PRWeek, the online publication for the public relations industry, outlines the roles of two public relations firms in the city’s bankruptcy in this article that focuses on how the city is messaging that it’s a good investment.
And not just a good investment for those looking to make big bucks or “a local or national political audience,” explains Bill Nowling, spokesman for Emergency Manager Kevyn Orr, who talked to PRWeek for the piece. The “investors,” he says, are the residents as well as the pensioners and other creditors who will vote on the city’s Plan of Adjustment that was filed in bankruptcy court last month.
It’s the latest phase in the message plan, that has evolved, Nowling says:
“We have spent an enormous amount of time coming up with a very specific and detailed plan of adjustment that tries to treat all of our creditor classes as fairly as possible, keeping in mind that the number one priority of the city is to continue to provide and improve services for its residents,” said Nowling. “That is the whole point of going into bankruptcy.”
The two firms contracted by the city are the Farmington Hills-based Duffey Petrosky and Abernathy MacGregor. Nowling, who is “on loan” to Orr, so to speak, is the director of public affairs and issues management at Duffey. Abernathy MacGregor, with offices in New York, Los Angeles, Houston and San Francisco, specializes in “high-end corporate, strategic and financial communications” for crises management, bankruptcies and corporate restructuring.
U.S. public pensions need more than investment windfall
It’s no secret that pension funding is a concern in municipalities and states around the country, but this Reuters piece, published in the Chicago Tribune, presents a bit of a balanced view about how dire (or not) the situation may be.
Indeed, there is evidence that the overall health of pension systems is brightening. A report released by the Federal Reserve last week said liquidity of pension funds has improved.
…many are still struggling with shortfalls. In some cases, they have worsened as state contributions fail to keep pace with what is needed to pay beneficiaries. … Roughly half of U.S. state pension plans have worrying gaps between what they have promised retirees and the funds on hand to pay benefits, according to most analyses.
However the pension funding situations play out across the country during the next few years, it’s clear that Detroit is setting precedent. Emergency Manager Kevyn Orr’s Plan of Adjustment calls for changes in the governance and administration of city employee plans. It remains to be seen to what extent those will be negotiated or whether they will be part of a forced settlement in the bankruptcy case.
The politics of division. Hangovers from the racial divides. Lack of regionalism. The new, white mayor. And of course how 8 Mile divides the region. Here’s a segment National Public Radio produced for last weekend. If you’re a Detroiter, you’ve heard this story a million times. How can we move this storyline along for the rest of the world?
NPR also reported about the organization Reclaim Detroit, a group that deconstructs abandoned homes and recycles the materials from them. Isaac Lott helps tell the story. He’s a former drug dealer who works for Reclaim Detroit. He says getting rid of blight and getting kids educated will help improve the city.
A few years ago, the Detroit Symphony Orchestra was on the brink of bankruptcy and the musicians were on strike. An auditor famously reported the institution had “no business being in business.” But a turnaround took place, and NPR brought it to listeners.
The Windy City is among the other U.S. municipalities struggling with pension debt and other financial challenges. Here the Motley Fool asks “Is Chicago the Next Detroit?” in this article and video. The Motley Fool, based in Virginia, is a multimedia financial-services company focused on individual investors.
The national magazine “Government Technology” took note of Detroit’s income tax, mainly Emergency Manager Kevyn Orr’s effort to ensure residents who work outside of the city limits are paying it.
Detroit’s problem stems from the fact that many of its reverse commuters fail to pay local taxes. Employers in Michigan aren’t required to withhold local income taxes if they’re not levied by the jurisdiction their employees work in. Twenty-two cities in the state levy local income taxes.
The magazine, affiliated with the Center for Digital Government, predicts more cities that are financially struggling have a “largely untapped source of revenue” in such income taxes that they may begin to more aggressively levy and collect.
Pennsylvania’s state system, as well as nearly half of its municipalities, faces pension problems that could force tax increases or bankruptcy, reports the Pennsylvania Independent newspaper.
Meanwhile, “Chicago faces ominous financial woes, particularly when it comes to its government worker pension debt, but the city has the wherewithal to weather the financial storm that Detroit could not,” the Chicago Tribune writes.
New Jersey Gov. Chris Christie cited Detroit in warning a town hall audience about his state’s pension underfunding.
Much has been made of the pensions versus art, Detroit creditors versus everyone in the city’s bankruptcy case. The sides are usually predictably drawn.
But this weekend, the Washington Post weighs in with an editorial picked up by newspapers around the country. It recounts, of course, a bit of how the city got to this situation, citing “mismanagement” on several levels. Then, the authors get to the municipal bond-related portion of the story:
Lenders have come to treat tax-backed municipal debt as nearly risk-free, and no doubt Detroit’s bankruptcy experience may cause some to reprice the risk of financing municipal governments, not only in Michigan but also around the country.
That future, WaPo writes, may not “be an entirely bad thing” if the effect is better managed municipalities. Then we get the discipline that seems to have been so badly missing for decades:
Surely banks that took fees to help Detroit fund its pensions with $1.4 billion in dodgy “certificates of participation”deserve to be taught a lesson.
We’ll see what kind of teacher Bankruptcy Judge Steven Rhodes is later this year.
Author of the definitive work about Detroit’s decline, “The Origins of the Urban Crisis: Race and Inequality in Postwar Detroit,” Thomas Sugrue speaks with Craig Fahle. Sugrue will appear at the Detroit Regional Chamber’s Policy Conference Feb. 27. Hear a preview.
At the Conference, Sugrue spoke with our Detroit Journalism Cooperative partner DPTV and the MiWeek team: