Non-profit helping to build resilience in Detroit’s small businesses
When Les Lance describes the initial state of the building in which J & G Pallets are now, he talks about the fact that a third of it had an “unintentional sliding roof”. As managing directors, he and the team had to cut out their work on the $ 1 million renovation of the $ 1 million building on Mack Avenue over eight years, but it paid off.
“We took a building with the ‘1903’ stamp on the corner,” says Lance. “We’ve put a new roof on, added new plumbing, and honestly, if we hadn’t bought it when we did, it would have probably been on a tear-off list for the city.”
The storage room in the new premises on Mack Avenue gives J & G Pallets the space they need to grow.
The premise now houses most J&G pallets‘Business, and was a way to consolidate multiple locations for the growing company. It made a huge difference. In 2013, the company had annual sales of around $ 900,000 but started at an average of $ 1.5 million before COVID-19.
The company, which started with four siblings over 20 years ago, has grown rapidly, and according to Lance, over 90% of its employees are based in Detroit.
“We expanded to do some inventory maintenance work,” says Lance. “This has contributed to our growth. We have more customers in the automotive and food and beverage industries. We’ve been able to expand our marketing, we didn’t have a website, and as much as word of mouth is a powerful thing, people are still searching Google to find us. “
“We are determined to market ourselves as the ‘pallet people’.”
But without a $ 700,000 loan, they wouldn’t have made it LISC Detroitand the partnerships the Detroit nonprofit helped promote. Lance credits the home loan granted by LISC, assistance from Detroit Economic Growth Corporation with the purchase of a new pallet machine, and refinancing from Invest Detroit for the ability to complete the project.
“LISC’s support has allowed us to accelerate this,” says Lance. “Otherwise it would have taken another eight to ten years.”
The siblings JD Givhan, Rebecca Givhan, Geraldine Wooten and the managing director Les Lance are proud of the space they built for J&G Pallets in a renovated location on Mack Avenue.
LISC Detroit’s work is focused on giving locally owned companies the financial boost they need to fill in the gaps.
“J&G has been an excellent project,” said Anthony Batiste, director of lending and portfolio management at LISC Detroit. “They did a lot of things on their own without making bank loans.”
“We work as a unique partnership,” says Batiste. “Lots [entrepreneurs LISC supports]You know the business but may not have the exact financial information a bank needs. We are able to work with them, help them assemble paperwork, provide training on how to work with institutions, and use credits to grow their business. ”
“The ultimate idea is that they get bankable so they can keep going.”
Batiste says this sometimes means being more flexible with agreements that banks are traditionally not known for.
“We’re all looking at our relationships and I’m bidding [tax advice] from my background. We urge companies to have a hand in the game, in the form of cash or a building that shows that they are committed to the project. ”
“There’s a long way to go with this work,” says Batiste. “But the fact that we can do neighborhood projects that involve engagement for and from the neighborhood is making good progress.”
The Corner, a $ 30 million mixed-use building on Avenues Michigan and Trumbull, is one of the projects supported by LISC Detroit loans.
Support for affordable housing initiatives
The creation and investment in affordable housing originally marked the beginning of the LISC and, since 1990, of the Detroit Branch The national not-for-profit company’s office has invested more than $ 281 million in the city. This has resulted in more than 6,200 affordable housing units, but also 2.9 million square feet of commercial and community space, including schools, clinics, retail space, and community centers. LISC Detroit’s investment also resulted in more than $ 1.3 billion in development costs to advance the revitalization of Detroit’s neighborhoods.
One of these projects is the development of The Corner, a $ 30 million mixed-use building on Avenues Michigan and Trumbull that used to be Tiger Stadium. With 111 residential units and 26,000 square meters of commercial space on the ground floor, developer Eric Larson says in many ways that the area was a “legacy project”.
“The website represents some of the athletic highs and lows in Detroit,” said Larson, president and CEO of Larson Realty Group says. “As well as effective gatherings – all off [Nelson] Mandela to Martin Luther King [Jr.]has used the venue with every Mayor of Detroit to speak to the crowds. “
LISC Detroit, through a collaboration of three credit partners, has provided a $ 3.2 million development loan to provide a major $ 9.6 million source loan for the project’s New Market Tax Credit structure finance. LISC also granted a $ 650,000 loan as part of a larger loan to bridge dollars from Tax Incremental Financing (TIF).
Larson admits that working with partners who have a community-first approach to funding has resulted in a much more conscientious project than traditional processes, even at the drafting stage. It also helped actually move the initiative forward.
“We couldn’t have got this project up and running with the standard funding process,” says Larson. “With the multi-tier funding required for this project, we had to have partners who were more flexible and creative.”
According to Tahirih Ziegler, vice president of the LISC Detroit program, the project is having a ripple effect in the region, leveraging a LISC grant investment of $ 250,000 to the headquarters of the Detroit Police Athletic League (PAL) to install a soccer ball and Sports field next to the complex. The field will serve 3,400 student athletes and 1,500 cheerleaders.
“We supported over nine soccer fields in Detroit, like the one next door [to The Corner]”Says Ziegler.” When we think about investing in real estate developments, it is important that we consider options for teenagers as these are also very important to our community. We believe Eric Larson knocked this development out of the park. “
COVID-19 throws more than a wrench in the works
Last year, LISC Detroit invested $ 7.5 million in funding despite pandemic setbacks. The result was 82 residential units, more than half of which are affordable units, and 5,000 square meters of commercial space. The 64 jobs created in 2020 are part of why Batiste is excited about the impact of the investment, especially after COVID-19.
Batiste says the global pandemic, in addition to the initial standstills, has negatively impacted development progress as it hinders the supply chain and material costs.
“If you take that and put it on a budget, it adds up and can take a project from one level to the next,” he says. “It can be quick, 5% to 10% can mean millions of dollars.”
While there have been a few projects that fell into this category, Batiste says that sometimes “soft funding sources” can be activated to help, such as local governments and the Detroit Housing for the Future Fund.
“This low-interest, soft money can be used to fill in gaps,” he says.
“In general, there are so many neighborhood building projects out there,” he says. “Working with the right partners from a developer’s point of view, managing rising construction costs and the demands of the city – all the things that come into play – is not easy, you have to have the capacity or the experience.”
Here LISC sees an important role in building neighborhoods. “Find the right partner and find the right mix of tax advice and partnership [is important]”Says Batiste.
For Lance, he hopes to expand his business further and plans to hire eight to ten more employees when the dust from the pandemic clears. He says the partnerships he has made have meant the sustainability of his business through the crisis.
“At this point, we feel like we have survived the greatest success we could have suffered,” he says. “And we did it standing up.”
This is part of a LISC Detroit-sponsored series that chronicles the journey of small businesses in Detroit in response to the COVID-19 pandemic.