General Motor Corp. plans to spearhead a $20 million urban redevelopment program near its corporate headquarters here.
The giant automaker will begin with the purchase and renovation of 125 homes and 175 apartment units in a six-block area known as "New Center," a name dating to before World War II. It is just north of GM's headquarters and roughly two miles north of downtown Detroit, where the widely-touted Renaissance Center is located.
GM Vice Chairman Richard L. Terrell said a subsidiary of his company will supply half of the initial $2.6 million capitalization. An additional 15 finances, together with GM, will ultimately provide a third of the seed financing. City, state and federal funds are expected to account for the remaining two-thirds.
The price for restoring the mostly dilapidated houses, some of which have been abandoned for several years, was estimated at about $23,500 each; houses are expected to sell for about $40,000 - roughly half of what they would cost in Detroit's suburbs.
GM Chairman Thomas A. Murphy called it an "urban transformation that will rely heavily on the private business sector. It is a residential redevelopment program that we hope will trigger other comprehensive redevelopment programs in this community and be a model for similar efforts elsewhere."
GM executives said the redevelopment may include a small shopping center, parks, senior citizen housing, and a walkway over the John Lodge Freeway to the nearby Henry Ford Hospital.
The six-block area includes a total of 400 homes and roughly 4,000 apartment units. A GM spokesman said that about 65 percent of the 125 homes and 175 apartments slated for redevelopment are now under option.
Detroit Mayor Coleman A. Young said he was "literally overwhelmed" by the scope of the project."
Since 1970, GM has spent more than $2.5 million to renovate its headquarters, refurbish adjacent facilities and expand parking facilities.
In recent years, the corporation's leaders, believing that many or most efforts to revitalize cities have been ill-conceived, set up a committee to study the problem on their own.
General Motors chose the New Center area surrounding its headquarters for an experimental project. The idea was that if New Center could be revitalized, the methodology could be transferred to other cities.
GM hired Gladstone Associates of Washington and Johnson, Johnson & Roy of Ann Arbor as consultants on the project. It also devoted top-level management to the program, and faced certain unhappy truths they uncovered.
One example was jobs. "Jobs will not solve the city problem," vice chairman Terrell recounted later in an interview. "In some ways it aggravates the city's problems."
Inner-city residents hired to work at the Cadillac plant, for instance, start at salaries that allow them to move out of Detroit, Terrell said.
The GM project has been kept fairly quiet up until now. When a 12-year-old, 290-room Howard Johnson Motel went bankrupt a year ago in th New Center area, GM people led the negotiations to acquire it from the Canadian mortgage holders, involved other local firms in buying the mortgage, and then donated the facility to Henry Ford Hospital.
GM has also quietly purchased small, failing businesses and restaurants in the area. Two of the latter now boast Parisian-style outdoor eating - when Detroit's capricious weather permits.
"Look, we don't think we know the answwers," Terrell said. "We don't. But we're at the stage where we're beginning to understand th problem."
He described the use of GM's resources for urban revitalization as "just good business."