Are Things Happening in Detroit?
It's a warm spring day at Harvard University as the Initiative for a Competitive Inner City (ICIC) luncheon gets underway. The mayor of Detroit, Kwame Kilpatrick, is wedged on a dais with Dallas Cowboy wide receiver/Los Angeles developer, Keyshawn Johnson, and Inc.'s master of ceremonies, Norm Brodsky. Kilpatrick, 34, is there to receive the 2005 ICIC Mayoral Inner City Leadership Award.
The 6-ft. 4-in., 300-lb. ex-college lineman stands, shakes hands, and engulfs the podium to give his speech. Sporting a close-cropped full beard, an elegantly tailored pinned-stripe suit with a patterned silk tie, a gold watch, and a diamond stud earring that matches his 1,000-watt grin, Kilpatrick is impossible to ignore, as is his enthusiasm for the city he loves. His core belief is a simple one: Things are happening in Detroit.
"Because of 50 years of negative imagery, being mayor of Detroit is the most revolutionary job in America," says Kilpatrick, "but we could also be the best turnaround story in the country."
The thought that an old-line manufacturing city like Detroit can transform itself into an entrepreneurial hotbed may be hard to believe, but selling the Motor City is central to Kilpatrick's "revolutionary" job description. He delivers a persuasive speech bolstered by the fact that five companies from Detroit made this year's annual list of the fastest-growing urban businesses in America. Kilpatrick believes the city's revival is underway and the foundation is being built by companies like former "Bad Boy" Vinnie Johnson's The Piston Group (Inner City 100 2005, #5).
Kilpatrick's authentic enthusiasm for his hometown isn't held in reserve for Harvard award ceremonies, either. Wherever the mayor goes, he is selling the potential of the Motor City.
On a damp day in January, while snow falls outside the Detroit International Auto Show, a crowd mills around the Joe Louis statue inside the Cobo Center waiting for Kilpatrick. The morning's gathering is to announce that Car Tunes on Parade, a slice of charitable civic boostersim involving painted auto sculptures displayed around Detroit, is progressing on schedule for a spring exhibition.
When Kilpatrick finally arrives -- a half hour late -- he seems genuinely fired up. After accepting a "Car Tunes" sweatshirt, which obviously will not fit, and posing for the cameras, the mayor is on the move through the Auto Show.
Kilpatrick is in Bill Clinton mode, using his physicality as an asset as he glad-hands cops, backslaps auto executives, and envelops a D.J. hired by Mini-Cooper in a hug like he's just given the best man toast at his wedding. The buzz surrounding "Kwame" (apparently on a first-name with all of his constituents) as he swaggers like a ballplayer through the crowd, oozing confidence, makes it easy to buy into his vision that things are indeed happening in Detroit, and now is the time to invest your money while the getting is good.
Later in the day, while walking through the expansive corridors from his office to the General Motors Renaissance Center, Kilpatrick has more good news. He notes that Home Depot and Borders have opened Detroit branches and that the administration worked with the large IT company, Compuware, to facilitate the move of its corporate headquarters from the suburbs into downtown. Compuware's 4,000+ employees are now housed in a sparkling, $350-million, 1,000,000 sq. ft. headquarters, complete with fitness and childcare centers, and a colorful modern art piece resembling a kite-tail hanging in the atrium.
People keep coming up to say hello, but Kilpatrick never breaks stride as he ticks off upcoming events scheduled for his town, including the 2005 Major League Baseball All-Star Game, the 2006 Super Bowl, and the Women's Bowling Conference in 2007. ("Don't laugh," he tells me, "I heard like 16,000 bowlers show up for it.")
The mayor also lists less high-profile, but arguably more important, accomplishments, such as updating fire and police equipment, cutting grass on a regular basis, repaving 160 miles of roads in 2003, and demolishing many of the dilapidated blights on downtown. "Those buildings have been abandoned my entire life," says Kilpatrick with disgust.
In many ways, things do seem to be happening in Detroit, and Kilpatrick has the numbers to support his core belief. According to his administration's 2004 Annual Report to the Community, crime is down 10%, housing starts are up over 40%, and there were over 7,300 building permits issued. Also, a recent court ruling means the Greektown casinos may be headed toward a major expansion; there are twenty-three new restaurants; and GM is continuing to work with the city on a $2 billion development that has begun the transformation of the neglected riverfront into a promenade of retail establishments, hotels, condos, parks, and ports.
Kilpatrick also is trying to streamline the path to business ownership with the Detroit Economic Growth Corporation (DECG), designed to facilitate public/private dealings for business owners needing developmental, financial and technical assistance. Kilpatrick wants to expand the DECG efforts, recognizing that local companies will provide the high-paying jobs of the future.
