Even in bankruptcy, Detroit has millions of dollars in state and federal money to tear down blighted buildings and clear up vacant lots. Some unspent money has even been found in the city’s own accounts. Scott Woolsey, executive director of the Michigan State Housing Development Authority, discussed how the funds will be spent and what difference they could make in Detroit.
“As soon as the weather breaks, you’re going to see a lot of homes come down,” Woolsey says. “You’re going to see a pretty massive effort in terms of demolition and vacant lot cleanups across the city.”
From city neighborhoods to Lansing to the national landscape, Detroit’s bankruptcy had a sometimes profound effect.
Even a casual observer of Detroit’s municipal bankruptcy proceedings had to note the superlatives and singular details involved. Years of decline. The biggest settlement. The largest city. An imperiled art collection. Decades of state oversight.
But one year later, the final question – how did it turn out? – could be answered by a Magic 8 Ball: Answer hazy, try again later.
Unique cases tend to have unique outcomes, and Detroit’s won’t be fully known for some time. The pieces are in place for what state and local policymakers, residents and other stakeholders hope will be a happy ending. The Financial Review Commission will provide fiscal oversight. A new city council, elected by district, hints at better decision-making going forward. An energetic mayor is trying new strategies to reverse population decline and craft a new landscape from blocks of blight and prairie.
“I won’t tell you it’s going to be easy. This is going to be a long grind,” Mayor Mike Duggan told a citizen’s group in early November. Listen to Mayor Duggan
If the state’s economy continues to recover, if the auto industry remains on track, if small business continues to grow, if big business can be tempted into the city … if, if, if. A happy ending is by no means certain.
Nick Khouri, Michigan’s state treasurer, put it this way after a recent meeting of the Financial Review Commission: “It’s always, when you’re doing long-term budgeting (and) financial analysis, what happens during the bump in the road you don’t see, what happens during the next recession. So what’s the concern? The concern is momentum continues and that we set that structure in place that can withstand those times.” Listen to Nick Khouri
And some of the biggest influences on the city’s fate are well beyond its borders. Advocates for local governments, like the Michigan Municipal League, often point out that the state legislature’s model for supporting its cities is no longer very supportive. Or as Tony Minghine, the MML’s chief operating officer, said during a recent WDET panel discussion, “People don’t realize that we have a system that doesn’t really set communities up for success. …Seventy-five percent, roughly, of a city’s revenues are going to come from property taxes and revenue sharing from the state. And they have little or no control over either those. We have some of the most stringent property tax limitations in the country.” Listen to Tony Minghine
Other, less prominent Michigan cities in dire financial straits – but that haven’t gone through Chapter 9 municipal bankruptcy – haven’t found extrication easy. Pontiac, Benton Harbor, Flint and others still struggle.
And while the bankruptcy’s conclusion was seen as good news for Detroit, pensioners will continue to struggle. Juanita Hernandez is 88 and learning, at that advanced age, to live with less: “As my mother would always say, ‘As long as you’ve got a roof over your head and something to eat at the table, you survive.’ And I guess that’s what I’m saying; we’re surviving.” Listen to Juanita Hernandez
Detroit has barely started down the road to its future. Treasurer Khouri lays out what’s at stake for the state’s biggest city: “It’s critical that the city grows. … these investments that are going to be made are part of the broader budget priorities to make sure that the city grows, make sure services are improving so people are attracted to the city, so they get a bigger, stronger economic base growing, a growing economic base which leads to financial stability.” Listen to Nick Khouri
That could apply to many Michigan communities.
This Week's Featuresin
THE PEOPLE & THE DETROIT AGENDA
The judge, the emergency manager and the mayor always agreed on one aspect of the bankruptcy case: city services needed to improve for residents.
Here’s the progress — and setbacks — Detroit has made.
People, the hundreds of thousands who left over the decades, were where Detroit’s decline started. And as the city starts its comeback post-bankruptcy, the people are where its successes and failures will be reflected. First-term mayor Mike Duggan has said it many times: Judge his performance on whether Detroit is still losing population in a year or two. But turning that tide is a matter of doing many jobs much better than they have been done in the past.
Mass transit. Blight removal. Job growth. Business opportunity. All were discussed as the city created it’s post-bankruptcy plan. All were part of city officials’ testimony at trial.
And all will play a part in encouraging people to move into or back to Detroit. The record of improvements and successes over the past year is mixed.
