City to invest $6.1M to extend affordability on 389 housing units to prevent potential displacement

• Eight aging low-income apartment buildings will be renovated, rents kept affordable to existing longtime residents
• City funds being made available as part of agreement with HUD to resolve questions over use of Community Development Block Grant Funds in Motor City Match program

Nearly 400 individuals and families living across eight aging low-income apartment buildings in Detroit will see their units renovated and their rents kept affordable, thanks to a $6.1 million investment announced today by city housing officials. The city funding will help cover much of the cost of the renovations in exchange for the owners keeping rents affordable for 389 households for another 15-25 years.

Projects approved for the funding so far include six buildings at affordable housing developments in the Hubbard Farms and Mexicantown neighborhoods. The remaining two buildings are pending approval from City Council. Without the funding, the buildings would be at risk of converting to market rate, potentially displacing longtime and elderly lower income Detroiters.

The use of funding from the city's Affordable Housing Trust Fund satisfies an agreement between the US Department of Housing & Urban Development and the City's Department of Housing & Revitalization. That agreement resolves HUD's questions about the criteria the city used to distribute Community Development Block Grant (CDBG) through the Motor City Match program during the early years of the program in 2015-2018. The Housing & Revitalization Department was the direct recipient of those funds and distributed them to the Motor City Match Program.

HUD officials participated in conversations at the inception of Motor City Match about how CDBG funds would be used. After reviewing actual expenditures, however, HUD took the position that $6.1 million in Motor City Match spending in those years did not meet CDBG guidelines because those expenditures could not be directly tied to specific business addresses (many of which were still in the process of establishing themselves).

To resolve the matter, The City has agreed to utilize $6.1 million of its own general fund dollars and spend them in a way that is in accordance with CDBG guidelines. Those City funds will be used to support the four affordable housing preservation projects to renovate the buildings, extend the years of affordability and prevent the displacement of longtime Detroiters.

The City has elected to use funds from the Trust Fund and apply them toward six affordable housing preservation projects. Money in the trust fund is generated through proceeds from the sale of city owned land for economic development projects. HUD has agreed that this is an acceptable use of these funds under its guidelines.

In April, City officials announced that it and its partners had invested more than $1 billion into affordable housing in the city in the past five years.

"That level of investment is the reason Detroit is not experiencing tent cities and a homelessness crisis like some other large cities," said Schneider. "It is going to take many more years of sustained investment into affordable housing to meet the need and demand in the city and this $6.1 million investment will be an important part of that.

"We appreciate HUD's partnership in working through this very complex process," Schneider added. "This is a fair resolution and are pleased to finally be able to put the matter to rest. As a result, we will be supporting the preservation of badly needed affordable housing in a way HUD fully supports and that protects our most vulnerable longtime residents."

Motor City Match an unqualified success

Since April 2019, the City no longer uses CDBG funds for Motor City Match, and instead uses general fund dollars approved by City Council. Last year, City Council also approved the use of additional American Rescue Plan Act funds to double the grant awards Motor City Match presents to entrepreneurs from $500,000 to $1 million per quarter.

Through 27 rounds of Motor City Match:

• Total business open: 168
• Total businesses under construction: 104
• Total cash grants: $19.1 million
• Total leveraged investment: $102.7 million
• 85 percent are minority-owned businesses
• 70 percent are women-owned businesses
• 67 percent are businesses owned by Detroit residents
• 2,095 total businesses served

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