One Year In: Today marks one year since Detroit bankruptcy petition was filed

One Year In: Today marks one year since Detroit bankruptcy petition was filed

At exactly 4:06:22 p.m. today, Detroit’s bankruptcy hits the one-year mark. Detroit News business columnist Daniel Howes said it well:

“There will be no celebrations at 4:06 p.m. Friday, only quiet acknowledgment that the largest municipal bankruptcy in American history is marking its first year.”

The Detroit Free Press marked the anniversary with a package of stories last weekend that explored the year in court, the effect in the communities and the new political structure at city hall. Later this week, the Freep published a report predicting a population decline that will make the future even more challenging.

The costs of this municipal bankruptcy itself are high, to be sure, the highest in history. As of June, the city had been billed $75 million by 19 law firms and financial consultants involved in the case, Crain’s Detroit Business reported.

While not everyone likes the negotiated terms that are emerging in the settlement, there is no doubt Detroit’s bankruptcy is moving toward resolution faster than anyone could have expected a year ago. It still faces a confirmation hearing, scheduled to begin Aug. 14, and Judge Steven Rhodes will undoubtedly see in the mirror the proverbial King Solomon as he tries to find the fairness and reasonableness to creditors, including city retirees, in the plan. He also knows he’ll be setting legal precedent as he crafts the settlements and restructuring plans, which will be used in future municipal bankruptcy cases across the country.

We can describe with relative certainty a few elements of the next stage of this case: The pensioners will take cuts to their monthly checks and pay hundreds of dollars more out of pocket for health care. International media will print, broadcast and post more photos of blight juxtaposed against the RenCen as they try to chronicle the decline and possible resurgence thanks to bankruptcy of this city. Courts will decide the legality of the state’s emergency manager law, the remaining pre-trial issues in the Chapter 9 case and future appeals. Lawyers will make more money. Mayor Mike Duggan and the city council will eventually assume control of the city’s departments with “clean” balance sheets and a responsibility to all the city’s neighborhoods, residents, business owners, investors and oversight committees created by the state in the terms of the $195 million pension contributions.

Whether we see real improvements in access to jobs, quality education for children and adequate public safety for everyone remains to be seen. Lansing, quick to congratulate itself for the package of bills providing money and oversight, could do more and should be pressured to do so. What could possibly be on that agenda? How about statewide reform to municipal finance and a re-examination of revenue sharing, regional transit to help Detroiters get to jobs in the suburbs and help with collecting income tax from Detroiters who work outside of the city. Those three elements would be a start but the governor and the Legislature have been silent on those issues.

Many of us will continue to frame the city’s bankruptcy with the competing if extreme truths that “there will be a course change to reroute Detroit’s economic decline, failure of public institutions and creating protections against corruption” and “the bankruptcy is undermining unions, codifying the legality of slashing public benefits and creating huge billing tallies for silk-stocking law firms.” Hopefully how we define the bankruptcy’s causes will not limit our ability to emerge from it and restore city services, improve life for residents, ensure fiscal stability and make countless other improvements.

As for the Emergency Manager’s future plans when his term expires later this year? He told WWJ radio’s City Beat Reporter Vickie Thomas that he’ll “leave quietly,” saying he was surprised by the level of public scrutiny the case brought to him and the city.

“I think it’s appropriate for me, when this does come to an end, to exit quietly — I’m off the stage — and let the regular order return and let the city’s sort of healing process take; and let the patient recover on their own,” Orr told Thomas.

7.18.13Bankruptcy Petition by WDET 101.9 FM