Affordable housing project aims to bring economic jolt to Detroit neighborhood

A new mixed-use project in Detroit's Islandview/Greater Villages district on the east side typifies a push to create more affordable housing in the city's neighborhoods.

Developers were starting work this month on the $23-million Parker Durand project, a four-story structure named for the two streets near the heavily traveled Kercheval and Van Dyke streets.

With 92 apartments on the upper three stories and retail on the ground floor, the Parker Durand aims to deliver a jolt of economic development to a neighborhood that spans Indian Village mansions, trendy shops and a large amount of vacant lots and run-down buildings.

Led by co-developers Roxbury Group and Invest Detroit, the Parker Durand will offer rental units aimed at working-class Detroiters. Donald Rencher, director of housing and revitalization for the City of Detroit, said the project shows that the city is serious about getting more economic development in the neighborhoods.

"The biggest things that this project represents is the city's continuing efforts to push investments in neighborhoods," he told me. "And with those investments, trying to ensure there's affordable housing opportunities."

Unlike many more expensive projects, this one will feature more affordable units for working-class Detroiters.

"I think it's a great way to show diversity among the population and a great way to bring investment and continued growth in the area," Rencher said.

The entire Parker Durand project will be rent restricted, with 19 units renting to those who earn no higher than 50% of the area media income, scaling up to units for renters making no more than 120% of area media income.

Area median income in metro Detroit is now about $58,000, so units will rent to people earning roughly from $30,000 to $70,000. That means most renters could be working Detroiters, typically police officers, nurses or teachers, said Marcia Ventura, senior vice president of Invest Detroit.

The project thus supports the City of Detroit's goals and initiatives to increase diversity and vitality in the city's neighborhoods and old commercial corridors, Ventura said.

Noting that the area media income in that census tract is about 60% of the region's median income, she added, "We feel very good about the fact that we're providing new quality housing that's affordable to existing residents of the neighborhood."

This Islandview/Greater Villages district is one of 10 areas throughout the city chosen by the city for its Strategic Neighborhood Fund investments.

The SNF fund, a pot of money raised from foundations, corporations, city revenues and other sources, will pay for streetscape and park improvements, new and rehabilitated housing, retail support, and other improvements.

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In choosing the 10 districts to focus on, the city picked districts in need but that already had some strengths to build upon. So across the street from the Parker Durand projects are the popular Sister Pie bakery and Marrow restaurant, and upscale Indian Village with its stately mansions is just steps away. But there's plenty of vacancy nearby, too.

Creating the Parker Durand project meant stitching together a patchwork of low-interest, longer-term loans from lenders whose mission is to create more affordable housing in cities like Detroit.

Those lenders include Invest Detroit, Capital Impact Partners, Detroit LISC, and the Michigan Economic Development Corp.

Such "patient" financing is needed because there is a conflict between making a building affordable and making it profitable enough for lenders to get their money back.

"Construction costs are the same regardless of which neighborhood you're in but the rental rates that you can achieve and what the market will bear in demand is different," said Nicholas Pohl, a lender with Capital Impact Partners.

The project also illustrates the city's goal of reviving its old commercial corridors, thoroughfares like Livernois on the west side, where generations of Detroiters once did their everyday shopping.

Contact John Gallagher at313-222-5173 or gallagher@freepress.com.Follow him on Twitter@jgallagherfreep. Read more on business and sign up for our business newsletter.