HUD APPROVES $17 MILLION LOAN GUARANTEE TO EXPAND DETROIT'S CULTURAL CENTER
City plans three parking garages, art galleries, commercial space and public improvements

DETROIT - Detroit's Cultural Center is in store for a makeover because of a $17 million loan guarantee approved today by Housing and Urban Development Secretary Alphonso Jackson. Eighteen blighted parcels of land, including several historic buildings that are currently abandoned or underutilized, will be home to three new parking garages, art galleries, a performing arts theatre, new apartments, a restaurant and coffee shop.

Detroit requested this loan guarantee assistance to increase downtown parking, to rehabilitate historic buildings for the visual and performing arts, and to increase residential housing as part of a plan to reverse years of decay and neglect. Part of Detroit's plan includes replacing sidewalks, planting trees, improving landscaping, and installing new street lighting as a way of connecting residential and commercial areas of Detroit's midtown.

"Today I am proud to announce another chapter in our partnership with Detroit to enhance this City's Cultural Center," said Jackson. "Together we can develop vital neighborhoods that attract artistic and commercial activity, create jobs and provide affordable homes for lower income families."

HUD's Section 108 Loan Guarantee Assistance Program enables local governments to borrow money from private investors at significantly reduced interest rates to promote economic development, stimulate job growth, create housing opportunities for low- and moderate-income families, and improve public facilities. Such public investment is often needed to inspire private contributions, to provide seed money or to simply boost the confidence of private firms and individuals to invest in distressed areas.

Detroit intends to use more than $7.6 million to help construct three parking garages (totaling 355 parking spaces) in the City's Cultural Center as well as to reduce blight by replacing sidewalks and improving landscaping. In addition, more than $1.2 million will acquire and rehabilitate substandard buildings to create art galleries, a restaurant, a bookstore and a coffee shop. Nearly $1.7 million will assist the Arts League of Michigan to rehabilitate tens of thousands of square feet of commercial property and create a 272-seat theater, a visual arts studio and a dance studio. Finally, nearly $6.5 million will support the rehabilitation of two buildings to create approximately 70 units of mixed-income housing (see attached summary).

HUD is the nation's housing agency committed to increasing homeownership, particularly among minorities; creating affordable housing opportunities for low-income Americans; and supporting the homeless, elderly, people with disabilities and people living with AIDS. The Department also promotes economic and community development as well as enforces the nation's fair housing laws. More information about HUD and its programs is available on the Internet and espanol.hud.gov.

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Project Summary

The City of Detroit requested $17 million in Section 108 loan guarantee assistance for the Garfield II Projectlocated within 18 parcels of the City's Cultural Center, which has a national historic designation. The City will use $7,638,828 of the funds toward site acquisition for construction of three parking garages, as well as toward site improvements on public property including, but not be limited to, sidewalks, street trees, and lighting. The City's Building Authority (DBA) will develop the three parking garages and convey ownership to the City's Municipal Parking Department upon completion. The garages will total 355 spaces, which will primarily serve the City's primarily residential University Sub-community that comprises 18 census tracts with a population of 23,775, of which 83 percent are low- to moderate-income persons.

The City will lend the remaining Section 108 financing to the following three different development entities carrying out projects in the Project Site:

1) George N'Namdi: Owner and operator of the for-profit G.R. Namdi Art Gallery, will utilize a Section 108-funded loan to acquire two parcels containing substandard structures and rehabilitate 16,800 square feet of commercial space for uses including art galleries, a restaurant, a bookstore, and a coffee shop. N'Namdi expects to create and/or retain 38.5 full-time equivalent jobs. N'Namdi's activities will further the Plan's objectives of slum & blight elimination via rehabilitation and preservation of the Project Site's historic but dilapidated buildings for commercial use. This portion of the Project will cost $2,591,582 - of which, $1,200,389 will be financed with Section 108 proceeds.

2) The Arts League of Michigan (ALM): The non-profit ALM will sign a 99-year ground lease with Cathedral Community Services¹ and act as subrecipient/developer. ALM will utilize Section 108 funds for rehabilitation of 10,820 square feet of commercial space and construction of 16,475 square feet of additional commercial space. The total 27,295 square feet will be combined into a 272-seat theater, a visual arts studio for up to 50 artists, and a dance studio that will accommodate up to 120 dancers. The art center will host ALM's two core programs, Arts For the People and Community Arts and Education. Arts For the People consists of live theater, dance, and music performances, of which over 200,000 people attended in 2001. Ticket prices for events range from $10 to $25 per event, though many complimentary tickets will be distributed to location schools and senior centers.

Community Arts and Education features an arts awareness and education initiative that will partner with Detroit Public Schools. While this partnership will be for public schools citywide, ALM's outreach will include schools and churches in the Project Site's immediate vicinity. ALM's activities will further the City's objectives of reducing slum & blight through rehabilitation and preservation of the Project Site's historic but dilapidated buildings. This portion of the Project will cost $11,135,000, of which $1,681,633 will be financed with the Section 108 loan from the City.

3) Garfield Development Group, LLC ("GDG"): GDG, a for-profit entity, will sell the parcels within the Project Site at 71 & 74 Garfield to Garfield Real Estate Properties, LLC, which will then lease these parcels to back to GDG which will then rehabilitate two rental residential buildings containing a total of 58 units. GDG will also acquire the 92 Garfield parcels and rehabilitate the residential building to make available 12 more units. GDG's activities will help complete the Plan's objectives of slum & blight elimination via rehabilitation and preservation of the Project Site's historic but dilapidated buildings in order to provide a mixture of low, moderate, and market-rate housing. GDG's portion of the Project will cost $14,290,462, of which $6,479,150 will be financed with the Section 108 loan from the City.

The District is already home to several cultural entities, such as the Detroit Institute of Arts, Detroit Artists Market, the College for Creative Studies, and Wayne State University. Along with the Project site's physical renovation, the Project looks to promote the arts at the District's neighborhood level. In addition, the City looks to complement the District's cultural amenities with a thriving residential community to enhance both the District's commercial core and its public safety. Ultimately, the Project will rehabilitate six buildings and infill seven vacant lots. Total Project costs will be $35,655,872.