Friday, September 6, 2013

Opportunity Detroit! Future City USA?

Perhaps no other US city is in a position to more dramatically reshape their future than the City of Detroit. A city that has been shrinking and deteriorating for the better part of the last six decades is exhibiting signs of a turnaround. A city better known for violent crime, failure of government leadership, urban decay and massive financial challenges is showing signs of life. Detroit has held the sway of the media due to its bankruptcy filing earlier this year: the largest municipal bankruptcy filing in American history.

But recently, Detroit has become a media darling for an entirely different reason. A massive resurgence in downtown Detroit, driven by billions in public and private investment and a vibrancy and optimism in citizens new and old. The Center for Priority Based Budgeting investigated this undeniable burst of enthusiasm and growth and came away convinced that indeed an economic revolution is happening in Detroit. But can it be sustained, will the investment reach Detroit's neighborhoods and what does Detroit's future really look like? With this in mind, the Center for Priority Based Budgeting has once again immersed itself in the trenches of this issue, and gone straight into perhaps the most interesting experiment in economic development we could imagine: the complete economic redevelopment of a City.

Our first article, focusing on the neighborhoods of the City of Detroit, Reversing the Trend: Might Corktown Hold the Key to a Greater Detroit Neighborhood Resurgence?, provided background context on the city's challenges and how entrepreneurship is playing a driving role in reshaping the downtown core and, slowly, the inner city neighborhoods. Our second article, Detroit: Bankrupt, but Not Broken, cast a spotlight on city governance through an interview with Nolan Finely of the Detroit Free Press. This article will focus more on Detroit's burgeoning entrepreneurial start-up and tech sector, and how this explosion of new business development is having a transformative effect on the city.

The Rise of the Creative Class

Amanda Lewan represents the new wave of Detroit entrepreneurs. She grew up in Michigan and attended Michigan State University obtaining a creative writing degree. Upon graduation, she attended Wayne State University and obtained a Masters in Creative Writing. While attending Wayne State she became part of a team that created Michipreneur, a 9-month old start-up company with a focus on covering the Detroit tech and start-up scene. It used to be typical of many Michigan college graduates to plan on leaving the city and state upon graduating. But now more and more college graduates are staying and jumping into Detroit's burgeoning start-up scene, and Amanda decided to stay and assume the Editor and Community Manager post of Michipreneur. Amanda adds, "I thought for sure I would leave, but was inspired to stay."

Amanda's enthusiasm for the Detroit tech and start-up scene doesn't end at Michipreneur. Through her involvement in the entrepreneurial scene, she met Bamboo Detroit co-founders Dave Anderson, Mike Ferlito and Brian Davis and now holds the title of Bamboo "Boss" (aka Communications and Social Media Manager). The Bamboo Detroit motto is "what can we do for Detroit?" Bamboo is primarily a collaborate entrepreneurial workspace located in downtown Detroit, but is driven by a mission to further inspire the spirit in the next generation of Detroit based entrepreneurs.

And Amanda doesn't stop there. She's also the Communications Resident at D:hive Detroit.  D:hive is a physical store front in Detroit’s central business district that connects current and new citizens with the tools and resources needed to live, work, engage or start a project in the city. It is a one-stop resource center where one can find a place to live and learn how to start a new business all in one location. Through the D:hive Build program, start-up entrepreneurs can obtain all the resources they need to successfully launch a business and, if they're lucky, may be "awarded two months of rent-free retail space on the 1200 block of Woodward Ave. to test their brick-and-mortar potential in a prime location downtown" through the sister D:hive Pilot program. D:hive is an initiative funded by the Hudson Webber Foundation and managed by an Advisory Council consisting of individuals from the private, public and non-profit sectors of the community.

D:hive, along with Bizdom, the Detroit Economic Growth Corporation, InsYght, and TechTown are co-developers of the BizGrid. The BizGrid is advertised as "a physical infographic designed to help Detroit entrepreneurs navigate the landscape of organizations providing business assistance within the city." This resource rich mega-group of public and private organizations, collectively known as part of the Detroit Business Support Network, is attracting, guiding, mentoring, supporting and launching a tsunami of entrepreneurs across the city. And with the expanding support infrastructure in place for future entrepreneurs, expect more and more start-ups to be attracted to and launched from Detroit.