More buses are rolling on the streets, a welcome relief from the days when schedules were only guesses and hours might pass between stops. Federal money helped put 80 new buses on the street, and now 190 are in service every day, Duggan says. Ridership and customer satisfaction will follow, the city hopes. Drivers signed a new contract promising bonuses contingent on increased ridership.
Blight removal is more of a mixed picture. Land-bank sales of dilapidated but salvageable houses via online auction is a success, enough so that the program has been expanded to include side lots and a new “rehabbed and ready” segment, where the city and partners do the fix-ups and sell them, via Realtors, to buyers who might want to participate in the program but don’t have the time or skills to take on such ambitious projects.
Listen to Craig Fahle
“We put $60-$70,000 into some of these,” says Craig Fahle, director of public affairs for the Detroit Land Bank Authority. “And we put them at a price that we think might build some comps in the neighborhood. …We realize there was a market for that.”
However, the central task of blight eradication – actually tearing down and removing structures beyond repair – hasn’t gone as smoothly. Demolition, the city has found, is one task where there are no economies of scale. The more you do, the more expensive it can get, for a variety of reasons. Asbestos containment is critical when multiple houses are coming down in a neighborhood. And there have been shortages, mainly of fill dirt.
Listen to Mayor Duggan
As demolitions increased, “we used up every bit of dirt within 20 miles of Detroit. We were going out to Rockwood and Port Huron and Lake Orion to go get dirt. …We brought two million cubic yards of dirt into this city in the last 18 months to fill holes.”
But services and landscape are secondary to the most urgent need in the largely impoverished city: Jobs. The flourishing of downtown business is perhaps the most-covered story in the city, but the fate of smaller, less centrally located businesses is just as critical.
“Opportunity Black” was the first event put on by the Young Entrepreneur Society of the Detroit Black Chamber of Commerce, attracting hundreds of established and aspiring business owners and young professionals to share ideas, problems and possible solutions. The critical issues? Capital. Credit. Collateral. It’s difficult to get a loan.
ProsperUS Detroit is one of a handful of programs that have emerged to help set up entrepreneurs – mostly minorities – for success.
Listen to Kimberly Faison
“We really do have to approach this particular issue in a different way because Detroit has too much talent to continue to lose it to other places for lack of access,” says Kimberly Faison, ProsperUS director.
As all these moving parts start to work, independently and together, the picture of the city’s future will become clearer. Duggan lays out the stakes.
Listen to Mayor Duggan
“There’s a Financial Review Commission in place so if we run a deficit they have right to come back in and take control again. I am never going to let that happen,” he says. “I will tell you the truth because I’m never going to let somebody take control of this city again who’s not elected by the voters.”
This Week's Featuresin
Archive: Neighborhood Communities
"Detroit’s bankruptcy is unprecedented in many ways, and the state and federal power exercised in the process remains mostly...
As Detroit is poised to exit bankruptcy, work continues on other issues critical to the region's future. In this...
The Detroit Land Bank Authority will receive nearly $12 million from the city’s general fund, following a split City Council vote last week. Land bank officials say they needed the monies to operate and continue demolition of vacant and abandoned properties.
The council also transferred nearly 38,000 city-owned residential properties to the Land Bank, which seeks to put them back into productive use or clear them.
Council President Brenda Jones, who along with members Raquel Castaneda-Lopez and Janee Ayers voted against the subsidy, said she’s reluctant to take on the financial responsibility.
Detroit, she said, is operating under the oversight of a Financial Review Commission that will go away if officials budget responsibly and avoid deficits for three years.
“My concern is this; we just emerged from a bankruptcy,” Jones said. “The city looks pretty good. I don’t want a deficit to occur in three years because the city is going to be responsible for what the land bank does if the land bank doesn’t have any money.”
The city’s blight was a major issue of the bankruptcy case, with several city officials testifying it was one of the top concerns as they looked to revitalize Detroit.
Orr’s pay in Atlantic City
Former Detroit Emergency Manager Kevyn Orr collected a higher hourly wage in his consulting role in Atlantic City than most of the attorneys who worked on the Detroit bankruptcy case, according to published reports.
Orr, who was appointed by New Jersey Gov. Chris Christie as a consultant for the financially challenged casino town, charged $950 an hour during his three months of work. His total collected: about $70,000, the Press of Atlantic City reports.
Bankruptcy watchers have sights on Puerto Rico
Like Detroit did two years ago, the sunny island of Puerto Rico is facing a debt crisis: $73 billion owed to financial creditors, NPR reports. With four times the debt that purged Detroit into bankruptcy, the sunny paradise destination is looking for any solution out.
