JPMorgan Chase, the nation's biggest bank, will provide $100 million to help debt-ridden Detroit with housing repairs, blight removal, job training and economic development projects over the next five years, according to two people with direct knowledge of the plans.
The investment, a mix of loans and grants, will add to a growing pile of money from outside private institutions as the city nears the final, painful stages of the nation's largest municipal bankruptcy proceeding. Detroit filed for bankruptcy protection in July, with an estimated $18 billion in long-term debt. This summer, a federal judge will decide whether to approve a plan that would allow the city to exit bankruptcy court by mid-October.
In recent days, the city has been lobbying to secure nearly $200 million in funding from Michigan lawmakers, who are wary of setting a precedent by using taxpayer dollars to bail out a major metropolis. If approved, the state funding would be part of a so-called grand bargain that would also include hundreds of millions of dollars from philanthropic foundations. The money would be used to cushion pension cuts for Detroit retirees and avert the sale of the city's art collection. The Legislature is weighing a package of bills regarding the outside funding this week.
JPMorgan's support, previously reported by Detroit newspapers, will focus on city revitalization efforts and may help ease concerns by some legislators that Detroit could find itself in financial trouble again down the road. The institution's chairman and chief executive, Jamie Dimon, will make a public announcement about the money with state and city officials on Wednesday. A spokesman for the bank would not discuss the matter before then.
"The city's challenges remain significant — unprecedented, in some regards — but JPMorgan Chase believes that Detroit has the ingredients and intrinsic strengths to reshape and rebuild a dynamic modern economy and make the city a great place to live, work and invest," said a company document detailing how the $100 million would be spent, which The Detroit Free Press posted online on Tuesday. "We are committed to helping make that future a reality."
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The bank will direct half of the money to community projects that would otherwise lack access to capital. It will put $25 million toward assisting groups like the Detroit Land Bank Authority and the Detroit Blight Removal Task Force, which have begun aggressive demolition campaigns to rid the city of its estimated 78,000 vacant structures. The rest will be diced up: $12.5 million for work-force training, $7 million for small-business assistance and $5.5 million toward economic growth projects such as a new streetcar system.
The company announced another five-year initiative in December that infused $250 million into Detroit and other big cities for job-skills training. Both efforts come as JPMorgan emerges from a period of intense scrutiny. The bank reached a $13 billion settlement in November over its sale of questionable mortgage securities in the prelude to the financial crisis.
Goldman Sachs, another bank that has been buffeted by regulatory woes, pledged $20 million to Detroit in November for job creation and economic development.
--By Steven Yaccino and Jessica Silver-Greenberg, New York Times