According to a recent study, 63 percent of recent college graduates are remaining in Michigan, up from 51 percent in 2007. If Detroit can continue to attract outside talent, while retaining and nurturing enthusiastic, educated and entrepreneurial local graduates like Amanda Lewan, start-ups like Bamboo Detroit and the D:hive resource center can expect more and more attention.

The Circus Has Not Left Town

Grand Circus is another innovative tech start-up that launched downtown in February 2013. Taking their name from Detroit's historic Grand Circus Park (which is directly across the street from their Broderick Tower headquarters), Grand Circus is "a training institute in the heart of downtown Detroit on a mission to elevate the tech community. We offer training, co-working, and event hosting — all under the same tent." Their true niche, according to Grand Circus Director of Marketing & Communications Kelly LaPierre, is a "flipped classroom model that provides training with a purpose in support of the thriving tech community."

Kelly is another member of the growing class of Detroit natives who are focused on remaining committed to the city. She graduated from the University of Michigan and went on to obtain her MBA from Harvard. Kelly's expertise is in the competitiveness of cities and she returned to Detroit, as she said, "to bring a positive light to the city, prove people wrong and contribute to the growing tech scene."

While Grand Circus officially launched in February, classes begin in late September. Classes cross multiple disciplines with training focused primarily on technology, business and design. Grand Circus purposefully created a broad curriculum that allows for flexible, customized training to suit a variety of schedules. Additionally, their 3-storey (15,000 square foot) space will also host events and approximately 50 co-working spaces available on a flexible as needed basis.

Detroit sorely needs more training and educational opportunities, especially in skilled industries like the tech sector. Grand Circus appears well positioned to help fill this void.

The Wizard Behind the Curtain

How is this happening? How can a city known more for blight and bankruptcy become one of America's hottest tech start-up communities? The individual most responsible for this resurgence is Mr. Dan Gilbert.

Gilbert is a Detroit native and the chairman and founder of Quicken Loans. Quicken Loans moved its headquarters and 1,700 of its team members to downtown Detroit in August 2010, where Gilbert and the company are helping lead a revitalization of Detroit’s urban core. Gilbert's corporate umbrella entity is Rock Ventures. Quicken Loans is the flagship of Rock Ventures. Gilbert is also a General Partner of Detroit Venture Partners, which seemingly has its hand in the vast majority of Detroit tech start-ups. And his real estate holding company, Bedrock Real Estate Services, is purchasing and renovating properties, building apartments and wooing corporate tenants.

In 2011, Gilbert's Rock Ventures group purchased several buildings in downtown Detroit, including
the historic Madison Theatre Building, Chase Tower and Two Detroit Center (parking garage), Dime Building (renamed Chrysler House), First National Building and three smaller buildings on Woodward Avenue. In 2012, Rock Ventures, the umbrella entity formed to provide operational coordination, guidance and integration of Gilbert’s portfolio of companies, investments and real estate, purchased the former Federal Reserve Bank of Chicago Detroit Branch Building, One Woodward Avenue, 1201 Woodward (Kresge Building), and five smaller buildings on Woodward Avenue and Broadway Street, totaling 630,000 square feet of commercial space in downtown Detroit. In 2013, Rock Ventures purchased the 1001 Woodward office tower and several smaller buildings in the downtown area.

Rock Ventures' downtown Detroit real estate investments include more than 30 properties (buildings and/or store fronts) totaling 7.6 million square feet. Four million square feet is commercial space; another 3.6 million square feet is parking (10,096 parking spaces). Quicken Loans and its family of companies employ more than 10,000 team members, with 8,000 now working in Downtown Detroit.

In March 2013, Rock Ventures, joined by the Downtown Detroit Partnership (DDP) and Detroit Economic Growth Corporation, kicked the Opportunity Detroit plan into light-speed by unveiling a visionary placemaking and retail plan for Detroit’s urban core. At the cornerstone of this plan is Rock Ventures’ Central Business District property empire.

