Expert: Different approach could have helped Detroit avoid bankruptcy filing

[313WX]

The problem wasn't the State of Michigan didn't want to help. It's that that they didn't want to help unless EVERYTHING was on THEIR terms, versus forming a TRUE partnership.

Either way, his conclusion is right. Because the city, suburbs and state were too petty to put their differences aside for the greater good, now Detroit, the state's largest city, is in bankruptcy court [[unlike Chicago/Illinois, Pittsburgh/Pennsylvania and New York City/New York who were all too busy to hate).

http://www.detroitnews.com/article/2...#ixzz2fdogYg9m

Detroit — A bankruptcy expert said Friday that the state of Michigan could have taken a more proactive approach to help Detroit avoid its July bankruptcy filing, the largest municipal filing in U.S. history.
Frank Shafroth, director of the Center for State and Local Leadership within the Center for Public Governance at George Mason University in Virginia, published a study Friday that looks at six American cities, including Detroit, to see whether the Motor City’s financial crisis could spread. The other cities are Chicago, Pittsburgh, Providence, San Bernardino and Baltimore.
Speaking at the Michigan Municipal League’s annual conference at Renaissance Center, Shafroth said a Michigan law that allowed Gov. Rick Snyder to appoint Emergency Manager Kevyn Orr was a “post-distressed program,” meaning it came after the financial crisis and provided help too late.
“The concern about Michigan is the law provides the state to interact after[[Detroit’s)gone over the cliff,” he said. “Michigan the state could have been more positive in thinking through how can we help instead of waiting until it was too late.”

[Gistok]

As long as the ineffective adminstration of the city was in place... why would anyone want to bother throwing good money after bad?

Just look at Sumas's issues with dealing with her nusance parking ticket... for another example of inept city government.

Why would suburban or state officials want to deal with that? Did you forget about the Belle Isle fiasco??

I think that the sweeping housecleaning that Orr is doing is a good start towards the future of the city... not the existing entrenched beaurocracy...

[Wesley Mouch]

The problem wasn't the State of Michigan didn't want to help. It's that that they didn't want to help unless EVERYTHING was on THEIR terms, versus forming a TRUE partnership.

Certainly it could have been done differently. But it wasn't.

The State didn't agree to Detroit's terms. And Detroit didn't agree to the State's terms.

I don't see why you pin the problem on State. Sure, the State could have bailed out Detroit earlier. And Detroit could have been receptive to help.

A TRUE PARTNERSHIP involves both parties coming to the table. Perhaps the State was too rigid. But Detroit most certainly was too rigid.

So a deal wasn't stuck. Blame everyone. Don't just blame those with whom you disagree.

[firstandten]

As long as the ineffective adminstration of the city was in place... why would anyone want to bother throwing good money after bad?

Just look at Sumas's issues with dealing with her nusance parking ticket... for another example of inept city government.

Why would suburban or state officials want to deal with that? Did you forget about the Belle Isle fiasco??

I think that the sweeping housecleaning that Orr is doing is a good start towards the future of the city... not the existing entrenched beaurocracy...

I agree, you have two issues that you need to address at the same time. One is the financial situation, the other is incompetent city management. In the state's view both must be attacked at the same time. To partner up with the entrenched bureaucracy at this time doesn't make a lot of sense. Bing has been in the news crying about how Orr mislead him, that they weren't partners. I believe that the original intent was to be partners, but once Orr got into the governance of the city he realized partnership couldn't happen especially if he wanted to fulfill the mission in the time limit that he has. I believe Orr saw total mismanagement. In this case a true partnership may happen if Duggan is elected, I am betting the state is not that thrilled with Benny and his crew should he be elected.

[BankruptcyGuy]

Illinois/Chicago is likely a fait accompli when it comes to bankruptcy.

Harrisburg, PA was related to an incinerator project, not like some of these other cities.

Rhode Island's solution was effectively take away local control if things got near getting bad. That's shutting the doors after the horses are out of the barn.

[Wesley Mouch]

I agree, you have two issues that you need to address at the same time. One is the financial situation, the other is incompetent city management. In the state's view both must be attacked at the same time. To partner up with the entrenched bureaucracy at this time doesn't make a lot of sense. Bing has been in the news crying about how Orr mislead him, that they weren't partners. I believe that the original intent was to be partners, but once Orr got into the governance of the city he realized partnership couldn't happen especially if he wanted to fulfill the mission in the time limit that he has. I believe Orr saw total mismanagement. In this case a true partnership may happen if Duggan is elected, I am betting the state is not that thrilled with Benny and his crew should he be elected.

Which means that Detroiters have a choice here between getting more State help [[Duggan) or less State help [[Napoleon).

Great post. Partnership requires partners. In Bing, Detroit still isn't acting like a partner. Even if Bing has been 100% marginalized, it is his job to be a leader. He should still be working 100% for the people of Detroit to get the most from this bankruptcy/EM deal. That might require swallowing his own ego. Oh well. Difficult times tell us something about people.

[firstandten]

Knowing a little something about how Bing runs his companies and treats employees this is his comeuppance.

