Andrew Colom and David Alade believe that longtime Detroiters should profit from the revitalization of their city. And they don’t mean that as a metaphor.
The two men are old friends who moved to Detroit in 2015 to launch Century Partners, an unusually holistic housing development company. Colom came from Mississippi, where he pursued writing and film while running a real estate company in his hometown. Alade came from New York City, where he worked as an investment banker at Barclays Capital and Credit Suisse. They met when they were students at Columbia University, and while it took years of “what if” conversations, they finally found themselves in Detroit, going all-in with a new model of getting things done.
To date, Century Partners owns and manages more than 60 rental units in Detroit’s North End and Boston Edison neighborhoods. Nearly all are single-family, two-family and four-family homes, though it also has a 36-unit apartment building. It rehabilitates the historic properties with over $1 million raised from family and friends. Their hope is to not only stabilize two “tipping point” neighborhoods, but also to build wealth for the Detroit families who live in these communities. They do this through a property fund where neighbors can purchase equity in the homes that Century Partners rents to other people. That is, residents become investors in the rehabbed homes, earning financial returns as the neighborhood improves. It is similar to equity experiments for renters in Cincinnati and Cleveland, but it stands out because it is tailored to benefit Detroiters who stuck with the city over its hardest-hit years.
“It’s essentially like getting stock in a house,” Colom says.
Not only is the equity model a way for longtime Detroiters to build wealth, but it also reduces tensions that can arise when residents move into the neighborhood. In this case, older and newer residents have a heightened stake in each other’s wellbeing. “This is the opportunity to do something really special,” Alade says.
Alade also describes this project as a kind of balancing of the cosmic scales. In the last recession, the housing industry’s collapse “lost people literally trillions of dollars of wealth,” he says. In the aftermath of that, who do you trust? The equity model is a way for a community to invest, literally, in itself. And they are doing it by leveraging the gracious historic homes that, decades ago, were built for Detroit’s wealthier residents.
In the program, there is a low minimum investment of a couple thousand dollars. For Detroit property owners, the price isn’t explicit. Rather, it is based on their stated desire for equity as a percentage of the current value of their property. The money is invested into the Century Partners fund that owns all the properties. This way, the investors minimize their risk because it is diversified over a number of properties, and not tied up in the uncertain fate of any single address.
By its nature, the program is tailored to people with modest incomes. “A rich person is not going to invest in a single-family home,” Alade says, because the rate of return is relatively small. But there is an expected return, with part of the rent paid by tenants going back to the neighborhood investors. For Alade, who steered over $100 billion in financing for mid-size and Fortune 500 companies, including tens of billions for the financing arms of the Big Three auto companies, it’s a turnaround. While he credits his time on Wall Street for teaching him key skills, he says that his satisfaction in raising capitol for wealthy corporations only went so far. Century Partners is his way of bringing the benefits of investment to the community level.
Century Partners also promises full transparency in its transactions, terms and structure. And there is a personal stake here too: Colom lives on Atkinson Street, in the first house bought by Century Partners. His tenants are also his neighbors, and together they have a shared interest in ensuring quality city services and property maintenance in the community.
Altogether, this is a radical departure for the ordinary way of doing redevelopment in Detroit these days. Traditional banks are reluctant to lend at all in the city, so nonprofit institutions have stepped in to help fill the void — and they have accrued an incredible amount of influence along the way. Even when J.P. Morgan Chase “invested in Detroit’s future” by giving it $100 million over five years, the money was funneled through major nonprofit institutions.
Housing development funds also tend to be restricted to multifamily buildings with eight or more units. That is of limited use in Detroit, where 85 percent of the housing in the city is in the form of detached single-family homes that sprawl over dozens of neighborhoods. Colom points out that this effectively confines the use of most funds to the few places where multifamily structures are found in Detroit — mostly downtown and Midtown. “Even if they adjusted it a little to allow for duplexes or four-tops, we’d be able to do more in the neighborhoods,” Colom says. It’s a significant point. Even though few will outwardly disagree that Detroit can “come back” in a full and meaningful way if its neighborhoods aren’t revitalized, very few development projects are targeting those communities.
Nonetheless, Century Partners is able to achieve a lot of the same efficiencies that multifamily developments do. Contractors, utilities and insurers give them economy-of-scale rates when they point out that they have 15 units on one street. “It essentially is multifamily. Just not vertical,” Colom says.
As the young company navigates the tricky world of contractors, utilities, permitting and real estate financing in Detroit, it takes its identity as a community advocacy agency seriously. This is evident not just in its equity experiment, but also in small ways. Take the gorgeous wood-cased television and turntable left behind in one of the homes they’re rehabilitating: They gave it away to their new residents. “One of the most of amazing things about rehabbing historic homes in the neighborhoods of #detroit is discovering the tremendous history and treasures that reside within them,” they wrote on Instagram. “#CenturyPartners endeavors to preserve these histories to the greatest extent possible.”
One of the most of amazing things about rehabbing historic homes in the neighborhoods of #detroit is discovering the tremendous history and treasures that reside within them. #Centurypartners endeavors to preserve these histories to the greatest extent possible, in part by passing along items such as this beautiful television set to residents of our new Detroit family. Look out for Century Marketplace coming soon….#historic #preservation #urban #revitalization
To be sure, it’s a troubled history. Many Century Partners properties are near the corner of 12th and Clairmount streets, where July 1967 rage broke open in what is still variously called a “riot” or a “rebellion,” depending on who you are talking to.
But it’s also a rich history. Detroit was once celebrated for having the highest rate of homeownership in America, and specifically, the highest rate of African-American homeownership. Henry Ford’s famed $5-a-day wages set a new standard where the urban working class could afford not only their own Ford automobile, but also their own dwelling. It typically came complete with a front and backyard, driveway and garage.
Even today, Detroit is the only city in the country where more African-Americans own homes than rent, and the neighborhoods with the most expensive homes, like Indian Village and Palmer Woods, are meaningfully integrated. But the city’s well-documented struggles undercut the generational benefit of that wealth, and the national housing crisis only exacerbated the individual losses. Century Partners is intentionally interrupting the pattern of disinvestment with a model of shared ownership. If all goes as hoped, it will pioneer a replicable model for people-centered housing development in urban neighborhoods.
The Equity Factor is made possible with the support of the Surdna Foundation.
Anna Clark is a freelance journalist in Detroit. She has written for the New York Times, the New Republic, NBC News online, Pacific Standard and other publications. She is a political media correspondent for the Columbia Journalism Review. Anna is the editor of A Detroit Anthology and author of Michigan Literary Luminaries: From Elmore Leonard to Robert Hayden. A former Fulbright fellow, she is also the director of applications for Write a House. Her website is annaclark.net.