"Entrepreneurs have a lot more hustle, and they're on the ground doing business in Detroit because they want to," he says, "and we will always engage a local person trying to build their dream." He also points to a partnership incubator at Wayne State University known as TechTown, a $56-million center for developing new technologies.
Joseph Reyes, CEO of Integrated Media Technologies (Inner City 100 2005, #78) feels his hometown is headed in the right direction, and he says Kilpatrick is a big reason why. "As far as economic development goes Mayor Kilpatrick has been stellar for the city," says Reyes. "He continually advocates for business owners and understands that Detroit's tax base will only grow by bringing in companies both big and small." Reyes adds that Kilpatrick was the first mayor to attend meetings of the Hispanic Business Alliance and the targeted business development zones have helped secure work for entrepreneurs like him.
Reyes is positive about the city's direction, but not all business owners are buying what Kwame is selling. "I would say there is a dearth of entrepreneurial activity in the region and the city of Detroit is dead," says Michael McCorquodale, CEO of superconductor company Mobius Microsystems. To his point, there were zero VC dollars spent in Michigan during the first quarter of this year.
McCorquodale moved to Detroit because the company started while he and the other employees were postgraduates at Ann Arbor, and none wanted to relocate too far. He believes there is underutilized engineering talent in the area, but the managerial pool is so shallow that Mobius had to set up an office in Silicon Valley. Initially, McCorquodale checked out TechTown, but found it inadequate for his business's goals. "It's a small lab that's totally impractical for a high-growth venture-backed company like ours," he says.
Ironically, Mobius is one of the companies Kilpatrick touts for moving to the Motown.
Perhaps it is only fair to view Detroit as a city that hit rock bottom and is taking baby steps to recovery, but even with the Inner City 100 success, it's a fair question to ask if Detroit is worthy of entrepreneurial investment.
Walk around downtown on chilly gray afternoon without Kilpatrick's enthusiasm guiding the way, and the renaissance is a much tougher sell. The word bustling doesn't come to mind. Foot traffic is almost nonexistent. Two new loft-style apartment developments are going up, but they have yet to be filled. Amenities are limited in the area, and for employers, there is no mass transit to get anyone back home to the suburbs.
Anecdotal evidence aside, some numbers express a stark contrast to Kilpatrick's sunny outlook. A 2004 ICIC chart of inner city job growth between 1995-2001 found Detroit at the rock bottom, although the metropolitan area had a 2% gain. The city lost some 50,000 residents between 2000 and 2004, and faces an enormous projected budget deficit of between $230-300 million in 2005.
Even Detroit's notable achievement of having the most representatives of any city on the Inner City 100 list can be somewhat attributed to a strong effort his administration put forth in getting companies to apply to the list (Kilpatrick told the ICIC gathering that they went "entrepreneur fishing.") In addition, four of the companies are at least tangentially tied to the flailing auto industry.
More problematic for the mayor is the myriad personal scandals he is embroiled in, with or without merit. The most inflammatory accusation was of a raucous, stripper-laden party at Manoogian Mansion, the mayor's residence, which was investigated by Michigan Attorney General Mike Cox and found to be a wholly unsubstantiated "urban legend."
Cox also investigated charges of overtime fraud, police misconduct, and obstruction of justice by Kilpatrick for firing a deputy police officer looking into the party rumor. The attorney general's office found no evidence of criminal wrongdoing. Kilpatrick did admit to leasing a taxpayer-funded $25,000 luxury SUV for his family, sure to anger plenty in a metropolitan area where the unemployment rate is 7.8 %.
Kilpatrick claims the negative press hasn't affected any development in Detroit, but it's hard to believe entrepreneurs wouldn't take pause when Time labels you one out of three worst mayors in America , especially considering this is an election year. "It hurts but it hasn't stopped a thing," says Kilpatrick. "The slaps at Detroit are unfair, unbalanced and personal."
Prior to his ICIC speech though, Mayor Kilpatrick is in good spirits. "In the ebb and flow of being mayor, today is an ebb," he says throwing air jabs at his would-be detractors. Later that night, on stage at the awards ceremony, Kilpatrick will again pump his fists, as well as whoop and holler for every hometown entrepreneur who comes up to accept an award. "The ICIC recognition is great for the Motor City because it shows we're growing a diverse, vibrant economy beyond the dying rust belt town people think of," he says proudly.
Two weeks later, the Detroit Free Press reports the Kilpatrick administration ran up a $210,000 credit card bill that includes luxury hotels, spa treatments and steakhouse dinners. The mayor contests that it's a cost of luring business to Detroit, and has made some restitution.
Reyes gives Kilpatrick a ton of credit.
McCorquodale thinks Detroit is wilting and the administration is "awash in corruption."
The mayoral election is Nov. 8.
Indeed, things are happening in Detroit.