Opinion | U-M’s investment is helping us improve Detroit, not evict people.

We at Fortus are concerned with the important issues raised by a recent Bridge Magazine article about the University of Michigan’s $30 million investment in our real-estate company.

Detroit, as with other major cities, has suffered from widespread foreclosures causing people to lose their homes that may have been with their families for many years. We are also aware of predatory landlords who evict tenants unfairly and without care. 

These issues, among others affecting our city, are tragedies we wish never occurred. Despite these unfortunate and prevalent issues, Fortus must respond to the incorrect statements and misrepresentations featured in the article.

Related: The University of Michigan invested big in Detroit. Now come the evictions.
July 19: Students to University of Michigan: Stop funding Detroit evictions

We welcome this opportunity to briefly share our experiences investing, working, and moving from Los Angeles to this unique, historical city. For six years, Fortus has invested nearly $95 million in residential properties throughout Wayne County. We are proud to have raised $65 million of that capital from investors outside the state of Michigan that have never invested in the City of Detroit. 

Our companies’ primary focus is increasing availability of affordable, quality housing for the city’s residents through direct rehabilitation of single-family homes and apartments. Fortus actively avoids acquiring occupied homes and purchasing properties from traditional sales. Only a small fraction of our Detroit acquisitions homes were purchased at the Wayne County tax auction, which sells tax foreclosed homes.

In fact, we have no plans on buying homes at the auction in the future, due to interior pre-inspection restrictions Wayne County places on bidders, which limits our ability to ensure homes are unoccupied. Additionally, once a bidder wins a property, it may take months for the county to send a deed— a lengthy duration barring us from securing the home properly and confirming property is unoccupied.

We did, however, buy some homes out of auction last year, and the Bridge Magazine article focused largely on one family whose home was served with a notice of eviction.

The home’s previous landlord stopped paying taxes but continued to collect rent after it fell to foreclosure. We attempted to reach the family for five months –  during which time the city issued us fines for not securing properties – before serving the eviction. We are now working with them to move back to the soon-to-be-renovated property and become a tenant.

Fortus made every effort to ensure that homes were unoccupied before purchasing them at tax-auction, physically visiting each property before bidding on them. County rules, however, bar auction buyers from entering the homes before bidding.

Friedman and Hanker

Jordan Friedman and Corey Hanker are managing partners of Fortus

After the auction, we learned 26 of the homes we bought in Detroit were occupied, but only one had a previous landlord. The other occupants unlawfully moved into the homes after Fortus acquired the properties  With each of these 25 occupants, Fortus worked diligently to contact and work out a favorable agreement. Most occupants refused to respond to our attempts. 

We are honored to be a small part of the city’s rebirth and committed to the future work that lies ahead. It was with great care and thought that we made our first acquisitions in 2013 with our own capital. A large part of Fortus’ mission is to bring jobs and provide career opportunities for Detroiters and since then, we’ve hired locally to build a company currently employing over 30 local Detroiters and providing work for more than 300. 

After working with multiple third-party property management companies, we realized the need to build our own and thus Hela Management was born. Property management is as rewarding as it is challenging -- our Hela team takes great care and strives to be better at every opportunity. 

As difficult as it is to discuss, this city we call home has a property blight issue. The population of Detroit has shrunk dramatically over the last five decades and the result is thousands of abandoned, blighted homes. This issue affects all neighborhoods throughout Wayne County and causes harm in a myriad of ways; including neighborhood safety and decreased property values. At great expense and time, Fortus has restored hundreds of blighted homes with respect and care to the history of the properties and neighborhoods. 

The company's long-term goal is to increase community home ownership by helping our tenants become homeowners. Our team educates tenants on how to improve their credit and secure home financing. On a larger scale, Fortus is working with local and national lenders to increase lending to our market. 

