Although GM is on a path to recovery, its home city of ... Although GM is on a path to recovery, its home city of Detroit seems to be headed for bankruptcy (AP).
DETROIT, March 1 -- The city of Detroit must have an "emergency manager," to solve the city's financial emergency, according to Michigan Governor Rick Snyder, who made the pronouncement today. The move will essentially over-ride Detroit's elected government, and could be a pre-cursor to a bankruptcy for the "Motor City."

"I look at today as a sad day, a day I wish had never happened in the history of Detroit, but also a day of optimism and promise," Snyder said.

Detroit is in decay. But it wasn't always that way. In the 1950s and early 60s, it was one of the nation's most prosperous cities--the home of the U.S. auto industry, which dominated America's car-park its until Asian automakers began building up their market shares in the 1970s. It had nearly 2 million people at its height of prosperity.

Detroit today has become the butt of jokes and a national symbol of urban rot that many experts believe is irreversible without the city going through bankruptcy and a total re-think of the structure of the city. Exodus from the city, as well as corruption and mismanagement throughout the city's political and bureaucratic structure for decades has created a $327 million budget deficit and more than $14 billion in long-term debt.

The city cannot afford to pay its bills. The reason for the emergency manager, and the hope, is that one person who doesn't have to seek political consensus can plow through the obstacles and create some fast solutions.

The new manager, as yet un-named, will replace Mayor Dave Bing, a Hall of Fame NBA player for the Detroit Pistons in the 1960s and early 70s who went on to become a successful businessman in Detroit.

Mayor Bing on Friday said he doesn't favor Gov. Rick Snyder's decision to appoint an emergency financial manager for the city but is willing to work with Lansing to move the city forward.

"The governor has made his decision, and it was his decision alone to make. While I respect it, I have said all along that I do not favor an emergency manager for the city of Detroit. I will look at the impact of the governor's decision as well as other options, to determine my next course of action," Bing said in a statement.

Michigan has other emergency managers

Other Michigan cities have been taken over by emergency managers--Ecorse, Benton Harbor Highland Park, Pontiac and Allen Park. But Detroit will be the biggest challenge because of its size and scale.

The Emergency Manager Law is unpopular in Michigan, so much so that Michiganders voted to get rid of it by referendum last November. Snyder, and a Republican-controlled State House, have been so determined to use it on Detroit that they rushed through a new Emergency Manager Law in December, flouting the will of the voters a month earlier, and even attached it to a budget measure insuring that it won't be subject to another referendum.

Though Snyder's move was widely viewed as underhanded, he has some cover with many voters because Detroit's City Council and Board of Education has been so bad at their jobs for so long, with both institutions nailed for corruption. Voters outside Detroit do not want to see the State bailout Detroit.

The politics, of course

What remains to be seen in Snyder's move on Detroit is how much politics will be injected. The Governor, nor the Republican State House, has not much love for Detroit as it has been a reliable Democratic voting block for decades.

Karen Lewis, 49, a manager at a fast food store, reflected the resentment some residents feel at the takeover of the predominantly black and Democratic city by a predominantly white and Republican state government.

"It don't take a genius to know what this is all about," said Lewis, who is black. "They want our money and our land. No one cares about us. And we're the ones who stuck around. Not the white folks."

But Bernard Ragin, 41, said he was tired of living in a city that has seen a collapse of basic services. "I don't care who fixes Detroit, as long as the street lights work and the police show up on time," he said.

What ails Detroit is daunting for any manager who will dig into the books and recommend one way or the other if the city should file for bankruptcy.The managers power includes: The emergency manager will eventually have strong powers to develop a financial plan, revise or reject city budgets, consolidate departments, reduce or eliminate the salaries of elected officials, sell eligible assets, lay off workers and renegotiate labor contracts.

Five huge tasks and challenges

-The city's footprint once handled two million residents. With fewer then 700,000 living there, vast sections of Detroit are uninhabited, run down beyond repair and dangerous.
-The school system is atrocious, making it all the more unattractive for any family who would take a flyer on an inexpensive house.
-The city's infrastructure is out of date, has numerous toxic sites and decayed buildings that are expensive to tear down.
-There is unemployment above 20%, and a huge population of welfare recipients and single parents with children on public assistance.

Five signs of life and prosperity in Detroit

-General Motors, after its 2009 bankruptcy, is on a prosperous path of recovery, and has kept its downtown headquarters, which dominates the skyline.
-The Woodward Avenue corridor running north from the Detroit River has Comerica Park (home of the Detroit Tigers), Ford Field (home of the NFL's Lions), a world-class Detroit Opera House, a future arena for the Red Wings, and Wayne State University. It is a spine of economic activity and business and pulls people from the suburbs.
-Detroit is home to the Henry Ford Health Center, which is a top-notch network of healthcare. Cities can't mount comebacks without a strong healthcare system.
-Companies have been adding jobs downtown, including Chrysler, Quicken Loans and Blue Cross/Blue Shield.
-A creative community has been building in the city, drawn by cheap rents and opportunity.

With Reuters

Share This Photo X