With a junk status rating, Puerto Rico is trying to negotiate a new bond sale with Wall Street investors. At the same time, the island’s troubled energy company, PREPA, is desperately trying to stave off default. … To deal with its debt, Puerto Rico passed a law that would allow troubled agencies like the state-owned power company to seek bankruptcy protection. A federal judge struck down the law, though, ruling it violated the federal Bankruptcy Code. The commonwealth is appealing that decision. It’s also pushing for a law in Congress to amend the Bankruptcy Code to include Puerto Rico. In the meantime, the island needs to find money to pay its creditors. And that means raising taxes.
It’s nice to be recognized!
With gratitude to our sources, readers, listeners, those involved in the case and our other supporters, WDET is the proud recipient of 10 individual category awards in the Michigan Association of Broadcasters Broadcast Excellence Awards for work in 2014.
The station also won “Public Radio Station of the Year,” a huge honor!
Several pieces related to Detroit’s bankruptcy case and future revitalization were among the entries. The complete list of the station’s honored projects is below. Our partners in the Detroit Journalism Cooperative, Detroit Public Television and Michigan Radio, also received awards in the annual contest.
And now we go back to work. Congratulations to all!
BEST in Community Involvement Category
The NextChapterDetroit.com “Community Lighting” meeting broadcast on Detroit Today.
BEST in Hard News and Current Events Story
BEST in Marketing Materials
For Kevyn Orr and the “Love Train” on Detroit Today
BEST in Membership Appeal
This is What Pat Says – Spring 2014
BEST in Special Interest/Cultural Programming
“Blue Collar Musicians”
BEST in Newscast
Morning Newscast 8-12-14
MERIT in Community Involvement
The NextChapterDetroit.com “Blight” meeting broadcast on Detroit Today.
MERIT in Membership Appeal
MERIT in Mini Documentary or Series
Detroit Agenda Series
MERIT in Station of the Year
Following the bankruptcy trial, WDET headed into Detroit’s neighborhoods with panels of city officials and neighborhood advocates. We met with residents, heard their questions, asked our own and got some answers. Here are those meetings, recorded, as they aired on WDET’s Detroit Today program. Topics: City services, public safety, blight, lighting and (inclusive) development.
The special House Committee on Detroit’s Recovery and Michigan’s Future convened earlier this year to consider the so-called “grand bargain” bills related to the city’s bankruptcy. Today, the panel met again and passed along a bill to the full House that would allow municipalities to crackdown on land speculators and other property owners who are delinquent on property taxes.
Meanwhile, WDET’s Sandra Svoboda spoke with committee chair Rep. John Walsh (R-Livonia). Here’s what they said:
JW: One is really highly technical in nature. One of the bills that passed out of the committee back in May-June timeframe had some corrections that we needed to make so it’s appropriate to come back to the committee and do that. While we’re there, since I had to post for that, I have another bill that I’ve introduced that will address the issue of people who can bid on tax-foreclosed properties. We’re going to take up both bills up at the same time.
SS: What changes does the bill on tax foreclosures make?
JW: The bottom line simply is if you are attempting to purchase tax-foreclosed property at an auction, you cannot bid if you own other tax foreclosed property. So the cycle in Detroit, and I’m told in other jurisdictions, is that we have land speculators for lack of a better word, out trying to buy property, and maybe they make use of some of it and drop others. But there’s this cycle of people who have habitually abused this process, let their property fallow, failed to pay taxes, and then yet they’re bidding on other tax foreclosed property so the hope here is to gain a higher quality bidder, somebody that actually is going to not only honor their obligation on the purchase but to make tax payments on it moving forward.
SS: To what extent has the existing situation contributed to Detroit’s financial crisis or even the bankruptcy?
JW: In terms of the financial crisis it goes to that bottom line of who’s paying taxes in Detroit and who isn’t. Are properties falling fallow and into blight because people aren’t maintaining them, they’re dispensing of them. Finding responsible owners that can paying their taxes is the goal and I think ultimately contributes to the health of the city.
SS: What are you hearing from your fellow representative, are they in favor, do they have questions or concerns? What’s the mood on this bill?
JW: There have been no specific questions or concerns raised. People are waiting for the hearing to learn more. I just introduced the bill a couple of weeks ago but I do expect it to pass. I have spoken with committee members. They don’t have any questions pending testimony. Barring anything that is dramatic, I think we’ll be able to move the bill to the floor.