Week One of Detroit Bankruptcy: One Year Later

THE CITY

Detroit shed billions of dollars in debt through the bankruptcy filing.
What else happened to city government? Have residents noticed a difference?

By Nancy Derringer
Bridge Magazine, Detroit Journalism Cooperative

To Mayor Mike Duggan, at least publicly, Detroit post-bankruptcy is nothing but blue skies — with a few clouds that cast occasional shadows over the sprawling city.

To the head of its firefighters union, it’s a time of “all-time low” morale for the city’s workforce that’s basically been insulted by cuts to pensions and forced health care payments.

Residents are mixed, with optimists looking forward to better times, and others worrying that ordinary Detroiters and ordinary neighborhoods will be forgotten in the crowing over rebirth and success in the central..

The historic deal shed about $7 billion — roughly 40 percent — of the city’s long-term debt, largely through reductions to pensions and retiree health care. It brought an infusion of money to shore up the pension funds in exchange for preventing the sale of the city-owned collection at the Detroit Institute of Arts to pay creditors. Legislators agreed to send state money to pension funds because oversight panels would monitor the city’s finances. Unions accepted five-year contracts and retirees voted for the deal, accepting terms that prevented them from challenging it in courts.

So how is the bankruptcy settlement, hammered out under now-retired Bankruptcy Judge Steven Rhodes, holding up after a year?

Duggan, for one, is upbeat about the new start. Basic city services and emergency response times are improving from the frankly dismal low points they hit before the July 2013 Chapter 9 filing.

Click to listen to Mayor Duggan
“Well you know city services certainly are a lot better than they were a year ago,” he says. Streetlights are being replaced. More buses are running. Parks are being mowed and maintained. And for a city that is often in need of emergency responders, “the ambulances are arriving within eight or nine minutes which is the national standard so we have a lot of things that are a lot better.”

Other public safety response times are more complicated; Detroit Police Chief James Craig and Duggan, say they are down sharply – from the 58-minute figure Emergency Manager Kevyn Orr quoted at the beginning of the bankruptcy case to the roughly 15-minute average police response time that city officials now tout.

On the financial side, John Naglick, Detroit’s finance director, says it’s too soon to give a thorough overview of the redrawn financial picture, and that tweaks to the Plan of Adjustment – the blueprint for post-bankruptcy finances – are inevitable and ongoing, mainly in the area of pensions, through adjusting actuarial tables for pension planning. But discharging the city’s bonded indebtedness, assumed under the Kilpatrick administration, left some much-needed breathing room.

Click to listen to John Naglick
“It’s allowed us to take money that used to have to go to things that weren’t visible to the citizens and people that come to the city to do work, and allowed us to put a lot more resource toward improving police and fire,” as well as hire new workers to deliver much-needed services, Naglick says.

That said, major challenges remain on the administration’s agenda, and Duggan ticks them off – sky-high car insurance rates, faltering schools and high unemployment for city residents. Not all are in his power to change.

But all will reflect on — and influence — day-to-day life in the city. But to Duggan, even for a city that had nowhere to go but up, the trajectory and progress of the climb has been satisfying.

Others are less enthusiastic. Jeffrey Pegg, president of Detroit’s firefighters union, states frankly that departmental morale is “at an all-time low,” due to stagnant pay and a withering firehouse network, as well as other, more profound changes.

Click to listen to Jeffrey Pegg
“Look, the city has to come back, and it will come back, and it is coming back,” Pegg says. “It’s just very difficult when you sit in meetings that say the reason why we got new fire trucks is because they cut retiree health care. …That was a $3 billion savings, my understanding, over a 10-year period of time. … But what about the people that worked for the city that put their lives on the line and when they retire, they don’t have retiree health care?”

Shirley Lightsey, president of the Detroit Retired City Employees Association, calls for pensioners and residents to take responsibility for their own destinies. The retired human resources administrator in the water and sewerage department says performing what we call our civic duty has never been more important.

Click to listen to Shirley Lightsey
“I think we have to be a lot more thoughtful and serious as to who we put in office. Because what I see, everyone coming in has their own personal agenda,” she says. “That personal agenda is not necessarily good for the city, the retirees, the actors, the taxpayers or anyone else. … So if nothing else, get out and vote.”

And what of the people who call the city home?

Again, mixed reviews but a hopeful spirit that Detroit is, with much help and a great deal of work, doing what its civic motto declares: Rising from the ashes.

A sample of voices:

Click to listen to Paul A. Garrison II

Paul A. Garrison II: “Bankruptcy in my perspective and opinion professionally was ten years overdue. But fortunately it did finally take place..”

Click to listen to Stephanie Perry

Stephanie Perry: “It’s really important to know that (emergency services) are responding way quicker, that EMS is responding way quicker. Because one minute when it’s an emergency can seem like five compared to eight minutes that’s seeming like 30. So response time is a very big thing to know. That minute is seeming way more than a minute.”

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