[Hermod]

Spending less money than you take in is a sure fire way to avoid bankruptcy.

[skeptic]

Detroit = Micawber: "Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds nought and six, result misery."

[Gistok]

Detroit = Micawber: "Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds nought and six, result misery."

20 Quid?? Even Britain went decimal in 1971... no more Shillings...

I bet a Sovereign that you predate the currency conversion?

[RO_Resident]

The problem wasn't the State of Michigan didn't want to help. It's that that they didn't want to help unless EVERYTHING was on THEIR terms, versus forming a TRUE partnership.

Wow, from the report, it looks like the situation is a lot more complex than 'the state didn't want to form a true partnership.'

The fact that there were multiple players, all with much different perspectives, made the political game all that much more difficult. The state kicked the problem down the road, then tried to put in a final fire block.

The city couldn't muster up the leadership to look at the long-term interests of the city.

Finally, union leadership were looking out for the current membership without regard to existing liabilities.

The GMU short case study looks to me like it came out of a political vacuum.

Analysis. Filing for municipal bankruptcy is a critical step for Detroit to stop its hemorrhaging and to develop, in concert with the state, a realistic plan to overcome its insolvency. Without either radically changed physical boundaries or governance and shared services, however, such an effort is
unlikely to succeed. The appointment of an emergency manager who recognizes that a plan to
resolve the city’s municipal bankruptcy will require not just balancing the city’s books going forward, but also investing in the development of a strong growth strategy is critical.

Redesign Municipal Services. Municipal services are failing. The Detroit metropolitan region is ranked 10th worst of 942 metro regions in the U.S.1
in a measure which considers both the number of units administering common services and each government’s related expenditures. A new Detroit, nearly encircling two failing municipalities, must redesign and
coordinate and share services with other jurisdictions in the metropolitan area to both reduce costs and ensure far more effective delivery of essential services.

Redesign boundaries. Michigan, Wayne County, and Detroit must address the city’s physical boundaries. The city’s 78,000 vacant structures and 60,000 vacant land parcels “present an ongoing public safety and public health concern,” forcing the city, despite the signal loss of population, to provide and maintain services over its 139 square miles—and area that
contains 78,000 abandoned and blighted structures, nearly half of which are thought dangerous, and 66,000 blighted and vacant lots which encourage fires and crime.

Develop a strategy for future growth. It is not enough to design a plan to exit bankruptcy. Detroit, in concert not only with the state, but also with a consortium of philanthropies, civic, corporate, and community leaders to not only match the proposed investment in the Orr plan, but also to ensure a post-bankruptcy growth plan.

If anything, outside of the realpolitik of the EFM law, economic downturn, and complete mistrust between the unions, city leadership, and the state, GMU's recommendations go far beyond what could have happened in the region.

Full web page
http://publicservicecenters.gmu.edu/...-fiscal-crisis

Detroit executive summary
http://s3.amazonaws.com/chssweb/docu...pdf?1379560730

Detroit case study overview [[includes the section quoted above)
http://s3.amazonaws.com/chssweb/docu...pdf?1379561097

[[Edited for formatting)

[professorscott]

This whole thread is ridiculous. Of course there was an alternative, proposed and agreed to, then absolutely ignored. It was called a "consent agreement". Go read back issues of the papers. The City and State agreed on several changes that might have delayed or removed the need for a bankruptcy filing, I believe in all there were twenty-one specific items the City agreed to act on. If the number's wrong, correct me.

As of the date of the bankruptcy filing, the number of those items with which the City in fact complied as it had agreed to: zero.

[Chinman]

have any of you been at any Clowncill meetings? they don't want HELP. they think that they know how to make the City run. They have been doing the same for years and have only helped themselves. Nothing to see here...Move along... all is good!

[mwilbert]

This whole thread is ridiculous. Of course there was an alternative, proposed and agreed to, then absolutely ignored. It was called a "consent agreement". Go read back issues of the papers. The City and State agreed on several changes that might have delayed or removed the need for a bankruptcy filing, I believe in all there were twenty-one specific items the City agreed to act on. If the number's wrong, correct me.

As of the date of the bankruptcy filing, the number of those items with which the City in fact complied as it had agreed to: zero.

I agree with this.

[Chinman]

my wife, back in 2004 was thinking about running for Council. The
Peep's that were pushing her said that they could get her elected but they needed favors. She declined the invite because She wanted to serve the people not the Peep's. I doubt all others have that where-with-all!

[Pam]

20 Quid?? Even Britain went decimal in 1971... no more Shillings...

I bet a Sovereign that you predate the currency conversion?

That was a quote from a Dickens novel, so yes way before 1971.

[Hermod]

Farthing [[quarter penny), Halfpence, Penny, Two pence, Groat [[four pence), Six pence, Shilling [[twelve pence), Half-crown, Crown [[five shillings), Pound [[sovereign), Guinea [[twenty-one shillings)

Believe it or not, I learned it in DPS. It was the last two pages of the DPS sixth grade arithmetic book.

