In an interview with Reuters news agency, Detroit’s Emergency Manager Kevyn Orr says the city’s bankruptcy process has convinced him not to ever run for public office. “This has erased any political aspirations, dead or barely alive, that I ever had, and I was a political science major,” Orr said. “This has done me in.”
Orr, a Florida native, attended University of Michigan for undergraduate work and then returned to Ann Arbor for law school. His legal career, focused in private bankruptcy work, included time at the Resolution Trust Corp., the federal agency that worked on the aftermath of the savings and loan crisis of the 1980s. Orr also was chief counsel during the Whitewater investigation that had links to former President Bill Clinton and former U.S. Senator and Secretary of State Hilary Clinton and he represented Chrysler Corp. during its financial troubles.
But Orr tells Reuters the Detroit Chapter 9 case will likely be his last municipal bankruptcy. His plans after he wraps up in Detroit? “A long vacation on a warm island” with his wife.
If you can’t make it to the Wayne State University Law School event today, “Detroit’s Bankruptcy and Beyond: Organizing for Change in Distressed Cities,” find the live stream here.
The remaining schedule is:
10:30 a.m. to noon: Panel discussion “Detroit: Historical Roots & Current Effects on Bankruptcy”
Noon to 1:30 p.m.: Keynote Address by Angela Glover Blackwell, founder and president of PolicyLink.
1:30 to 3:15 p.m.: Panel discussion “Distressed Cities: A National Perspective”
3:15 to 4 p.m.: Keynote Address by Ronald Sims, senior professor of business administration at The College of William & Mary
4 to 5:30 p.m.: Panel discussion “Working Within and Through Municipal Distress”
London’s The Guardian newspaper asks “Why does anyone still live in Detroit?” in an article published last week and authored by a native Detroiter now living in New York.
In the first five paragraphs, the article manages to pack in descriptions of the city’s problems with crime, police response, blight, population decline, lack of mass transit, crumbling roads and water infrastructure, lack of grocery stores and retail, and the difficulty of non-motorized transportation.
Whew. That’s an impressive litany of woes jammed into the top of an article, packaged between photos of a tagged abandoned house and a party store’s outside wall advertising liquor, lotto and check cashing.
In the remaining 2,100 words of the piece there is one paragraph devoted to Mayor Mike Duggan’s campaign promises, the city charter change to council elections by district and a description of how Emergency Manager Kevyn Orr has “made blight removal and service provision a priority.” One subsequent paragraph summarizes foundation dollars and other private contributions that could provide some support for improvements. Another few paragraphs describe the goals and challenges of the Detroit Future City plan.
The ‘Live in Osborn’ effort gets some rhetorical love in the article, with a description of improvements planned in that east side neighborhood. The blight removal efforts are as “the easiest answer, though not necessarily the best.”
But the article’s conclusion?
“Perhaps Detroit needs a hero to battle its hydra.”
Detroit Mayor Mike Duggan, Michigan Gov. Rick Snyder and Detroit Emergency Manager Kevyn Orr will be featured speakers at the Detroit Regional Chamber’s Mackinac Policy Conference later this spring.
Here’s what the chamber said in announcing the lineup:
With Detroit’s emergence from bankruptcy critically important to Michigan’s future, Orr will discuss the progress since his appointment in March 2013 and what is needed to position the city for success moving forward. Before his expected departure this fall, Orr will give insight into the short and long-term vision for Detroit’s sustained growth, as well as the blueprint it provides for municipalities around the nation facing similar challenges.
Other speakers in the scheduled May 27-30 event include:
Jim Clifton, chairman and CEO, Gallup Inc.; author, “The Coming Jobs War;” Malcolm Gladwell, author, “David and Goliath;” and Joel Klein, CEO, Educational Division, News Corporation; former chancellor, New York City Department of Education.
The Manhattan Institute for Policy Research livestreamed its Monday event, “Detroit: The Next American City of Opportunity,” but in case you missed that, here’s the coverage from Detroit’s daily newspaper.
The Detroit News in this report focused on “the upbeat assessment” offered by Gov. Rick Snyder and Emergency Manager Kevyn Orr during the hour-long forum.
During the nearly hour-long event, Snyder and Orr discussed the unsustainable legacy costs that helped drive Detroit into bankruptcy; the improvements already under way as part of the city’s restructuring; and the need for local, state and federal leaders to work together to sustain change. They also agreed that schools must improve to attract and keep families in the city. Snyder praised new Detroit Mayor Mike Duggan as “fully engaged,” saying he’s working well with Orr, who was appointed emergency manager last March.
The Detroit Free Press, meanwhile, focused on the potential events in the near future here in Detroit.
Detroit emergency manager Kevyn Orr said he hopes to secure enough support “within the next couple of weeks” to achieve a consensual resolution to the city’s Chapter 9 bankruptcy, but he warned that time is running out. … With creditors’ support, the city’s restructuring could speed quickly through a trial starting July 16, when U.S. Bankruptcy Judge Steven Rhodes will consider approval of the plan. But without creditors’ support, the city may attempt to implement a forcible restructuring plan in a legal process called a “cram-down.”
MLive columnist Rick Haglund found himself in the Los Angeles area on personal business, but used his time there to take a look at the similarities and differences between Michigan’s and California’s financial situations and municipal bankruptcies in this column.
