Detroit Mayor Mike Duggan announced Tuesday the creation of the Detroit Housing for the Future Fund (DHFF), a public-private partnership that seeks to bridge the funding gap between the cost of redevelopment and the income developers will receive from a particular project.
"If you want to hold rent low enough that people of low income can afford it, but your housing costs to build are the same as every place else, you lose money," said Duggan. "Nobody is going to build apartment units where the cost of building it costs more than they get back in rent. They'd all go out of business."
The goal is to raise $75 million in private capital for the DHFF to invest in creating and preserving affordable housing in Detroit.
Duggan announced that $48 million, or almost two-thirds, have already been committed by about one dozen banks and companies, including a $15 million commitment by JPMorgan Chase.
"When you talk about neighborhoods, you have to talk about affordable homes," said Peter Scher of JPMorgan Chase. "Because that is really the launching pad to resilient families, to resilient neighborhoods, to well paying jobs. But access to quality and affordable homes is not equitably available."
The DHFF is the privately funded part of Detroit's larger initiative to preserve and create affordable housing for Detroit's lower income residents amid the threat of gentrification.
The Duggan administration has set a goal to preserve 10,000 units of existing affordable housing and to develop 2,000 new units.
"If we do this right, we can bring jobs and businesses back while protecting those who stayed here during the down times," said Duggan.
"We're going to make sure that what we saw happen in Brooklyn, in Washington, DC, in Seattle, in San Francisco, what's happening now in Austin, Texas, where new jobs and businesses forced out long time residents," Duggan said. "We're committed not to have that happen here."
The DHFF is designed to use private grant and low interest loan capital to complement and leverage public investment through the City of Detroit and the Michigan State Housing Development Authority. It will be managed by the Local Initiatives Support Corp (LISC).