Detroit’s bankruptcy trial has been postponed until Aug. 14 as Judge Steven Rhodes released a new timeline for the case today. In his order establishing new deadlines and hearing dates, Judge Rhodes says he’s balancing the interests of several stakeholders.
They include the city’s creditors, employees and retirees as well as state officials and residents of the city, region and state, the judge notes. Rhodes notes the city has caused “unfortunate delays” by not producing requested documents, but he also says creditors have submitted unreasonable requests for information.
The schedule, according to the judge, is designed to promote a “just, speedy and inexpensive determination” of Detroit’s bankruptcy, which at an estimated $18 billion of debt is the largest Chapter 9 in U.S. history.
Here’s the full text of the judge’s order with all the deadlines and hearing dates.
Detroit Emergency Manager Kevyn Orr seems to making a victory lap after the Michigan Legislature passed the “Grand Bargain” bills…and during The Craig Fahle Show today he invited others onto the “love train” of positive momentum. Listen to what guest host Laura Weber Davis and Next Chapter Detroit’s Sandra Svoboda ask him about other current and future happenings in history’s biggest Chapter 9 case.
Earlier this morning the Detroit Journalism Cooperative released a poll.
It asked likely voters throughout the state about their feelings toward Detroit and the state funds that could go toward the bankrupt city to shore up pensions and, ultimately, prevent the sale of a portion of the art collection out of the Detroit Institute of Arts.
The poll found that there was widespread support for providing funds to Detroit. Specifically:
…roughly eight in ten respondents view Detroit’s financial health as very important or essential to the health of the state. Nearly two-thirds of people in the survey say it’s a top priority or important for their elected officials to address Detroit’s financial recovery. And they say they prefer Gov. Rick Snyder’s original 20-year plan for annual $18 million payments rather than a single lump sum payment to Detroit.
The poll also recorded a number of positive and negative responses. We visualized them. Of the 28 “positive” responses, this is what its word cloud looks like:
As you can see, “things” seem to be the most used word. In comments like: “Contracting work has gotten better, things seem to be improving.” And, “There’s an opportunity for some really good things to happen there.” Bull list below.
On the other side, 38 “negative” comments were recorded. It looked like this:
As you can see, “crime” seems to be the most used word when it comes to the negatives of Detroit. Not all that surprising. Many of the responses for the negatives were simply “crime.” There were a few variations of this such as “The crime rate,” or “Crime is too high.”
Here are the full responses:
Downtown looks good
They’re really trying to bring things back
The improvements to belle isle
They’re trying to improve the business climate to create more jobs
I like to go there, they have a lot of sporting events
Great cultural activities
It’s my favorite vacation spot
Detroit is moving forward with the bankruptcy the right way
It’s a great place going toward the right direction
They declared bankruptcy which is a step in the right direction
Contracting work has gotten better, things seem to be improving
The neighborhood is getting cleaned up
There’s a lot of hope in the people who live there to bring the city back
Now there’s a mayor who is working to improve the city
Gm is coming back
Greenfield village community
They have new elected officials who are going to manage the money
All the places to go there, like the sports facilities, opera house and detroit institute of arts
I’m from the bronx, it’s not much different from there crime wise
Things that have been neglected are starting to be fixed now
There’s an opportunity for some really good things to happen there
The tigers are winning
The current lack of corruption
The involvement of the state to help
Improvement in the economy
Sports bring money into the economy
It’s lost so much industry
Poor past leadership
The city government there is corrupt
The whole city isn’t safe and the leadership is terrible
There are too many murders
They’re full of poverty
Seeing all of the blight and good houses going to waste
The education level is bad there
Crime is too high
I understand they’re tearing down houses
They have so many problems
There’s still too much of a good ol’ boy network in detroit
They’ve failed to fix financial issues for the past 40 years
The bankruptcy situation
The crime rate
No one takes care of it
The failure to get justice
The city in general
People being moved out of their homes because of jobs lost
The high rate of illiteracy
Criminals with no pride in their city
The city is filled with greed
They’ve been ignoring problems for decades
Not being able to fix the bankruptcy issues
The lack of services
Bad government structure
The rundown areas
Crime rates are too high there
The economy isn’t being handled properly
Bankruptcy Judge Steven Rhodes is holding job interviews of sorts today with four men and one woman who applied to work as the court’s expert witness in determining the feasibility of the city’s eventual plan to exit from bankruptcy and operate in the future. Rhodes eventually will issue a final order with parameters for the city’s financial structure, management, operations and other provisions, and, to his credit, he’s looking for help in evaluating it.
