Few Detroiters think the largest municipal bankruptcy in U.S. history is great news.
But plenty see it as an opportunity. Many Detroit business owners hope the bankruptcy will mean more stability and certainty, in a city that has had little of either in recent years.
Sandy Baruah, head of the Detroit Regional Chamber, says the bankruptcy filing did not come as a surprise to him, nor should it surprise anybody else.
"Detroit is not unique," Baruah says. "Great American cities like New York, Pittsburgh have all gone through some form of bankruptcy/receivership. And all of those cities look back on the time as kind of the defining point that put their cities on a much more sustainable path. All three of those cities are now vibrant, urban centers."
Part of Baruah's job is to convince investors Detroit is a good bet. But that's been difficult in recent years with City Hall the focus of corruption probes, an auto industry that needed a federal bailout, and the steady erosion of its population and tax base.
"Let's face it, Detroit has not gotten its fair share of outside investment — Shanghai money, London money, Chicago money — frankly because of the concerns about the financial condition in Detroit," he says.
But businesses closer to home have been bullish on Detroit. Several companies, including the online mortgage juggernaut Quicken Loans, have relocated from suburban Detroit to the city center. And the greater downtown area is flourishing, says Brian Holdwick, of the Detroit Economic Growth Corporation (DEGC).
"I've been at DEGC for 20 years, and this is the most activity I've seen in my career over there," Holdwick says.
There's a housing shortage. New boutiques and restaurants are popping up all over the place. And at lunchtime the sidewalks swarm with 20-somethings who work for tech companies.
"Between Quicken Loans and Blue Cross and a few other companies, we've brought down over 12,000 employees over the last few years," Holdwick says. "We have over $10 billion in investment in the last five years."
Still, business leaders also acknowledge that out in the neighborhoods, it's a different story. Detroit is a sprawling 139 square miles. The city can't keep up with the blight. Some 40 percent of the streetlights are broken. Only about one-third of the city's ambulances run.
Bankruptcy itself won't make the streetlights work or put more cops on the street. But city and state officials say bankruptcy will free up cash in the short- and medium-terms. They hope a clean slate will help Detroit focus on those things, instead of chasing money to meet payroll and pay off debts.
Gov. Rick Snyder and Kevyn Orr, Detroit's state-appointed emergency financial manager, were dealt a setback Friday when a county judge ordered the bankruptcy filing be withdrawn, citing state constitutional questions. It's not clear how significant the ruling is. Once a bankruptcy filing is made in federal court, it generally trumps other litigation in state courts.
Snyder says ultimately, what matters is getting city services back on track.
"Police response times being at 58 minutes, when you look at a national average of 11. Clearance rates on crime of 9 percent, when you look at a national average of over 30 percent – or state average. That's unacceptable," Snyder says. "So, this is really an opportunity to say enough is enough."
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Transcript
LINDA WERTHEIMER, HOST:
Detroit filed the largest municipal bankruptcy in U.S. history this week. Many Detroit businesses are watching the federal bankruptcy court hoping the filing will mean more stability and certainty in the city that has had little of either in recent years. Sarah Hulett of Michigan Radio reports.
SARAH HULETT, BYLINE: You'd be hard pressed to find people in Detroit who think the bankruptcy filing is great news, but there are plenty of people who look at it as an opportunity.
SANDY BARUAH: Detroit is not unique.
HULETT: Sandy Baruah heads the Detroit Regional Chamber. He says the bankruptcy filing did not come as a surprise to him and it shouldn't surprise anybody else.
BARUAH: Great American cities like New York, Pittsburgh have all gone through some form of bankruptcy/receivership, and all of those cities look back on the time as kind of the defining point that put their cities on a much more sustainable path. Those cities are now vibrant urban centers.
HULETT: Part of Baruah's job is to convince investors Detroit's a good bet, but that's been difficult in recent years, with City Hall the focus of corruption probes and auto industry that needed a federal bailout and the steady erosion of its population and tax base.
BARUAH: Let's face it. Detroit has not gotten its fair share of outside investment - Shanghai money, London money, Chicago money - frankly because of the concerns about the financial condition in Detroit.
HULETT: But businesses closer to home have been bullish on Detroit. Several companies, including the online mortgage juggernaut, Quicken Loans, have relocated from suburban Detroit to the city's center. And if you just look at the greater downtown area, you might not know Detroit is an insolvent city. Brian Holdwick is with the Detroit Economic Growth Corporation.
BRIAN HOLDWICK: I've been at DEGC for 20 years and this is the most activity I've seen in my career over there.
HULETT: There's a housing shortage, new boutiques and restaurants are popping up all over the place. And at lunchtime, the sidewalks swarm with 20-somethings who work for tech companies.
HOLDWICK: Between Quicken Loan and Blue Cross/Blue Shield and a few other companies, we've brought down over 12,000 employees over the last few years. And we have over $10 billion in investment in the last five years.
HULETT: But business leaders also acknowledge that out in the neighborhoods, it's a different story. Detroit is a sprawling 139 square miles. The city can't keep up on the blight. Some 40 percent of the streetlights are broken. Only about a third of its ambulances run. Bankruptcy itself won't make the streetlights work or put more cops on the street, but city and state officials say bankruptcy will free up cash in a short and medium term. And they hope a clean slate will help Detroit focus on those things instead of chasing money to meet payroll and payoff debts. Governor Rick Snyder says ultimately that's what matters.
GOVERNOR RICK SNYDER: Police response times being at 58 minutes, when you look at a national average of 11. On clearance rates on crime at just under 9 percent instead of a national average of over 30 percent - or state average. That's unacceptable. So this is really an opportunity to say enough is enough.
HULETT: Snyder was dealt a setback yesterday. A county judge ordered the bankruptcy filing be withdrawn over state constitutional questions. It's not clear how significant the ruling is. Once a bankruptcy filing is made in federal court, it generally trumps other litigation in state courts. Meanwhile, many city residents say they just want to put bankruptcy behind them, fix what needs fixing and be able to look back on this as the low point for the city. For NPR News, I'm Sarah Hulett. Transcript provided by NPR, Copyright NPR.
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