A youth group at Lincoln Street Art Park. Plans for the project, dubbed “Dreamtroit,” call for keeping the arts, education and recycling the DIY space is known for. Courtesy photo
We constantly hear developers say that without access to hyper-competitive Low Income Housing Tax Credits (LIHTC), itâ€™s difficult to include truly affordable housing in their project. If completed, one development in Detroit will demonstrate both sides of that coin: itâ€™s possible, and also incredibly tricky.
It was recently announced that the Recycle Here! and Lincoln Street Art Park complex at the corner of Lincoln and Holden streets is getting a much-needed facelift. The building owners, first-time developers Matt Naimi and Oren Goldenberg, have grand plans to convert the buildings, which are in various states of occupancy, into a mixed-use program with affordable housing and 38,000 square feet of commercial space, all while maintaining the eccentricity that make it a destination for artists, late-night partygoers, recyclers and students.
Now that the project has received approval for a Michigan Strategic Fund loan, theyâ€™re finally ready to begin on the nearly $20 million redevelopment.
Itâ€™s fitting that a literally scrappy outfit â€” the folks at Recycle Here! have been known to build fire-breathing dragons out of scrap materials â€” would adapt their old buildings into something unconventional. Theyâ€™re calling the project Dreamtroit.
â€œFrom the beginning, we didnâ€™t want condos, didnâ€™t want to gentrify,â€ Goldenberg says. â€œWe wanted to remain a freak show.â€
From car assembly to artist studios
The sprawling facility in Northwest Goldberg has a varied history of ownership and use. Designed by renowned local firm Rogers and McFarlane in 1910 for the Warren Motor Car Company, the long building made of brick and reinforced concrete was bought seven years later by the automotive entrepreneur Henry Leland to produce luxury cars for the Lincoln Motor Car Company. Though eventually bought by Henry Ford, it continued to produce cars for at least another decade.
Starting in 1946, Grosse Pointe Quality Foods and then Metro Groceries, owned by Naimiâ€™s father, operated out of the building. At some point, a larger warehouse was constructed around the original factory. Naimi has since turned it into artists studios, a recycle center and headquarters for Green Living Science, an environmental education nonprofit.
The Dreamtroit vision
The redevelopment hopes to streamline this complex web of past uses. The key feature is the creation of 81 live/work spaces, which arenâ€™t reserved for artists but are designed with them in mind. They come in a mix of sizes and living arrangements â€” one-bedrooms, two-bedrooms, and 15 co-living flats with a shared kitchen and bathroom. Twenty percent of the units will be reserved for those making 50% of the area median income ($27,500 or less for an individual), half for under 80% AMI ($44,000), and all for less than 120% AMI.
â€œWeâ€™re going after people who are usually displaced in the gentrification models of traditional development,â€ Naimi says.
Affordable housing for artists may be the reason behind the design, but itâ€™s far from the only change. The 160,000-square-foot property contains no less than seven parcels, with the former Lincoln Motor Car Company Building at its heart â€” all of it needs major updates. Plans also call for a marketplace, coffee shop, offices and outdoor venue. This coincides with the relocation of Recycle Here! to another part of the property in the summer.
â€œItâ€™s going to be an active place,â€ Naimi says. â€œThere will be artists. The Art Park is there. Weâ€™re working with the city on a 24-hour economy initiative centered on Holden Street.â€
Artist displacement and endangered art spaces
Goldenberg and Naimiâ€™s ambitious goals were prompted by what they see as the gentrifying forces in the city, which flatten edges and push out artists. Artists themselves and well connected with the cityâ€™s creative scene â€” Goldenberg is a filmmaker and Naimi is the founder of the graffiti-filled Lincoln Street Art Park â€” they say there are diminishing options for artists to live affordably and safely.
In recent years, artists have been displaced from buildings in Eastern Market and Core City, and conditions are potentially hazardous at the Russell Industrial Center, which contains one of the larger art communities in the Midwest. A graffiti artist even died at Recycle Here! after falling through the roof.
â€œMany art and community spaces that have survived in Detroit over the last 10 years are falling apart. People have not been able to maintain them,â€ Goldenberg says. â€œWeâ€™ve spent the last four years trying to crack that nut. How do you maintain a culture while having to do massive renovations to make the building compliant?â€
Indeed, â€œmassive renovationsâ€ are required. The buildings will need extensive cleaning and debris clearing. Leaky roofs will need to be replaced. Much of the old warehouse built around the Lincoln Motor building will be demolished, new buildings will be constructed, a new surface lot will be paved and more. The total construction cost is estimated at $12.17 million.
Doing the development math
Acquiring financing for a project this complicated and with margins so low â€” Goldenberg and Naimi say they are essentially forgoing income to make this work â€” was no easy task. So itâ€™s no surprise that Dreamtroitâ€™s capital stack is as complex and layered as the property itself.
After approval of the Michigan Community Revitalization Program funds, the project now has loans, equity, abatements and credits from at least seven sources. The biggest contributors are Capital Impact Partners ($5.7 million), developer equity ($3.16 million), mission-driven lender IFF ($3 million), the Michigan Economic Development Corporation ($2.49 million) and historic tax credits ($2.12 million).
â€œWe explored every option for affordable housing thatâ€™s not LIHTC,â€ Naimi says. â€œBut rather than use those tools and keep high profit by going to the top of the threshold for rent, weâ€™re keeping them low. Itâ€™s possible, you just have to forego a level of profit in order to maximize the affordability component.â€
Capital Impact Partners found the project to be a great match because it had extra funding tied to an affordable housing grant from 2016. But Nicholas Pohl, in the office of Business Development for Capital Impactâ€™s Great Lakes Region, said the project also fulfills â€œa lot of mission componentsâ€ for the community development financial institution.
â€œThe owners are heavily invested in the people that work in the buildings,â€ Pohl said. â€œThereâ€™s lots of public programming to support the neighborhood. And the rental rates were modeled in order to keep residents in the community.â€
Construction will begin as soon as Goldenberg and Naimi close on the MSF loan, hopefully before the end of the year, and take approximately 50 weeks. Theyâ€™re looking towards a January 2022 completion.
Given all the work thatâ€™s needed to bring this idea to fruition, the lack of experience from the developers and the non-traditional nature of the project, itâ€™s remarkable that such a wide variety of establishment funders are putting their trust in Dreamtroit.