Week Four of Detroit Bankruptcy: One Year Later

THE EFFECTS

From city neighborhoods to Lansing to the national landscape, Detroit’s bankruptcy had a sometimes profound effect.

By Nancy Derringer
Bridge Magazine, Detroit Journalism Cooperative

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.

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