Detroit just found an angel investor with deep pockets.
JPMorgan Chase (JPM) will invest $100 million in the troubled city, marking one of the largest commitments made to Detroit in recent history. The investment comes after the Kresge Foundation last year pledged $150 million to help revitalize the city.
While the city has become a symbol of urban blight and fiscal mismanagement, thanks to its 2013 bankruptcy filing, it's also gaining support from the likes of billionaire Dan Gilbert, who see an opportunity to revive the once-gleaming Motor City. JPMorgan has specific ideas for how its money should be used, however, with a focus on removing blight and spurring community development.
"Obviously, Detroit was having issues," JPMorgan Chase chief executive Jamie Dimon told the Detroit Free Press. "I got together some of our senior people and said, 'What can we do that's really neat, that could be really creative?' "
The investment was sparked by a conversation between Gilbert, the founder of Quicken Loans, and Dimon, the Free Press notes. Gilbert -- who has spent more than $1 billion acquiring Detroit real estate and investing in the city -- told the publication that he helped point Dimon and JP Morgan in certain directions, noting that "they want to be involved in the ground level."
So what are Dimon's plans for Detroit? The bank will split its investment across five areas:
$50 million for community development. The bank will says it will create two new funds to finance "vital" projects that might otherwise lack access to sources of capital. This portion of the overall investment will include $40 million in flexible, long-term debt capital to create the two community development investment funds. Another $10 million will be focused on grants for Invest Detroit and Capital Impact Partners.
$25 million for tackling blight. With roughly 78,000 abandoned buildings in Detroit, urban blight has been a serious issue hampering revitalization efforts. Empty buildings and lots erode the city's tax base and create a "downward spiral of property values and neighborhood pride," JPMorgan notes. One goal of the effort is to provide loans with flexible terms to homeowners who want to rehabilitate properties.
$12.5 million on strengthening the workforce. Recent research has shown that Detroit businesses are finding it difficult to recruit employees with the skills they need, especially middle-skill jobs that require some post secondary technical training, JPMorgan notes. This investment will put money into training partners and services that will prepare workers for jobs in healthcare and information technology, among other sectors.
$7 million for growing small businesses. Start-ups and fledgling businesses can find it hard to gain access to capital in Detroit, the bank notes. This portion will help entrepreneurs get off the ground, with JPMorgan noting that it's investing in the regional food hub Detroit Eastern Market.
$5.5 million for seeding future economic growth. JPMorgan will invest in a 3.3 mile street car called M-1, which is part of the city's plan for urban renewal in downtown Detroit. It's also investing in Global Cities Initiative, which it started in 2012 with the Brookings Institution, by creating a forum in 2015 about investing in Detroit.