The Kresge Foundation in Troy, Michigan, has announced a financing package from five mission-focused financial institutions totaling $22 million in support of an early childhood center being constructed on the former Marygrove College campus in northwestern Detroit.
The investment includes $8 million in New Markets Tax Credits (NMTC) financing for the 28,000-square-foot center, the first ever NMTC investment in early childhood programs in Detroit. The mixed-income center, which is slated for completion in the spring of 2021 and will be operated by Starfish Family Services, will serve a hundred and forty-four students, with priority given to those living in the surrounding neighborhoods. In addition to its early childhood component, the mixed-income center will provide a range of services, from prenatal to postsecondary education, to residents of the Livernois-McNichols neighborhood.
The transaction is supported by contributions from the foundation, which provided a $19 million unfunded guarantee to remove risk from the transaction; Northern Trust, which made a $14 million direct debt investment and will serve as equity investor; and Capital Impact Partners, MBS Urban Initiatives CDE, LLC (an affiliate of McCormack Baron Salazar), and Cinnaire, all of which are providing tax credits.
"This financing package represents a continued commitment to the children and families in Detroit neighborhoods, that they should have access to the best early childhood educational opportunities," said Aaron Seybert, managing director of the Kresge Foundation’s Social Investment Practice, which led the way in assembling the package. "We can’t wait for the day that young, bright residents of Detroit get to walk into the center for the first time and experience all it will offer."
"Study after study has shown that early childhood development and education can provide a lifetime of benefits. It is one of the best returns you can make on a community investment with economists having calculated up to a 10 percent rate of return in increased lifetime achievements and reduced negative mental and physical impacts later in life," said MBS Urban Initiatives CDE chief executive Laurel Tinsley. "[We are] proud to support the neighborhoods' young children and their families. We know that neighborhoods are more than just housing; they are vibrant schools, community services and access to quality jobs — all of which will be created with just this one investment."
(Photo credit: Starfish Family Services)