking giant. The enthusiasm was palpable, from McClure's Pickles to Michael Antaran's Marvel Apps.
This is what an inflection point looks like, a confluence of events, forces and people that can be leveraged into a new, fact-based narrative for Detroit. Or the moment can be wasted once the discipline of bankruptcy fades, making way for the old self-dealing machines that ignored reality and sucked Detroit dry.
But the smart money can see and smell the change. Michigan's Republican governor and the GOP-controlled Legislature engineered a Detroit rescue package that is critical to concluding the bankruptcy; foundations and local investors are putting cash to work at home, not elsewhere.
The revival of the hometown automakers and their products is positively influencing what "Detroit" conjures in the public psyche. The city's mayor and his administration's surprisingly cooperative relationship with City Council is tackling priorities that can affect the lives of real people living outside downtown.
"People are impressed," said Daniel Doctoroff, the CEO of Bloomberg LP, a Michigan native who's lived in New York for 30 years. "The mayor was very impressive, focused on the right stuff. You need to balance optimism with a desire to overperform expectations, not underperform expectations."
He's right, too. Detroit's post-war history is littered with false starts and broken promises, as much products of financial inattention and corporate cynicism as the meddling and pettiness that Detroit's political class elevated to high civic art. Too often, it valued long shots over hard work, handouts over restructuring, hype over substance.
Not so much anymore, a credit to the seismic impact of bankruptcy and a realistic leadership class that prefers solutions over partisan talking points and empty posturing. The Detroit on display for its diaspora is not the Detroit of a decade ago, even five years ago.
"We're now getting outside dollars and outside validation, and that's a game-changer," said Eric Larson, CEO of the Downtown Detroit Partnership. "The money that's now being invested is focused on long-term returns. And that's huge."
Investing in Detroit still is not for the faint of heart. Gilbert may be cornering the market downtown, but the Oracle of Omaha remains non-committal, notwithstanding his stake in General Motors Co. and his ownership dalliance in the early 1970s with the company that owns the Ambassador Bridge.
"You bought a lot of real estate around here," Buffett quipped to Gilbert, whose real estate company now controls 60 buildings.
"Yeah, a bit."
"If you want to sell half of it to me at cost," Buffett said, "I'll take it."
But even he's too late to do that deal — which says something about where Detroit is today, bankruptcy and all, and where it looks to be going.
Daniel Howes' column runs Tuesdays, Thursdays and Fridays.
Staff Writer Louis Aguilar contributed.