This story appears in the October 27, 2013 issue of Forbes. Subscribe
Indeed, the Pulte name has been synonymous with home building since 1950, when Bill's grandfather, also named Bill, constructed his first bungalow on Detroit's east side . Since then Pulte Group has delivered more than 600,000 homes in 28 states, and its stock is worth some $6.5 billion. Bill's father owns Boca Raton-based Mark Timothy, which builds $50 million mansions.
But here in the Brightmoor section of Detroit the 25-year-old family scion isn't building houses. He's razing them, clearing out blighted neighborhoods with an efficiency that has astonished this bankrupt city.
"Y'all have done an awesome job!" resident Judy Jones calls out to Pulte, now a familiar face in the neighborhood. She used to live in Brightmoor, and her grown children still do. "People thought this was a dumping ground. They didn't care. They gave up," she says. Just navigating around the mounds of trash and overgrown brush on her street was like four-wheeling through the jungle. Now the area is transformed into green space. "That's the kind of entrepreneurial spirit we need," says Michigan Governor Rick Snyder, heavily involved in Detroit's affairs since appointing an emergency manager last spring.
Yet there's something bittersweet about the Pulte family's effort to revitalize neighborhoods in Detroit, which has lost a quarter of its population in the past decade and is forecast to keep shrinking until 2040. In May Pulte Group announced it, too, is leaving. The company, in which the family is no longer involved (other than as a 10% shareholder), is moving its headquarters from Bloomfield Hills, near Detroit, to Atlanta, citing better opportunities. "Just because your name's on the building doesn't mean you have control over anything," says Pulte, who said his family had no prior knowledge of the move and was disappointed by it.
Still, he has plenty to distract him. There are at least 78,000 abandoned and blighted structures in Detroit, nearly half of which are considered "dangerous" because of fire damage or criminal activity. Another 66,000 lots are vacant or strewn with trash.
Detroit has sporadically tried, but failed, to keep up with the problem. In 2010 Mayor Dave Bing launched a program to demolish 10,000 vacant structures in three years. So far about 5,000 have been torn down, one at a time, at a cost of some $72 million. But the city says it is still $40 million short of the money needed to finish the job.
Pulte got interested after reading a newspaper article about how children were afraid to walk to school in their blighted neighborhoods. He approached his grandfather, now retired in Florida, about applying his expertise in building homes to demolishing them instead. "My granddad said, 'I wouldn't touch that with a 10-foot pole!' "
The red tape and expense are enough to discourage anyone. First, you must prove ownership or that the owner has agreed to the demolition. Hiring a contractor is $5,000. Surveying and asbestos abatement is another $1,500. Then you must show documentation that utilities are disconnected--another $1,300. Administrative costs? $750. Add it up and you're talking $8,500 to $10,000 to tear down a house.
But Pulte, just a few years out of Northwestern University and running an investment group called Pulte Capital Partners, didn't give up. He eventually got his grandfather on board, arguing that the city's crisis and changing political climate made it the right time to try something big. He then approached Bing, who jumped at the idea. Pulte created a nonprofit called the Detroit Blight Authority, which raised about $750,000, including $100,000 from the Pulte family.
Using the same economies of scale that apply when erecting houses, Pulte figures, the Blight Authority can demolish homes for less than $5,000 each--even less if Detroit would reform its cumbersome regulations. Instead of hiring a single contractor to tear down one house, the Blight Authority brings in an army of specialized laborers and equipment to rid an entire neighborhood of its empty houses, haul away the debris, clear out overgrown brush and regrade the property.
In its first project the Blight Authority cleared ten blocks in ten days, at a cost of $200,000. Eight structures were demolished, including two churches. Prostitution and drug activity in the area have vanished since. The second project, in Brightmoor, is much larger, involving over 500 lots. Workers spent a couple of weeks, and about $500,000, clearing the land, uncovering 300 tires, a couple of boats and the body of a 22-year-old woman. But demolition of blighted homes in Brightmoor will have to wait until more funding arrives. The U.S. Treasury has approved $100 million for blight removal in Michigan under the Troubled Asset Relief Program's Hardest Hit Fund, designed to help states hit hardest by the housing crisis. The city of Detroit will get half the money, and Pulte hopes the lion's share will go to his organization for mass demolition. "We have a proven model," he says.
Detroit Emergency Manager Kevyn Orr has proposed spending $500 million by 2020 to conquer the city's blight problem. (A new interactive map shows the magnitude of the challenge.) But that expenditure, like anything the city does now, has to go before a bankruptcy judge. And that means delays.
Pulte, meanwhile, is trying to remain patient. "I think we're on the precipice of something really big," he says. "We've got the knowledge. We just need the government to give us the clearance, and we can take it everywhere."