[gnome]

This whole thread is ridiculous. Of course there was an alternative, proposed and agreed to, then absolutely ignored. It was called a "consent agreement". Go read back issues of the papers. The City and State agreed on several changes that might have delayed or removed the need for a bankruptcy filing, I believe in all there were twenty-one specific items the City agreed to act on. If the number's wrong, correct me.

As of the date of the bankruptcy filing, the number of those items with which the City in fact complied as it had agreed to: zero.

+1

i would add that too often certain folks speak of Detroit and its residents as one in the same. I think they are different and one has not always treated the other with the deserved respect.

the small clutch of Orraphobes conjure up long-done hurts in order to blind others from the realities of the non-functioning city services. To wit: your gggrandfather whipped my gggrandfather,so that is why the streetlight is broken. While there can be truth in the grim residue of historical servitude, it can also be argued that an equal number of gggrandfathers fought to end that most heinous of institutions.

But the real truth is that to discuss the crimes of history doesn't get the streetlight lit. It doesn't make the fire trucks work. It doesn't make the police show up. But it does help the Orraphobes keep on keepin on.

Instead of getting things done, let us conflate issues, let us raise our fists and fret about being disrespected. That always solves problems.

[casscorridor]

Only stating the obvious here! Michigan could have easily crafted policies to get Detroit back on track toward greatness. Detroit is like a neglected child turned drug addict that the the parent would rather just forget and move on, without realizing its own role in letting it happen.

[Detroitnerd]

You are all acting as if the House of Detroit collapsed under its own weight.

It did not.

This was a controlled demolition fromt he beginning.

Lansing abrogated its own agreement to share revenue with Detroit.

And did this at about the same time it came up with a plan to deal with cities that were insolvent.

Was Detroit's government perfect? No, but it was democratic, and I think that's the ideal in this country, isn't it?

The situation wasn't ideal either, as Detroit's troubled balance sheet shows.

But don't conflate the state of Detroit's government and what the causes of this current situation were.

[professorscott]

Lansing abrogated its own agreement to share revenue with Detroit.

OK, great; let's go back to 2011 and give the D the, what was it, couple hundred large that people say the state owes it? Cool, now here we are in 2013 and everything is the same, only it's happening a few months later. So I'm writing this post in mid December or early January instead of now.

Meanwhile, for a decade and more, month after month, Detroit was maintaining an inflated staff of unnecessary bureaucrats while its population and revenue shrank, and paying the Mastercard with the Visa. But sure, blame everybody else.

[corktownyuppie]

No, but it was democratic, and I think that's the ideal in this country, isn't it?

Detroit is the poster child for depicting the limits of democracy in creating an ideal anything.

"Your city is disaster." - Everybody Else
"Ah, but at least it's a disaster that we get to control ourselves." - Detroit

[Detroitnerd]

OK, great; let's go back to 2011 and give the D the, what was it, couple hundred large that people say the state owes it? Cool, now here we are in 2013 and everything is the same, only it's happening a few months later. So I'm writing this post in mid December or early January instead of now.

Meanwhile, for a decade and more, month after month, Detroit was maintaining an inflated staff of unnecessary bureaucrats while its population and revenue shrank, and paying the Mastercard with the Visa. But sure, blame everybody else.

I think I acknowledged that Detroit's government wasn't trouble-free and that the situation was bad. And that wasn't my point. My point is that this is what Lansing wanted to happen, and it's completely obvious that it was engineered to go this way on purpose.

It's like having a ship docked in a marina. You agreed to paint it and the marina owner agreed to lend you a pump so it wouldn't sink. You painted it and ... he took away your pump, just as he was readying a change in the club charter about ships that sink below a certain line becoming property of the marina ...

Go ahead and change the subject or argue half-measures. Pile on [[crypto-racist) invective about the people running the city. It doesn't change how this was all planned out way in advance, how it was all done in the sneakiest and most underhanded of ways, down to the date Orr was appointed so Detroit had no choice in the matter.

[iheartthed]

This whole thread is ridiculous. Of course there was an alternative, proposed and agreed to, then absolutely ignored. It was called a "consent agreement". Go read back issues of the papers. The City and State agreed on several changes that might have delayed or removed the need for a bankruptcy filing, I believe in all there were twenty-one specific items the City agreed to act on. If the number's wrong, correct me.

As of the date of the bankruptcy filing, the number of those items with which the City in fact complied as it had agreed to: zero.

Actually, prof, you've missed something here. The consent agreement was not the alternative to Detroit going bankrupt. It was the opposite of the state taking control of Detroit's finances.

The point of the article isn't that Michigan could've avoided taking over Detroit's finances. It's stating two things: 1) the political climate of Michigan didn't allow Michigan much choice but to send the city to bankruptcy once it took control, and 2) the state's policies encourage the state to not step in until municipalities are already severely distressed. I've stated that second point on this forum for a while now...

[EastsideAl]

The state could have sent Detroit what it needed from them - help, money, and resources - instead of what we didn't need and didn't want - a dictator and bankruptcy.