Encouraged by its return on a $100 million bet it made on the Motor City three years ago, J.P. Morgan Chase & Co. is planning an additional $50 million investment in Detroit's revitalization efforts.
Chief Executive James Dimon, in an interview, said the largest U.S. bank will use the new funds to invest in small businesses and help fund training and neighborhood development. In 2014, J.P. Morgan allocated $100 million in loans and grants to help the city recover after years of economic decline and a municipal bankruptcy.
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The investment represents a unique project for Mr. Dimon, who has said Detroit is attractive because of a "can do American attitude" and specific plans designed by the city's mayor, Mike Duggan. The bank is encouraged by how quickly loans are being paid back, and Detroit's ability to lessen its dependence on subsidies.
"When we heard the mayor talk, he spoke about jobs, police, sanitation -- common sense stuff that we could get behind," Mr. Dimon said. "We made sure the forces were lined up. We wouldn't invest if they weren't."
When the investment was first announced in 2014, Dan Gilbert, founder and chairman of Quicken Loans, was one of the few private investors to invest a significant amount of money in Detroit.
Mr. Gilbert's investments are focused largely on downtown Detroit's business core, redeveloping vacant buildings into offices. Since then, many companies have moved their headquarters, or opened offices in downtown Detroit, and real-estate investors have poured millions into redeveloping historic buildings into apartments.
J.P. Morgan's investment is largely focused on strengthening the city's neighborhoods, which have seen little private investment compared with downtown Detroit. The 132-square-miles of land surrounding Detroit's downtown core are seen as key to Detroit's recovery, but the neighborhoods have been gradually emptying out.
Mayor Duggan said J.P. Morgan officials took the time to understand the Detroit market.
"They've been integral in everything we're doing," he said. "J.P. Morgan has invested in housing projects in good areas that couldn't get financing and were active in writing the strategies for workforce development. They haven't just sent money from New York."
In many cases, conversations with the mayor about specific problems in the city led to investments. For example, Mayor Duggan told Mr. Dimon when he took office in 2014 that city officials didn't know where the abandoned homes were across the city's 139 square miles. That led J.P. Morgan to invest in Motor City Mapping, a project that created a database of Detroit properties with photos and information about each parcel of land.
Peter Scher, J.P. Morgan's head of corporate responsibility who put the Detroit investment together, said he has been encouraged by how quickly the loans have been repaid -- $7 million of the $50 million in loans have been repaid -- and that the market is becoming more sustainable.
"When we started three years ago, most of the projects we were investing in were subsidized capital," he said. "By late 2015, that changed to market capital."
J.P. Morgan is using the Detroit investment, the bank's most comprehensive investment in a city to date, as a model for how to invest in other cities and create inclusive growth.
Write to Adrienne Roberts at Adrienne.Roberts@wsj.com
(END) Dow Jones Newswires
May 10, 2017 00:15 ET (04:15 GMT)