The expert witness’s role “is not to help the city solve its problems. This limited assignment is simply to help me evaluate the feasibility of the city’s plan, whatever it may be when it comes up for confirmation, and the reasonableness of assumptions that go into its assertions of feasibility,” Judge Rhodes said this morning.
The applicants are being questioned by the judge, city attorney Thomas Cullen, of Jones Day, and two attorneys chosen to represent the creditors: Guy Neal, who represents an insurer of Detroit Water and Sewerage bonds, and Barbara Patek, who represents police and firefighter unions.
Judge Rhodes says he will decide today or at the latest Monday whom he will choose.
For an overview, columnist Laura Berman had this take on the process.
Here’s the Detroit Free Press Live Blog of the day.
The New York Times published this almost-quirky take on the day.
Judge Steven Rhodes, who is overseeing the Detroit Chapter 9 proceedings, issued an order two weeks ago seeking input about his proposal to hire an expert in municipal bankruptcy to help him analyze the $18 billion case and assess the feasibility of the city’s exit plan. The city, in a filing, suggested Edward Glaeser for the job. Glaeser is a Harvard economist and Manhattan Institute senior fellow. He is also author of “Triumph of the City” and has agreed to work pro bono.
Judge Rhodes will hear objections to his plan tomorrow morning. The city and the state have filed supporting briefs. The Official Committee of Retirees has some concerns outlined inthis brief.
Meanwhile, Next Chapter Detroit had some questions for Glaeser…and he answered:
Next Chapter Detroit: How did you get connected with Detroit?
Edward Glaeser: I have studied cities for the last 25 years, and Detroit is a great American city. I have long been fascinated by its remarkable rise. I wrote about Detroit’s past in my book “Triumph of the City.” I continue to hope for a better future for the city. There have been far too many foolish policy mistakes inflicted on the people of Detroit. If you are asking about the bankruptcy itself– the short answer is that the lawyers for the city contacted me.
NCD: Why do this pro bono?
EG: I am doing this to be of service; I have no interest in taking money that might otherwise go to the city or its children.
NCD: Have you been involved in other municipal bankruptcies?
EG: I have not. This is an extraordinary case. Moreover, I have no intention in becoming engaged in the debate between bond-holders and other creditors. I hope that I can be helpful in forecasting what different levels of legacy obligations would mean for the city and the quality of public services in Detroit.
NCD: How did you choose a specialty in cities?
EG: I grew up in New York City. My father was an architectural historian; my mother worked in finance. Somehow it was natural that I become an economist who studies cities. Cities are so endlessly fascinating because they represent the essential human attribute– our ability to learn from people around us. Cities enable us to borrow ideas for our neighbors, our friends, even strangers. We are a social species and cities enable our social talents.
Detroit has been an example of the city at its most creative. The cluster of automotive genius in the city 120 years ago was magical– a perfect illustration of the urban ability to engender collaborative chains of genius. There is still great creativity in Detroit– but it is creativity under siege. The long run hope is that Detroit can put its political problems into the past and enable the human capital of the city to emerge triumphant once more, as it has in other cities worldwide.
NCD: Have you been to Detroit? Can you tell me about those visits or what other involvement you had?
EG: I have had two major visits to Detroit in the past few years. I spent time both admiring the city’s beauty, and walking around neighborhoods. I have visited a charter school, and deeply enjoyed its (the city’s) museums.
