Toward Inclusive Growth in Detroit Capital Impact Partners Policy Brief As Detroit neighborhoods see more public and private investment, this report examines that momentum and poses scenarios to help community leaders, decision makers, and residents​​​ consider development trajectories to cultivate dense, mixed-income, and inclusive neighborhoods. CONTENTS Executive Summary: How can Detroit Achieve Inclusive Growth? 4 Overview: Capital Impact’s Detroit Program 2000-2013 Baseline Research 6 1) Are any of Detroit’s corridor areas achieving inclusive growth based on measures of jobs, density, or income mix? 10 2) Where is population increasing in Detroit’s corridor areas? 12 3) As population is changing, how is income mix changing? 14 4) What does the Detroit Future City (DFC) recommend for development potential in Detroit’s corridor areas? 17 5) What income mix targets are achievable and equitable in stabilization and revitalization efforts in Detroit’s corridor areas? What does this mean in the context of a very high-poverty city? 20 6) What’s next 22 FIGURES Figure 1 - Corridor Areas 3 Figure 2 - Methodology 7 Figure 3 - Income Mix, 2013 9 Figure 4 - Overall Highlights, and Kirwan Opportunity Index, 2014 11 Figure 5 - Population Change Map, 2000-2013 13 Figure 6 - Population Change, 2000-2013 12 Figure 7 - Estimated Poverty Rate, 2013 15 Figure 8 - Household Income Mix, 1999 and 2013 16 Figure 9 - Maximum Build Potential, 2014 18-19 Figure 10 - Scenarios for Inclusive Growth 21 2 FIGURE 1 Corridor Areas Avenue of Fashion I- 75 Upper Woodward West University of Detroit McNIchols Mercy / Marygrove Highland Mack / Highland Park East Park I- 94 Warren Study Area Grand River / Highland Park Southfield Hamtramck HamtramckStudy Area West Davison / Middle Russell Woods Woodward I- 96 North End / north part of East Woodward Corridor Jeerson Inivitative Area The Villages Eastern Midtown Market East Riverfront / Elmwood Park Central Business Corktown District Windsor, Ontario Hubbard Richard Southwest I- 75 Miles 0 2.5 5 Capital Impact's Detroit Program corridor areas align with Detroit Future City's "Focusd Growth: Mixed Use areas," which consist of neighborhoods adjacent to mixed-use corridors, neighborhood centers, and district centers. 3 EXECUTIVE HOW CAN DETROIT ACHIEVE INCLUSIVE SUMMARY GROWTH? If we genuinely seek to increase economic now. The development scenarios and opportunity for current and future residents, income mix strategies outlined can help how can Detroit achieve inclusive growth? shape future neighborhood stabilization This is a vital question for our city. And, we and revitalization efforts that will lead to believe, it is an ongoing opportunity for more opportunity-rich neighborhoods that Detroit’s community development sector foster economic mobility for all Detroit to strategically allocate resources that residents. can encourage growth while preserving affordability and assets for all residents. This study–Toward Inclusive Growth in Detroit–is relevant to how we approach Recently, Capital Impact Partners’ Detroit community stabilization, revitalization, and Program began to explore this question development throughout the city for two in depth. main reasons: Our initial goal was to fully understand the ρ First, it addresses scenarios for cultivating economic and household changes that have mixed-income neighborhoods. Research taken place since 2000 in Detroit with a shows that such neighborhoods can focus on the city’s mixed-use corridors. We increase economic opportunity and then applied recent trends and patterns— mobility for all residents–particularly using a combination of local data sets, those with low and moderate incomes. land-use policies and real estate ‘rules of Yet few policies in Detroit address thumb’—to explore scenarios for inclusive this shared knowledge in a way that growth across the city. Capital Impact’s recognizes the unique characteristics, working definition of inclusive growth strengths, and trajectories of Detroit’s incorporates increasing density and working diverse neighborhoods. towards a healthy income mix at the neighborhood scale. ρ Second, it provides a methodology for investing within the context of The results are thought provoking. At its inclusive growth, recognizing that real- best, this analysis can inform Detroit’s time investment requires combining investment priorities over the next 5-10 live data sources to stay on top of the years by encouraging the development changing real estate market and keep of forward-thinking policies and practices partners continually engaged. This 4 study has helped us understand how increased economic inequality globally. Yet and where market rate developments signs of promise and momentum are clearly may be enhancing rather than