It was disheartening after six years of dedicated work and commitment to the city to see our company’s work put in a negative light. Additionally, without speaking on behalf of the University of Michigan Endowment, it is our strong belief that the University of Michigan Endowment should be applauded for their investment in Detroit. The endowment has made a significant investment in the neighborhoods to improve the quality of housing. While many banks and large institutions are primarily focused on the downtown corridor, the U-M Endowment stood up and chose to invest directly in the neighborhoods. We are most fortunate to have their support and look forward to executing on our mission for years to come.

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Comments

Paul M.
Thu, 07/18/2019 - 7:49pm

The city invites developers to invest in Detroit neighborhoods and they are slammed by the media for doing what has helped to revitalize the city. Big businesses like Bedrock go for downtown, need to support the smaller guys for helping the neighborhoods because no one else is.

Marlene
Thu, 07/18/2019 - 7:54pm

Kudos to Bridge for sharing their side of the story. May be too late though – small businesses can't survive negative press like big fish can

Gottobeme
Fri, 07/19/2019 - 8:41am

Appreciate the perspective and clarification.

Bones
Fri, 07/19/2019 - 9:48am

"The company's long-term goal is to increase community home ownership by helping our tenants become homeowners."

Bullshit. Your long term goal is to make money by commodifying a human necessity.

Subee
Fri, 07/19/2019 - 11:18am

Bones: what ideas do you have as alternatives? Not sure what your point is here. Are you disagreeing that homeownship is monitizing a necessity or that more rental housing needs to be built? If I am going to subsidize housing (speaking as a taxpayer here), I would rather spend it on providing houses for ownership rather than more section 8 rentals.

Reeg
Fri, 07/19/2019 - 3:25pm

My question for Fortus - why did you wait until after Bridge published their article to voice your opinion (which is what your statement above is, btw) on what transpired? I'm pretty sure the good journalists at Bridge contacted you many times before printing this article; as they stated in their article. So why did you fail to engage in a direct conversation with journalists as they were preparing the story and doing their due diligence?

Jeffrey Kless
Fri, 07/19/2019 - 3:43pm

Developers and helping others in the same sentence is an oxymoron. Please change it to " developers help themselves to seconds".

Ren Farley
Sun, 07/21/2019 - 11:27am

The reply by Jordan Friedman and Corey Hanker is informative and interesting. There is a national problem of affordable housing. In 2017, 20% of the households in Detroit reported incomes of under $10,000 and another 23% of households reported incomes of $10,000 to $25,000. Does the current housing market serve their needs? In the Truman administration the federal government initiated new housing programs that provided much housing for middle and lower income households. In the Johnson administration, many plans for urban renewal were discussed and some funded.
HUD's director is a U of M grad who grew up on Deacon Street in southwest Detroit. He is knowledgable about the issue of
housing for low and modest income families. I am anxious to hear what programs and policies he will advocate for some
this substantial problem of affordable housing in cities such as Detroit for families with incomes of $15,000 per year or less.

Ben W. Washburn
Sun, 07/21/2019 - 8:10pm

I am always dismayed by the economic ignorance which so many well- meaning folks bring to this kind of issue. There is no such thing as a free lunch. The cost of maintaining a house is non-negotiable. Nature brings unescapable requirements. The roof has to be replaced about every 15 years. Windows also have to be restored about every 15 years. Internal plumbing devices need to be replaced about every ten years. You can learn how to do these things for yourself with the input of many, many workhours. Or you can pay someone else to do it for you. But, it will still cost a bundle! Most renters in Detroit have absolutely no clue as to these issues. They simply feel that it is unfair to expect them to bear any of this normal burden. And misinformed folks like those who have weighed-in on this issue only do these folks continuing harm to believe in the false premise that property owners somehow owe them by Constitutional right to a free giveme. .
The American Revolution was at it's base about property rights. If you don't understand this, I would recommend that you take the time to inform yourself by reviewing the free Yale University Course taught by Joanne Freeman on the American Revolution. Property rights were then and are still the foundation of our American economy. That is a fact and that is a reality. I'm not a "conservative"; I support the ACLU: I've been a long-time Democratic precinct delegate. But, I also know when the rhetoric becomes total BS.