Detroit Rising: Life after bankruptcy. One year after a federal judge approves Detroit's bankruptcy exit plan, progress has been made while looming challenges remain, especially city pensions The City of Detroit has more than enough cash to pay its daily bills.
Thousands of busted streetlights have been replaced. City retirees still receive pension checks, and valuable paintings remain ensconced in the gilded halls of the Detroit Institute of Arts. That's the good news. But a year after a federal judge approved a cost-cutting and reinvestment plan in the nation's largest-ever municipal bankruptcy case, Detroit's financial future still hangs in the balance. Among the greatest concerns: a multibillion-dollar pension bill that starts coming due in less than a decade. How corruption deepened Detroit's crisis. DETROIT -- Former Detroit Mayor Kwame Kilpatrick was a spender, a schemer and a liar.
And taxpayers paid for it, by the millions. Over seven years, Kilpatrick's public corruption schemes, lavish lifestyle and ethical missteps cost taxpayers at least $20 million, a tab the financially strapped city was in no position to pick up but did anyway — usually without knowing. On Thursday, Kilpatrick will be sentenced for 24 corruption convictions. As he heads to federal prison for what could be decades, one important question lingers: How much did his extortion, kickback and bribery rackets contribute to the city's financial crisis and its filing in July for the largest municipal bankruptcy in the nation's history?
"Kilpatrick is not the main culprit of the city's historic bankruptcy, which is the result of larger social and economic forces at work for decade," federal prosecutors said in court documents. Court: Kwame Kilpatrick didn't cause Detroit bankruptcy, but atmosphere of corruption didn't help. Ex-Detroit Mayor Kwame Kilpatrick, right, and friend Bobby Ferguson leave court in this Jan. 8, 2013 MLive file photo.
The two were convicted of racketeering and extortion in March. Kilpatrick was sentenced on Thursday to 28 years in prison. Ferguson was sentenced Friday to 21 years. Forbes Welcome. Forbes Welcome. Forbes Welcome. Detroit’s Bankruptcy: Pensions and Public Employment. After losing more than half its population over the last 60 years, the city of Detroit filed for bankruptcy on Thursday.
While many factors contributed to its multi-decade decline, the biggest holes in the city’s budget appear to be due to underfunded pensions and health care for its employees and retirees. The city is now in the position of having to decide the degree to which it must stiff its creditors and retirees. The progressive “Blue model” of city governance promises a cohesive city government that offers good-paying jobs and lots of urban planning and social services, and the Motor City was no exception. But with the economic downturn, many of the bluest cities and states have shown the most red ink on their balance sheets. At the Spectator, Eileen Norcross details how public pension systems typically use nonsensical assumptions and accounting tricks to make them appear better-funded than they really are, leaving huge gaps that must be paid for by taxpayers. image source.
The Rise and Fall of Detroit’s Middle Class. In 1973, Ron and Loretta Martin and their three sons moved into the yellow-brick Colonial across the street from my childhood home, on Detroit’s west side.
My father greeted them warmly, despite the fact that most of our neighbors saw them as blockbusters, part of a nefarious conspiracy by civil-rights groups to force integration and break up tight-knit white enclaves. The Martins were one of the first black families on our block. It took a lot of courage to be pioneers, those black families who crossed the city’s racial frontier. And it also took extra money. Black pioneers, as I discovered years later when I wrote a book about Detroit, were usually better off financially than the white people they moved next to. Ron and Loretta were pioneers in another way. It was not always this way. But by the time the Martins moved in, those blue-collar jobs were disappearing. Public employment, of course, did not come cheaply. Anatomy of Detroit’s Decline - Interactive Feature. Mayor Coleman A. Young of Detroit at an event in 1980. Richard Sheinwald/Associated Press The financial crisis facing Detroit was decades in the making, caused in part by a trail of missteps, suspected corruption and inaction.
Here is a sampling of some city leaders who trimmed too little, too late and, rather than tackling problems head on, hoped that deep-rooted structural problems would turn out to be cyclical downturns. Charles E. Edward Jeffries, who served as mayor from 1940 to 1948, developed the Detroit Plan, which involved razing 100 blighted acres and preparing the land for redevelopment. Albert Cobo was considered a candidate of the wealthy and of the white during his tenure from 1950 to 1957.
Coleman A. Kwame M. Dave Bing, a former professional basketball star, took office in 2009 pledging to solve Detroit’s fiscal problems, which by then were already overwhelming. Related. State set to takeover Detroit city government - Mar. 1, 2013. The takeover is short of a formal bankruptcy, but it will include appointing an emergency manager who would have many of the same powers as a bankruptcy judge.