inhibiting evident following the 2008 recession and neighborhoods’ economic health; future the 2013 municipal bankruptcy. applications of this frame will continue to develop this knowledge base. We examine this momentum and pose scenarios to help community development The trends and investment scenarios and finance professionals think through developed in this report reveal some which development trajectories could help sobering realities. Despite significant cultivate a healthy income mix in order investment efforts in Detroit’s Woodward to best serve Detroit neighborhoods in Corridor since 2000, we are far from the long term. The trends and scenarios realizing the full potential of the city’s incorporate broad assumptions; they are land use and development capacity. meant to start a much deeper conversation Even in Midtown, the heart of mixed-use around fostering healthy neighborhoods investment activity during the past 15 over the long term. We believe this work years, there are 212 developable acres is achievable through citywide policy in the district. Additionally, no volume of development and neighborhood planning place-based revitalization efforts can fully processes that incorporate further market mitigate the macroeconomic trends that research, community partnerships, and have contributed to systemic issues like resource planning. huge job losses in southeast Michigan and Capital Impact Partners defines inclusive growth as development that increases density and provides for a healthy income mix at the neighborhood scale. 5 BACK 2000-2013 BASELINE RESEARCH SCAN GROUND OVERVIEW address the priority objective: 1. Are any of Detroit’s corridor areas achieving Capital Impact Partners’ Detroit Program inclusive growth based on measures of works to accelerate economic opportunity jobs, density, and income mix? through strategic cross-sector partnerships that create quality mixed-income districts and 2. Where is population increasing in Detroit’s job growth in Detroit. In 2015, Capital Impact corridor areas? explored 2000-20131 trends to develop a set of economic development policies aimed at 3. As population is changing, how is income achieving inclusive growth. Capital Impact mix changing? deems growth strategies as inclusive when they improve quality of life for everyone in 4. What does the Detroit Future City (DFC) the neighborhood while preserving access strategic framework recommend for and affordability for current and future development potential in Detroit’s corridor residents. Measures for inclusive growth areas? include increasing density and working 5. What income mix targets are achievable towards healthy income mix profiles at the and equitable in stabilization and neighborhood scale. revitalization efforts in Detroit’s corridor Priority Objective: Determine how Detroit’s areas? What does this mean in the context economic development partners can of a very high-poverty city? concentrate investment and development Assumptions: Our focus is on mixed-use strategies to best increase density and achieve corridors, density and income mix because healthy mixed-income neighborhoods, these are neighborhood characteristics thereby improving opportunity and economic that can have a positive effect on resident mobility for residents. opportunity. And, more importantly, these Questions: This report considers the following neighborhood characteristics can be key questions regarding recent trends and meaningfully addressed through strategic potential long-term investment scenarios partnerships, community development, in Detroit’s mixed-use corridors in order to planning, and real estate development. 6 FIGURE 2 Methodology Why focus on Current development Detroit’s patterns and Detroit Future Mixed-use City growth framework Corridors? highlight mixed-use corridors as a key step in reshaping the city. 1. How are Investment draws attention corridor areas and financing tools to new Methodology: changing? Our approach areas. began with three big questions. Net growth is still limited, but in some areas density is increasing. 2. How can we ensure our corridor growth strategies are inclusive? Coordinate neighborhood priorities with investments. Move toward healthy, mixed-income communities. Within the context of place-based goals and citywide policies. 3. 7 extremes (wealth or poverty) and that lower- income populations generally benefit more BACK from proximity to middle-income households GROUND WHY DOES DENSITY than high-income households. MATTER? More specifically, research has shown that when 10 percent or more of households are A combination of good planning, good below the poverty level, housing markets design, and higher densities can support can begin to devalue; when 20 percent or healthy, interactive, walkable