Non-profit helping to build resilience in Detroit's small businesses

When Les Lance describes the initial state of the building that now houses J&G Pallets, he talks about how a third of it had an “unintentional sunroof”. As the business manager, he and the team had their work cut out for them renovating the 43,000-square-foot building on Mack Avenue to the tune of $1 million, over a period of eight years, but it was worth it.

“We took a building with ‘1903’ stamped on the corner,” Lance says. “We put on a new roof, added new plumbing, and quite honestly if we hadn't purchased it when we did it would have likely ended up on a demolished list for the city.” 

Storage space at the new premises on Mack Avenue provides J&G Pallets with the room they need to grow.

The premise now houses most of J&G Pallets’ business, and was a way of consolidating several locations for the growing company. It’s made a big difference. In 2013 the company was looking at approximately $900,000 revenue per year but, prior to COVID-19, was beginning to average $1.5 million. 

The business, which started with a set of four siblings over 20 years ago, has grown rapidly, and Lance says over 90% of their employees are Detroit residents.

“We have expanded to do some warehouse fulfillment work,” says Lance, “which has helped with our growth, we have more automotive and food and beverage clients. We have been able to expand our marketing, we didn't have a website, and as much as word of mouth is a powerful thing, people still look to Google to find us.”

“We are determined to market ourselves as ‘the pallet people’.”

But they couldn’t have done it without a loan of $700,000 from LISC Detroit, and the partnerships the Detroit non-profit helped him foster. Lance credits the construction loan LISC provided, help from Detroit Economic Growth Corporation to purchase a new pallet machine, and refinancing from Invest Detroit, with the ability to realize the project. 

“The support from LISC allowed us to accelerate it,” says Lance. “It would have taken another eight to 10 years otherwise.” 

Siblings J.D. Givhan, Rebecca Givhan, Geraldine Wooten, and business manager Les Lance are proud of the premises they have built for J&G Pallets at a renovated site on Mack Avenue.
Building up businesses

Providing locally-owned businesses with the financial boost they need to fill gaps is part of what LISC Detroit focuses on with their work.

“J&G was an excellent project,” says Anthony Batiste, LISC Detroit’s Director of Lending and Portfolio Management. “They’d done a lot of things on their own without bank lending.”

“We work as a unique partnership,” says Batiste. “A lot of [entrepreneurs LISC supports], they know the business, but they may not have financials exactly how a bank might need them. We are able to work with them, line them up with help getting paperwork together, provide education around working with institutions, using loans to expand the business.” 

“The ultimate idea is that they become bankable, so they can continue.” 

Batiste says sometimes this means being more flexible with arrangements, something banks are not traditionally known for. 

“We look at all of our relationships,and I provide [tax advice] from my background. We do ask for the businesses to have skin in the game, in the form of cash, or a building, that shows 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 feature commitment to — and from — the neighborhood, we are making good headway.”

The Corner, a $30 million mixed-use building at Michigan and Trumbull Avenues, is one of the projects supported by lending from LISC Detroit.

Supporting affordable housing inititives

Creating and investing in affordable housing was initially where LISC started and since 1990, the Detroit branch office of the national non-profit, has invested more than $281 million in the city. This has resulted in over 6,200 units of affordable housing but also in 2.9 million square feet of commercial and community space, including schools, clinics, retail space, and community centers. LISC Detroit’s investment also leveraged more than $1.3 billion in development costs to catalyze revitalization of Detroit’s neighborhoods.

One of those projects is the development of The Corner, a $30 million mixed-use building at Michigan and Trumbull Avenues, the former home to Tiger Stadium. With 111 apartment units and 26,000 square feet of ground-floor commercial space, developer Eric Larson says in many ways the space was a “legacy project”.

“The site represents some of Detroit's highest highs and lowest lows sports-wise,” Larson, president and CEO of Larson Realty Group says. “As well as impactful gatherings — everyone from [Nelson] Mandela to Martin Luther King [Jr.], along with every Detroit mayor, has used the place to speak to the masses.”

LISC Detroit has provided a loan of $3.2 million for the development, as part of a collaboration of three lending partners to fund a larger $9.6 million source loan into the project’s New Market Tax Credit structure. LISC also provided a $650,000 loan as part of a larger loan to bridge dollars from Tax Incremental Financing (TIF). 

Larson admits that even at the underwriting stage, working with partners who embrace a “community-first” approach to financing made for a much more conscientious project than traditional processes. It also helped with actually moving the initiative forward. 

“We would not have been able to make this project work with the standard financing process,” says Larson. “With the kind of multi-layered financing needed for this project, we had to have partners who were more flexible and creative.”

LISC Detroit Program Vice President Tahirih Ziegler says the project has a ripple effect in the region, leveraging a LISC grant investment to the Detroit Police Athletic League (PAL) headquarters of $250,000 for the installation of a football and athletic field next door to the complex. The field will serve 3,400 student athletes and 1,500 cheerleaders. 

“We have supported over nine football fields in Detroit like the one next door [to The Corner],” says Ziegler. “It is important as we think about investing in real estate developments that we consider options for youth, as they are also very important to our community. We think Eric Larson knocked this development out of the park.”

COVID-19 throws more than one wrench in the works

Last year, despite pandemic-related setbacks, LISC Detroit invested $7.5 million in financing, resulting in 82 units of housing, over half of which are affordable units, as well as 5,000 square feet of commercial space. The 64 jobs generated in 2020 are part of why Batiste is excited about the impact the investment can have, particularly in the wake of COVID-19.

Batiste says that as well as the initial shut downs, the global pandemic has negatively impacted development progress because of the way it impedes the supply chain and the cost of materials. 

“When you take that and apply it to a budget, that starts to add up and can tip a project from one level into the next,” he says. “That can happen quickly, 5% to 10% can mean millions of dollars.”

While there have been some projects that fell into this category, Batiste says sometimes “soft sources” of funding can be activated to help, such as municipalities and the Detroit Housing for the Future Fund.
“That low interest, soft money can be used to fill gaps,” he says. 

“In general, there are so many projects to build up neighborhoods,” he says. “Working with the right partners from a developer's standpoint, navigating rising construction costs and city requirements - all the things that come into to play — it's not easy, you have to have capacity or experience.”

It’s where LISC sees an important role to step into to build up neighborhoods. “Lining up the right partner and coming up with the right mix of tax advice and partnership [is important],” says Batiste. 

For Lance, he hopes to continue growing his business, and plans to hire eight to 10 more employees when the dust settles from the pandemic. He says the partnerships he’s formed has meant the sustainability of his business through the crisis. 

“At this point we feel like we have survived the greatest hit we could take,” he says. “And we did it standing up.”

This is part of a series supported by LISC Detroit that chronicles Detroit small businesses’ journey in response to the COVID-19 pandemic.

Read more articles by Kate Roff.

Kate Roff is a freelance writer and editor based out of Detroit. Contact her at [email protected].
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