NCD: As an economist and academic, what do you see as the key issues/challenges in the Detroit bankruptcy — and beyond it?
EG: Going forward the key is to ensure that Detroit’s children have good schools and safe streets. The city needs to have a manageable budget. Revenues need to be high enough to cover those expenses. Tax rates can’t be too high, or they will further deter new business formation. The key is to find a middle way that recognizes the real resource limits and responds in a manner that it both humane and pragmatic.
-By WDET’s Sandra Svoboda
@WDETSandra and firstname.lastname@example.org
The $350 million Gov. Rick Snyder has proposed as part of a Detroit deal would come from what’s known as tobacco settlement money — a fund that, according to The Detroit News, some anti-smoking groups, public health advocates and others are saying should be used to pay for health improvements throughout the state.
Organizations ranging from the Campaign for Tobacco-free Kids to the free-market Mackinac Center for Public Policy don’t necessarily oppose strategies to assist the bankrupt city, but argue Michigan should be spending a sizable portion of the settlement money to combat the harmful effects of smoking.
Snyder wants legislators to approve 20 annual $17.5 million payments to Detroit starting in the next budget, with the agreement the city would use the funds to shore up pension accounts and to protect the collection at the Detroit Institute of Arts from being sold. Private foundations have committed $365 million to the deal while the museum has promised $100 million.
It will be a tough sell in Lansing, most likely, especially to out-state lawmakers, and now the Detroit News reports the opposition from the public health advocates. The opponents of using the tobacco fund money tell the News that the settlement funds were supposed to be paid to “reimburse the state and its taxpayers for the costly diseases caused by tobacco use.”
“We’re not opposed to fixing Detroit’s economic problems, but we feel a reasonable percentage of the (tobacco settlement) money should be used to help people quit smoking,” said Peter Hamm, spokesman for the national Tobacco-Free Kids group.
Snyder has said he hopes for legislative approval before summer to ensure the funds are part of Detroit’s Plan of Adjustment during its ongoing Chapter 9 proceedings. Bankruptcy Judge Steven Rhodes has scheduled a trial for July.
Things you might not think about: How much dirt will it take to fill in the holes of the 80,000 abandoned homes in Detroit once the structures are razed? This, along with squatters (an estimated 5 to 10 percent of these homes are still occupied) and paper work (of course paper work), are going to be speed bumps for Detroit as it attempts to rid the city of blight.
Now, maybe more than ever, there is not only the political drive to remove the blight but also the cash. As the Detroit Free Press pointed out:
Everyone is talking about demolishing buildings in Detroit. President Barack Obama pledged $100 million for such efforts in Michigan. In his State of the City address, Mayor Mike Duggan pledged $20 million to get started right away. Detroit emergency manager Kevyn Orr said $500 million will be used to knock down up to 450 properties every week for years.
But back to the dirt. With 80,000 abandoned homes in Detroit, once those structures, along with the basements, are removed, where are we going to get the dirt? The Freep’s John Gallagher digs into the logistics of actually removing these thousands and thousands of structures from Detroit. Here’s an excerpt from his latest:
The goal of a blight-free Detroit was set recently by Detroit emergency manager Kevyn Orr, who proposed in his Feb. 22 reorganization plan that Detroit spend $520 million over six years on blight removal. Orr suggested the city’s demolition pace could ramp up to 400 to 450 houses per week by next year from 100 houses a week today.
He said making Detroit blight-free would “dramatically improve the national perception of the city” and “raise investor confidence and effect lasting change in economic growth and quality of life.”
But one thing Orr didn’t spell out was how the city would achieve that hugely ambitious goal.
Even some of the people involved in blight removal are skeptical that the target can be hit.
“I don’t know that the numbers are achievable just because of the logistics of getting the physical title to the property, getting all the clearance, doing all the other stuff that has to done,” Adamo said. “Everything would have to go right. The process is really time consuming.”
What do you think? Will Orr and Co. hit 400 houses a week? Or is that pie in the sky?