Article
Detroit files for bankruptcy
The threat loomed and, today, the axe fell.
Detroit has filed for Chapter 9 bankruptcy— the largest city in our nation’s history to do so.
The Associated Press reports that Detroit Emergency Manager Kevyn Orr released a report that the city owed as much as $20 billion in debts and liabilities, a statistic debated by Krystal Crittendon, an attorney for the city.
“We do not have a $15 [billion] or a $20 billion debt problem. We have less than a $2 billion short-term debt problem that we could manage if we just went out and collected revenues that are owed to the city; stop giving, you know, tax abatement to people who can actually afford to pay taxes,” Crittendon told local CBS Detroit.
Last month, Orr estimated Detroit’s budget deficit at $380 million, and the city’s long-term debt at $20 billion, according to CBS Detroit. At that time, Orr gave the city a 50/50 chance of avoiding bankruptcy, and said viability would be determined by compromise – namely, creditors agreeing to accept pennies on the dollar of what was owed. Orr’s plan to avoid filing was derailed, the Business Insider reports, when two municipal pension funds sued.
Governor Rick Snyder signed off on the filing saying, "Right now, the City cannot meet its basic obligations to its citizens. Right now, the City cannot meet its obligations to creditors."
The Detroit Free Press said the filing will set off a 30- to 90-day period "that will determine whether the city is eligible for Chapter 9 protection and define how many claimants might compete for the limited settlement resources that Detroit has to offer."
“Pure Michigan”
“Pure Michigan”
If the Governor didnt hire
If the Governor didnt hire Kevin Orr, his salary should have been use to pay part of the debt.
Exactly. Why hire an
Exactly. Why hire an emergency manager when you already know you have a debt and deficit tax collection problem growing for past 10 plus years. All just to assign blame and responsibility on others instead of on elected officials and well paid city managers that are paid to manage these issues before they become emergencies. I would terminate the city manager and all senior management Commissioners etc…no severance packages since.all fired with cause for not doing their jobs. As for city Councillors they can get out into their wards and start sweeping the streets and responding to their constituency concerns. Useless politicians.
Exactly. Why hire an
Exactly. Why hire an emergency manager when you already know you have a debt and deficit tax collection problem growing for past 10 plus years. All just to assign blame and responsibility on others instead of on elected officials and well paid city managers that are paid to manage these issues before they become emergencies. I would terminate the city manager and all senior management Commissioners etc…no severance packages since.all fired with cause for not doing their jobs. As for city Councillors they can get out into their wards and start sweeping the streets and responding to their constituency concerns. Useless politicians.
Attorney Crittendon is on to
Attorney Crittendon is on to something. Too many give-aways with little return on the investments. Probably too much in the form of other entitlement programs also eating away at the finances. Detroit has long been in decline, I noticed it back in the 1980s when I drove OTR trucks delivering in and passing through Detroit. How it managed to hang on until now is anyone’s real guess. The story will be interesting to see how this will turn out.
Until we as a nation fully
Until we as a nation fully value our public services and support them fully (maintenance!) as well as rethink what we have and what we need, we will continue to face these fiscal cliffs.
A lot more thinking and action to create synergy b/w Cities & Counties to reduce ridiculous levels of duplication of facilities/services. Coordination between schools & civic facilities and even universities to minimize ‘need’ for new facilities e.g. athletic facilities. Better use of technology and more maintenance to improve municipal utilities e.g. cutting water system leakage losses in older municipal systems and employing smart technology is ‘the new supply’ not more reservoirs, pipes and heavy infrastructure.
Detroit is a special case, having shrunk by over 1/2. Then seeing (in this magazine) that a super prosperous growing place like San Diego also faces bankruptcy means we have to completely rethink our civic approach.
I understand an Ingham County
I understand an Ingham County Court stopped the bankruptcy proceedings today stating the Chapter 9 filing is unconstitutional.
NOT SURPRISED about
NOT SURPRISED about Detroit–suffers from history of poorly enforced, vague local public servant performance and related ordinances. Also, am aware of its severe public spaces littering and dumping problems. Detroit could have qualified to be a (T+L) TRAVEL+LEISURE “America’s Dirtiest City,” yet T+L chose not to review/rank Detroit, which is not part of its “America’s Favorite Cities” list.
First: GASB, as an AICPA
First: GASB, as an AICPA standard setting body, had a “fiscal sustainability” or “going concern” issue on its agenda. That unfortunately has been removed right at a time when the government auditing standard is needed most. That is sad.
Second: I was in the municipal bond business when NYC had to reduce union labor costs and refinance using some somewhat novel ideas; it was successful. I wonder if something similar can be arranged by the I-bankers qua financial czar?
Third. in the Detroit case of geophysical shrinkage of citizen usage, I wonder if the land can be controlled via debt relief similar to a defaulted mortgage such that a land czar qua urban planner can raze and otherwise sweep clean building and infrastructure decay and obsolescence and then, like the Phoenix, rise with a rebuild by modern and green technology a vision for the future? Think as if we were terraforming Mars.