Detroit: An end or a new beginning?

As officials have tried to explain the circumstances leading up to the bankruptcy,they have repeatedly pointed to the city’s diminished services

Written by Monica Davey | Detroit | Published: July 23, 2013 5:43 am

MONICA DAVEY

Detroit awoke July 19 in bankruptcy proceedings,a place no US city of its size has ever been,and reminders of the uncharted,uncertain nature of the circumstance were all around.

Well into the workday,the morning after a state-appointed emergency manager filed for Chapter 9 bankruptcy protection for the city,a woman paused outside the Detroit municipal building,inquiring whether the place was closed. The receptionist at the mayor’s office (which,like the rest of city offices,was open) said she had received a few calls from similarly puzzled residents,not to mention a caller from Texas who said he wanted to make an offer to buy the city. One resident on the East Side wondered aloud whether she now ought to move away.

“Mostly what we’re getting are questions,” Saunteel Jenkins,the president of Detroit’s City Council,said. “City employees want to know whether they’ll get paid. Constituents want to know what it means for services. People want to know,what does this mean for me?”

Although Detroit’s slide from an industrial powerhouse into financial ruin had been long and slow,and the prospect of bankruptcy has loomed here for months,residents were only beginning to wrestle with how the move might change life. Were they on the brink of a fresh start,with faster response times by the police and more working streetlights,as officials have promised,or a further hollowing out of a city that lost a quarter of its population in the last decade.

“If we’re broke,we’re broke,” Cicero Lewis said as he walked down a street where only a few houses remained. “If this is going to help the city,then OK. Bankruptcy could be good. Let’s see.”

For some,and even some who predict that bankruptcy might ultimately revive the city,doubts linger about the way Detroit,which is more than 82 per cent Black and dominated by Democrats,finds itself in this moment. Governor Rick Snyder,who is white and a Republican,authorised the bankruptcy filing,which required no approval from the mayor or council. “No deals should happen without our elected officials,” said the Reverend Charles Williams II,who leads the Detroit chapter of the National Action Network. “When did the governor become our mayor?”

As word of the bankruptcy spread though,officials raced to assure workers and residents that business was proceeding as usual. Kevyn D Orr,the state-appointed emergency manager,sent emails to the city’s nearly 10,000 workers. The city has said that it hopes to emerge from bankruptcy by the fall of 2014,an ambitious timeline for a complex case that court filings say involves more than 100,000 creditors.

For now,Orr said his message to the public will be simple: “We’re open for business. Your garbage truck is going to come. Potholes are going to be filled—hopefully better than in the past.”

In an interview,Snyder said that his greatest worry was that some in the general public might be confused. “This is something that can be scary to people,” he said. “This is about continuing normal services and giving people assurance that normal services are going to happen.”

As officials have tried to explain the circumstances leading up to the bankruptcy,they have repeatedly pointed to the city’s diminished services—broken ambulances and uncollected garbage. The city now owes 38 cents of every dollar to pay its debts,the state says.

“It’s obvious we need some help,” said Norman Mighty,a resident who said he was unsurprised. A 16-year-old girl,who said she rarely emerged from her house because it was the only one left on her darkened block,said any change would be good. And,at a club where members had to replace first-floor windows with bricks to end the break-ins and where members say the police took three days to respond to a burglary report,Charlene Kaslowski sounded hopeful.

Others were unconvinced,and troubled by the uncertainty and the prospect of added stigma in a city that has already had its share. Some suggested that if bankruptcy was a preferable alternative,other major cities like New York would have ventured there during their own crises. Some had long lists of questions: When does this end? How much will the thousands of retired city workers lose in benefits? And what will a post-bankruptcy Detroit look like?

“It’s the word bankruptcy,” Sharon Bowman said. “It just doesn’t fit right with me.” Bowman recalled an instance when she called 911 because she suspected she was having a stroke,then waited,she said,for what felt like ages. “It’s a total disaster here,” she said. “If I was younger or had more education,I would zoom out of here.”

Detroit may be the largest US city yet to file for Chapter 9 bankruptcy,but it’s not the first. Since 2010,36 cities,towns and other

municipalities have gone bust in America:

HARRISBURG,PENNSYLVANIA

The capital city of Pennsylvania filed for bankruptcy in late 2011 after it failed to cope with the costs of a revamp for a local incinerator. A court dismissed the petition,saying the city did not meet eligibility requirements for Chapter 9. In May 2013,Harrisburg’s city council voted again to file for bankruptcy.

CENTRAL FALLS,RHODE ISLAND

The smallest city of Rhode Island filed for Chapter 9 bankruptcy in August 2011. In addition to its declining economy,the city had $80 million in pension obligations. With an annual budget of only $17 million,the city was pushed to the brink.

JEFFERSON COUNTY,ALABAMA

In what had been the biggest such bankruptcy then,Jefferson County filed for bankruptcy in November 2011,after failing to restructure over $1.3 billion in sewer bonds. In 1996,the federal government had ordered the city to upgrade its sewerage system.

PRICHARD,ALABAMA

A shrinking middle class took a toll on Prichard’s tax revenues. For years,it was warned that its underfunded pension plan would dry up and in 2009,it did. In response,Prichard simply stopped paying its pension recipients. Eventually,the town was forced to file for bankruptcy in October 2009. However,this was Prichard’s second time; the first was in 1999.

VALLEJO,CALIFORNIA

Vallejo became the largest city of California to file for bankruptcy in 2008. Starting in 2005,the city’s expenditures started exceeding revenues by $3 million per year. And during this time,more than 75 per cent of the municipal budget went into personnel compensation and pension funds.

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