Detroit is Making a High-Speed Comeback

Detroit is Making a High-Speed Comeback

As published on www.thefiscaltimes.com

Last fall, construction crews began digging trenches in downtown Detroit to lay super high-speed fiber optics cable below a new street. This workspace wasn’t far from three-and-a-half miles of reconstructed pathways, parks, green space and a refurbished luxury hotel along the Detroit River.

Rocket Fiber, an ultra-high-speed Internet and TV service for central Detroit, will offer advanced broadband in a major boost to the city’s technology startup scene. The hope is that it will entice more upscale residents to the area.

While Detroit is far from the first major or even medium-sized city to be wired for the new one gigabit-per-second service – comparable to Google Wire – it is an important sign of how the one-time motor capital of the world is emerging from the worst Chapter 9 municipal bankruptcy in history. The city is reinventing itself as an edgy urban center of business, research and innovation thanks to a unique public, private and philanthropic coalition. This coalition wants to restore Detroit to its long-ago glory days as a center of commerce, innovation and culture – and early signs of a renaissance are beginning to spread from the inner core out.

Dan Gilbert, the billionaire founder of Quicken Loans and the patron saint of Motown’s revival, has purchased or taken out leases on 60 or more properties in the downtown area, including the iconic Hudson’s department store. Many of his purchases are 20th century architectural masterpieces. Gilbert is bankrolling Rocket Fiber, the high-speed Internet service that analysts and business experts say could help downtown businesses compete on a national level for customers and employees.

Gilbert and others view Detroit’s mission as a race to the top among Rust Belt cities that have lagged behind the Southwest, the East Coast and Silicon Valley in building critical infrastructure – roads, bridges, transit, airports – essential to their economic futures, The Detroit Free Press has reported. While Congress and the Obama administration have struggled over new long-term infrastructure policies, Detroit and other cities on the rebound are taking matters into their own hands.

Besides offering state-of-the-art Internet service to downtown businesses and residents, Rocket Fiber will also open a 5,000 square foot retail electronics store downtown. It will launch a training center to teach computer and Internet literacy and become another provider of cable television in Detroit.

From an infrastructure viewpoint, the city will skip a generation and dramatically drive business, Matt Cullen, president and CEO of Gilbert’s Rock Ventures, told The Free Press recently.

Bruce Katz, vice president and founding director of the Metropolitan Policy Program at the Brookings Institution, counts Detroit as one of the country’s innovation districts where leading anchor organizations and companies “cluster and connect with start-ups, business incubators and accelerators.” Those anchor groups are generally research universities and research-oriented medical hospitals – much like Detroit’s Wayne State University Medical School and the Detroit Medical Center. They’re both key employers in the downtown area.

“What is emerging is a new kind of metropolitan finance where public-private and civic capital comes together to basically build and grow economies,” Katz said in an interview. “Right now, all we have to describe public finance in cities is [municipal bonds], which is just access in capital markets for infrastructure. But I think the way cities really do grow across many dimensions – not just infrastructure – is through this aggregation of public, private and civic capital.”

Early signs of that partnership are everywhere in downtown Detroit. The once-dilapidated riverfront has benefitted from investment and spending by the city, state, philanthropic groups and private investors. The Michigan Department of Natural Resources stepped in to become an anchor tenant in the redesigned historic Globe Building along the east riverfront. Michael V. Roberts, a private investor, converted the former Parke-Davis Research Laboratory and Omni Hotel to the luxury Roberts Riverwalk Hotel.

The turning point for Detroit came after last November’s federal bankruptcy court blueprint. It allowed the city to shed $7 billion of its staggering $18 billion debt by forcing creditors and bondholders to take a haircut – and the city’s 21,000 pensioners to accept cuts in benefits.

The centerpiece of the agreement was an $816 million “grand bargain” struck by the city and state legislature, local corporations and national foundations that served to blunt the impact of the settlement and spare the Detroit Institute of Arts from having to auction off many of its masterpieces, including works by Rembrandt and van Gogh.

Subsequent anti-blight efforts near downtown and elsewhere involve coordinated efforts by corporate and civic partners, according to media reports. The M1-Rail streetcar line on Woodward Avenue, the main north-south artery across Detroit, originated with donations from Quicken Loans, which is headquartered downtown. Penske Truck, Compuware, the billionaire Mike Ilitch Family, Henry Ford Health System, the Detroit Medical Center and others also contributed, according to The Free Press.

Rocket Fiber is piggybacking on the M1-Rail streetcar line and is scheduled to launch later this year. Once the company is up and running, the downtown area can claim to be another “Gig City,” the nickname that Chattanooga (TN) business leaders adopted with pride.

Once considered the most polluted city in the nation, Chattanooga in the last two decades has cleaned its air, rebuilt its waterfront, and become a hub for the arts in eastern Tennessee. More recently, an aggressive high-tech economic development plan and an upgrade of the power grid thrust Chattanooga toward the one-gigabit connection.

Now Detroit civic leaders, investors, business executives and residents think it’s the Motor City’s turn.

“Detroit has gotten to the future a lot quicker than other cities, and the future is just a further extension of the way the United States operates anyway as a public-private-civil enterprise,” Katz said.

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