Both states have faced statewide budget challenges and had cities in bankruptcy: Detroit, of course, Michigan, with Stockton and San Bernardino on the west coast. Both states have governors who have led aggressive efforts to remedy state budget deficits.
But the methods used by the states to deal with their financial issues, Haglund writes, are vastly different.
California’s scary budget deficit has been erased, mainly through an income tax hike on the rich that voters approved in 2012… Michigan has taken a different tack in its recovery course. Snyder’s first budget in 2011 cut taxes for businesses, and raised them for pensioners and many low-income families.
An audience at the Manhattan Institute for Policy Research will hear it live, but the world can stream Gov. Rick Snyder’s and Emergency Manager Kevyn Orr’s presentation: “Detroit: The Next American City of Opportunity.”
The event will begin at 1 p.m. Monday at the Roosevelt Hotel. The livestream is below:
Detroit, of course, has taken over the dubious honor, but Stockton, Calif. was the country’s largest municipal bankruptcy when city leaders filed Chapter 9 in August 2012 with a reported budget shortfall of $26 million. (The city of roughly 300,000 has an annual budget of $521 million.)
What’s been at issue in the northern California city’s fiscal woes, according to Time magazine:
There are many reasons why Stockton was one of the hardest hit American cities in the Great Recession – a housing bubble, debt spending on white elephant projects (like a downtown arena which is rarely full), fiscal mismanagement, and unrealistic pension return expectations and under-funding during boom times all played a part.
Next Chapter’s Detroit Journalism Cooperative partner Bridge Magazine sent writer Ron French there last year as well as to nearby Vallejo, Calif., which had recently exited bankruptcy. French reported being told “you ain’t seen nothing yet” as he looked to those cities for what Detroit might expect as it moved toward its own bankruptcy filing:
Our postcards from those troubled cities aren’t pretty. Both face problems strikingly similar to Detroit. And while few question the necessity of the bankruptcies, residents wonder whether the painful fiscal fixes will be enough to keep the cities afloat.
One of Stockton’s widely reported problems is the effect of the exodus of city workers, mainly cops. It seems that public sector workers in California cities where leaders attempt money-saving pension reforms often transfer to other municipalities. About 90 percent of cities are under the state pension system, so workers retain their benefits when they change, say, police departments. But as Stockton lost police officers faster than it could replace them, 2012 saw a huge spike in crime, Time reports.
Voters there approved a sales tax last year to pay for 120 new police officers. Funds from the tax are also targeted for other city operations and should help the city emerge from bankruptcy. A citizens watchdog committee is in place to oversee the spending.
Meanwhile, Stockton has filed and the city council approved its Plan of Adjustment. The city’s bankruptcy trial is scheduled for May 12. One creditor remains, Franklin High Yield Tax-Free Income Fund and Franklin California High Yield Municipal Fund, and the sides are not close to an agreement, reports The Record, Stockton’s local newspaper.
Still, the city projects a $10 million budget surplus when the fiscal year ends in June.
Turnaround, quite possibly, is happening there.
Revenue-sharing arguments heat up
A $6.2 billion “fiscal crisis”. That’s what a group of mayors and the Michigan Municipal League say the state created for local governments by reducing revenue sharing during the last several years, as reported by The Detroit News.
The Michigan Municipal League’s new estimates of lost sales tax revenue from 2003-13 included $732 million for bankrupt Detroit, $46 million for Warren and nearly $21 million for Troy. Officials also argued that, even allowing for years of fiscal shenanigans, Detroit might have avoided bankruptcy.
As Gov. Rick Snyder’s proposed budget includes provisions for contingent increases to some municipalities, the News piece presents what could play out this year — and how some municipal leaders view the options.
Readers of the Wall Street Journal gained some insight about Detroit’s bus situation. In a piece that highlighted the low rate of car ownership, the financial constraints related to the city’s bankruptcy and Mayor Mike Duggan’s early efforts to improve the system, the WSJ found:
…the burden falls to the city’s Transportation Department and its fleet of 460 buses. The aging behemoths ply 36 routes daily, with about 6,000 stops, and a workforce of nearly 1,200. During the past four years, the city has hired two private management firms to try to turn around its operations. But poor use of federal grants, below-average bus fares and high absenteeism among drivers has led to lower revenue, subpar service and higher costs, according to the city’s disclosure statement filed last month in bankruptcy court.
Will Emergency Manager Kevyn Orr manage to increase fares and obtain more federal funds to hire mechanics and drivers?
A recent poll suggests a majority of Michigan voters favor the proposal to provide $350 million in state funds over 20 years as part of Detroit’s post-bankruptcy finance plan. As reported by MLive.com, the poll was conducted in early March by a Grand Rapids-based public relations firm that has done pro bono work for the city’s emergency manager.
The poll, commissioned by public relations firm Lambert, Edwards & Associates and conducted by Denno Research, surveyed 600 likely voters around the state on March 8 and March 9 with a 4-percent margin of error. When asked if they would support the state aid proposal for the purpose of keeping pensions from taking more than a 34-percent cut, 61 percent of respondents said yes, 25 percent said no and 14 were undecided, according to results released Friday. When asked if they’d support spending the money for the purpose of protecting the Detroit Institute of Arts collection, 53 percent said yes, 30 percent opposed the idea and 17 percent were undecided.
The $350 million is part of the “grand bargain,” a deal to ensure DIA artwork is not sold and pensions are funded. Other components of the plan include $100 million from the museum and $365 million from foundations.