It could mean throwing out contracts with public employee unions and vendors that the city can't afford, and could lead to further cutbacks in already depleted city services. Detroit has 10 days to appeal Snyder's decision that there is a financial emergency in the city. Snyder said he has a "top candidate" for the manager post, but that he won't announce it until after the appeals period has passed. Snyder, a Republican, insisted the emergency manager is the best way to deal with the problems facing the city's operations. "The current system has not been working. The U.S. auto industry, long associated with the city, has enjoyed a resurgence in the last few years since General Motors (GM) and Chrysler Group went into bankruptcy and received federal bailouts. Related: Best car sales in five years. Problem loading page. Detroit Jobs Might Return, But Workers Still Lack Skills.
DETROIT, Aug 2 (Reuters) - Detroit emergency manager Kevyn Orr has a long list of things to fix in the city and among them is one that may sound surprising: there are not enough skilled workers to fill job openings as they become available.
“Every problem in this city revolves around jobs,” said Lindsay Chalmers, vice president of non-profit Goodwill Industries of Greater Detroit. “That’s at the heart of the issue for Detroit.” The decline of manufacturing jobs, above all in the automotive industry, has played a major role in the slide of the Motor City’s population to 700,000 from a peak of 1.8 million in the 1950s. Despite recent gains, Michigan has 350,000 fewer manufacturing jobs than in 2000.
Seismic shifts in the local labor market have left many unskilled workers behind. Bankrupt in Detroit: What Does This Mean for the City’s Public Schools? Even before Detroit filed for bankruptcy last week, its public schools faced a grim situation.
One major problem is that people have been leaving the Motor City for years. In fact, the 2010 census showed just over 700,000 residents. Without people, schools have less tax revenue. The Detroit News reports that nearly 50 percent of the city’s taxable property parcels were delinquent on their 2011 tax bills. Detroit schools can't pay staff after April 8, lawmakers told.
Detroit Public Schools can only afford to pay its employees for the work they do through April 8 and needs $50 million in immediate aid, the district's transition manager said today.
Steven Rhodes and new Superintendent Alycia Meriweather testified before a state House Appropriations Committee hearing on proposed legislation that would restructure the debt-ridden district. Lawmakers have been talking for several weeks but remain unable to agree on a plan. Detroit Public Schools face bankruptcy if lawmakers don't act. DETROIT (WXYZ) - State Superintendent of Schools Brian Whiston says lawmakers need to urgently take action to address the Detroit Public Schools debt.
The district is on track to run out of cash to pay for any operations by April. Judge Rhodes threatens shutdown of Detroit Public Schools. As April 8 fiscal deadline approaches By Nancy Hanover 14 March 2016. Lansing must give Detroit Public Schools $715 million bailout, EM says. The rest of the state must bail out Detroit Public Schools, the district's new leader says.
"There is no alternative but to pass this legislation," said retired U.S. Bankruptcy Judge Steven Rhodes, whom Gov. Rick Snyder selected to lead the financially strapped district beginning last week. "There is no Plan B. There is no what-if; we need both pieces of legislation and we need them soon. " Rhodes appeared publicly Monday to announce his well-received selection to become Detroit Public Schools' interim superintendent. The Public Education Woes of Detroit. When Doug Ross came to the Detroit Public Schools 18 months ago, there was great anticipation that he would preside over a dramatic turnaround for a school system that has been ailing. And so his decision this week to leave his position has left many Detroiters surprised. After all, Ross was a widely respected and successful operator of charter schools in Detroit and a former United States assistant secretary of labor before he was given the position of chief innovation officer for the school system.
He said he is leaving to focus exclusively on the turnaround of urban high schools outside the Detroit Public Schools. Fixing Detroit’s Broken School System: Improve accountability and oversight for district and charter schools. Detroit is a classic story of a once-thriving city that has lost its employment base, its upper and middle classes, and much of its hope for the future. Forbes Welcome. Businessinsider. Scams, ignorance burn foreign buyers of Detroit properties. As Detroit breaks down, scourge of arson burns out of control. $500 Houses Not Selling In Detroit – But Suburbs Are Booming. This month, thousands of homes will be auctioned off in Wayne County, Mich., starting at $500. But so far, people aren’t buying. Cheap Detroit homes are costly for communities, unwary buyers. The parable of Detroit: So cheap, there’s hope. Forbes Welcome. Forbes Welcome. Forbes Welcome. Can Motown be mended? LARRY EDWARDS sits patiently in his wheelchair outside City Hall, waiting for a lift home.
He worked as a gardener at Detroit’s Belle Isle Park between 1988 and 2011. That was before a knee injury, and then a stroke, forced him to retire. He remembers how beautiful the island was before people started to move out of town and the crooked politicians arrived. Mr Edwards will be 50 in December. The city already pays one-third of his full pension. By filing for Chapter 9 on July 18th, Detroit sought protection from all its creditors, including pensioners like Mr Edwards.
Iron Orr. The city’s broke. Let me fix it. Detroit’s bankruptcy: Two tales of one city.