Detroit street lights star in new TV commercial

Count Citicorp among those hoping a bit of Detroit's comeback magic rubs off on its national brand.

The New York bank released a feel-good commercial this week showing workers installing new energy-efficient streetlights along once-dark Detroit streets and neighborhoods.

Schoolchildren are safer, families happier, neighborhoods taken back.

The commercial, online and airing on national TV channels, talks about Citi's role in raising money for Detroit's worst-in-the-nation streetlights during the darkest days of the city's bankruptcy.

Citi is not the first to advertise investments in Detroit for a national audience. J.P. Morgan Chase, which last year committed to $100 million in loans and grants in the city to help blight removal and redevelopment, home ownership and entrepreneurship, has taken out numerous print ads highlighting its contributions.

In 2012, a private equity lobbying group made a promotional video touting an $850-million investment commitment in the Detroit Medical Center by DMC's new for-profit owner, then Vanguard Health Systems, a portfolio company of the Blackstone Group.

Mike Bernacchi, marketing professor at the University of Detroit Mercy, said some companies want to be associated with Detroit's comeback story.

"There's not a city right now I would argue in the whole U.S. that's any hotter than Detroit," he said, "and taking advantage of this makes good sense."

The star of the Citi commercial is native Detroiter Odis Jones, 43, CEO of the Public Lighting Authority of Detroit. He moved back to the city in 2013 to head the newly formed agency with its separate finances and governance from City Hall.

Sitting before an old and yellowed city street map, Jones narrates Detroit's story, a rebound from 40% of streetlights broken to new LED lights installed each week and month. The commercial shows darkened neighborhoods and a stretch of Woodward Avenue where the streetlights were completely out.

Jones tells how the lighting authority had trouble finding a bank that would finance its ambitious three-year modernization plan while the city was in Chapter 9 bankruptcy. Then Citigroup stepped forward.

"Citi did not run away from the table like some other bankers did," he says in the clip.

The commercial shifts to an upbeat tone and a shot of utility worker installing one of the new and brighter LED streetlight fixtures. There are views of a well-lit downtown and neighborhoods where residents are now safe to play football at dusk and do errands after dark.

"It's a brighter day in Detroit," Jones says. "People can see better when they're out doing their tasks. Young people are moving back in town. Kids are feeling safer when they walk to school, and folks are making investments and the community is moving forward."

Bonds underwritten

Citigroup's contribution to Detroit's new streetlights was underwriting two bond issues for the lighting authority's three-year, $185-million modernization plan.

The project is on pace to finish next year and pare back the number of streetlights from about 88,000 (only 60% working) to a more manageable 65,000 lights (all working). The new smaller number reflects the city's shrunken population and the brighter light technology. The work crews have been tackling neighborhoods first before moving to the major roadways.

Citigroup was technically the underwriter of bonds issued on behalf of Detroit's lighting authority by the Michigan Finance Authority. The lighting authority is the one responsible for paying off the debt — not the state.

There was an initial $60-million bond issue in December 2013 and a second one for $185 million last July. Proceeds from the second sale were used to pay off the first bond debt.

The debt is backed by part of the $40 million raised annually from Detroit's utility tax. That tax money has traditionally paid for hiring and retaining Detroit police officers. To prevent cuts to police, the city delayed a scheduled decrease to its income tax rates.

Citicorp's fee for structuring and selling the deal was $959,671, according to the Michigan Department of Treasury. The bank did not charge a fee for the earlier $60-million deal, nor did it charge or pay anything for the lighting authority's cooperation in the commercial. Jones said he was paid a talent fee, which he donated to charity.

For last summer's larger bond issue, Citi marketed the transaction and identified investors to buy and hold the bonds for up to 30 years. Investor demand for the deal exceeded the number of available bonds, allowing state officials to get a lower-than-expected interest rate, effectively 4.5%.

That lower rate will allow the lighting authority to install an estimated 15,000 additional new LED lights than it had originally planned, as the state could increase the size of the bond deal to $185 million from $160 million.

Off the ground

A 1-minute version of the commercial has appeared on CNN and is scheduled for other channels, a bank representative said Friday.

The longer 2-minute version, posted on YouTube, shines a special light on the bank's initial $60-million bond issue. Because Citigroup was the sole buyer of those bonds, the transaction was essentially a short-term loan for the lighting authority to get an early start on upgrade work.

"What we did was use Citi's own balance sheet," an executive says. "Citi alone committed $60 million to the project to get it off the ground."

A spokesman for Mayor Mike Duggan said the mayor has been aware of the commercial and did not need to give approval because the lighting authority is separate from city government.

"We think it's a great ad and does a very good job of highlighting the work Odis and the team at the lighting authority are doing," mayoral spokesman John Roach said in an e-mail.

In a phone interview Friday, Jones said his office phones haven't stopped ringing since the commercial appeared on CNN.

"We've gotten calls from all over the country," he said. "It's been very very positive. It helps people to kind of reshape their image of Detroit, that it's moving in a positive direction."

Contact JC Reindl: 313-222-6631 or jcreindl@freepress.com. Follow him on Twitter @JCReindl.