Over 85 small companies have already moved into Gilbert owned property in the last 33 months. Rock Ventures keeps a detailed, up to date list of new tenants here. Many of these new start-ups are funded by Gilbert's Detroit Venture Partners. And with the Gilbert inspired Live Downtown Incentive Program, more and more people are calling downtown Detroit home.

Build It and They Will Come

Following Gilbert's lead, other entrepreneurs are getting into the game. The non-profit Hatch Detroit, inspired by a mission of "Crowd Entrepreneurship" (where average citizens have a role in voting for the type of retail they want in their community), are "supporting the creation of cool, unique retail spaces." Through a series of contests, emerging entrepreneurs can pitch their start-up ideas and the winner is selected through a community vote. This years winner is Batch Brewing, a small batch brewery that will use their $50,000 prize money to open a new brewery in Corktown.

And no discussion revolving around Detroit's start-up economy is complete without including the Gilbert owned M@dison Building, ground zero for the city's tech community. A 50,000-square-foot building that once housed Detroit's first major movie theater, the M@dison Building opened last January and has become an epicenter of the city's tech scene, hosting a bustling mix of about 300 entrepreneurs, investors, and developers, including Twitter. Several startups that began within the M@dison have grown so much they have begun to move into buildings in other parts of the city.

And newer organizations like the Green Garage coworking space and Crowd 313, a University of Michigan organization that connects university students with Detroit's business and cultural scenes, are expanding on the M@dison Building's groundwork to attract and keep more young talent in the city. According to Michipreneur, who tracks monthly start-up investment statistics, tens of millions of private and public start-up funding is flowing into the state every month (see July 2013 and August 2013 investments summaries). Detroit's entrepreneurial start-up scene is clearly gaining real and significant traction.

Future City USA?

There can be no doubt that real and tangible economic change and development is occurring
downtown Detroit and through Mid-town. Led by Dan Gilbert's vision, billion dollar investment and creation of a new economic ecosystem in the city, two square miles of downtown Detroit is being completely transformed. Long dormant buildings are being redeveloped and repurposed into tech focused hives of start-up creativity, ground-level retail is attracting new boutiques, restaurants, coffee shops and taverns. New lofts and apartments are attracting current and new residents to Live Downtown Detroit for the first time in decades, including city and state college graduates who are no longer fleeing the state in large numbers. And while many argue that these developments are too narrowly focused on roughly two square miles of downtown Detroit, the CPBB argues that these social and economic trends are enormously promising, powerful, and if successful downtown, may create the tipping point to incrementally initiate change in Detroit's neighborhoods.

Priority Based Partnerships and Priority Based Economic Development

In our work at the Center for Priority Based Budgeting, we've been overwhelmed by success stories stemming from partnerships. In fact, one of the key reasons cited by so many of our most recent PBB implementers for initiating the process is their desire to identify the most opportune partnerships, both public-public and public-private partnerships, worth pursuing. We're so excited about this, it begs the question: at what point does Priority Based Budgeting become, in part, the systematic discovery of Priority Based Partnerships?

What is interesting is that the very term "partnership" lacks the power to truly convey the significance of the solutions that can truly come about; the kinds of solutions we're seeing unfolding in the City of Detroit. Sometimes a "partnership" is the recognition that, in order to achieve a community's intended Results, it's in the best interest of local government to assume the role of "facilitator" rather than leader. Detroit Mayor David Bing was quoted in the New York Times, depicting his view of the role of the City in facilitating partnerships and economic development: "My job is to knock down as many barriers as possible and get out the way."

We are moved by this glimpse of what becomes possible when local government understands the Results it is striving to achieve, it's role in achieving them (even when that role is less prominent), and aligns resources to bolster success. Future City USA stands not just for Detroit, but for all of us in local government. The opportunity is upon us!

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If you're thinking of jumping into the world of Fiscal Health and Wellness through Priority Based Budgeting we would certainly like to be part of your efforts! Contact us to schedule a free webinar and identify the best CPBB service option(s) to meet your organization's particular needs.

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