{"id":2456,"date":"2013-10-11T18:42:30","date_gmt":"2013-10-11T18:42:30","guid":{"rendered":"https:\/\/journal.c2er.org\/?p=2456"},"modified":"2018-04-30T22:10:41","modified_gmt":"2018-05-01T02:10:41","slug":"detroit-why-bankruptcy-why-bankruptcy-now","status":"publish","type":"post","link":"https:\/\/journal.c2er.org\/2013\/10\/detroit-why-bankruptcy-why-bankruptcy-now\/","title":{"rendered":"Detroit: Why Bankruptcy? Why Bankruptcy Now?"},"content":{"rendered":"
\"City

City of Detroit<\/p><\/div>\n

Like it or not, the Detroit bankruptcy filing is a page turner. What\u00a0insights and lessons\u00a0might an economic developer glean from\u00a0it? That is our task in this issue. Since July 18th when the City of Detroit filed for the nation’s largest ever\u00a0(in terms of debt) municipal bankruptcy, the Curmudgeon has\u00a0been buried under\u00a0an avalanche\u00a0of different ideas explaining how\u00a0Detroit got into this revolting situation. There have also been a pile of\u00a0development-revitalization suggestions, as well as blame-placing.\u00a0 Blame there is–not surprisingly, blame aplenty.<\/p>\n

The ever-reticent Krugman, for example,\u00a0blames job sprawl and suburbs, and\u00a0a ton of media folk blame the decline on the auto industry or they resuscitate age-old deindustrialization woes. Others\u00a0blame unions, still others wonder about the role of race, state government, the city’s past political leadership–and a\u00a0bunch of extraordinarily brilliant commentators cite the obvious–that almost\u00a0everybody left town. What could the Curmudgeon possibly add to this cacophony?<\/p>\n

What the Curmudgeon proposes is simply to step back a bit and subject some of these “causes of bankruptcy” to a review. Do some of these alleged “causes” of bankruptcy have merit–is there someone-thing more than any other more responsible for the bankruptcy filing?<\/p>\n

Right off the reader might appreciate the Curmudgeon “take” on the bankruptcy filing. Detroit may, or may not,\u00a0be an extreme case of municipal decline–but not all legacy, or chronically declining cities are on the threshold of bankruptcy. Bankruptcy could be looked at\u00a0as the culmination of urban decline. We prefer to view\u00a0the bankruptcy\u00a0as the necessary first step to a future revitalization.\u00a0The bankruptcy can, arguably should, be used to remove those factors which make future investment in Detroit either unrealistic or a waste of money, time and effort.<\/p>\n

Economic and population decline has not been a stranger to Detroit over the last half century. Why does it matter now? Some of the factors cited as causing Detroit’s fiscal collapse have been around for\u00a0such\u00a0a long time that, while they may be part of the background, they are not the reason for the bankruptcy. Nor are several of the factors frequently cited as causes of the bankruptcy going to be part of the solution. Suburbs are not going away and the auto industry that built Detroit is not likely to return to Detroit any time soon. The national economy is the national economy and it will do whatever it will do.<\/p>\n

In our view, the immediate trigger, and prime cause, of the bankruptcy filing is (political agendas aside) unfunded pensions and retiree health care benefits. Until Detroit fixes that problem, it makes little to no sense to pour funds in to revitalize or\u00a0stabilize the city, its infrastructure and neighborhoods. Bankruptcy is the first step in the rebirth of Detroit–and yes, a lot of people will be hurt by it. It is the way in which the pension–and more importantly, the retiree health care benefits are resolved that offer the most page-turning potential.<\/p>\n

The Curmudgeon will be\u00a0the first to admit that this\u00a0is a cold-hearted approach to\u00a0municipal bankruptcy–he really does\u00a0not want or enjoy seeing the\u00a0suffering of individuals and families that will result from\u00a0bankruptcy resolution.\u00a0Also, he is fearful, that\u00a0the filing will eventually be resolved in\u00a0precedential ways which will negatively affect a lot of cities in the future. Detroit’s filing and bankruptcy revolution has the very real potential to be a page-turner in municipal history.\u00a0Both the human loss and the potential page-turning consequences affect all economic developers for years to come. This is an event worth watching as it unfolds.<\/p>\n

In any case, in the sections below, we shall pose several questions, hopefully pertinent to economic developers. First we\u00a0shall take a gander at some background issues which have been cited as responsible for Detroit’s bankruptcy\u00a0and secondly we will focus on the bankruptcy filing itself (which means\u00a0a more fiscal focus on debt–bankruptcy which after all\u00a0is a process to\u00a0resolve unsustainable debt obligations).<\/p>\n

Did Detroit’s political leadership stand idly by and watch the city decline?<\/strong><\/p>\n

Let’s start\u00a0with Coleman Young’s election in\u00a01973.\u00a0<\/span> Contrary to the image Young seems to enjoy today (as a rabble rouser-populist, divisive black activist, anti suburban–all of which he was), Young’s administrative style was quite\u00a0Neo-Liberal, i.e. municipal fiscal-budgetary and employee cutbacks, increased taxation, and close working relationships with the private sector.<\/p>\n

\"Coleman<\/a>

Coleman Young (1981)<\/p><\/div>\n

First things first, however. Off and on throughout his administration\u00a0Detroit\u00a0appeared\u00a0close to default–almost every major city in the Northeast and Midwest was in genuine financial\u00a0crisis at this time. New York City\u00a0taken over by Big Mac in 1976 and Cleveland (which\u00a0defaulted–but did not enter bankruptcy–\u00a0in December 1979 both\u00a0narrowly escaped bankruptcy, largely because structural or fiscal\u00a0alternatives were available to them.\u00a0 During these early years, until 1984,\u00a0Young reduced debt levels from about $3 billion (2013 dollars) to about $1,5 billion (2013 dollars).\u00a0In 1975\u00a0Young, with the city’s unemployment around 20%, confronted the crisis by\u00a0laying off one in five city workers. State aid to Detroit doubled and the state effectively took over the City’s Library System. Each year\u00a0thereafter a sizeable deficit had to be closed–after 1984 often by increased borrowing. By the end of his administration Young’s Detroit\u00a0non pension debt\u00a0burden\u00a0once again exceeded $3 billion (2013 dollars).<\/p>\n

It all\u00a0came to a head in 1981.\u00a0Triggered by a\u00a01980 court decision which awarded $50 million additional funds to the city’s fire and police, the city spiraled into an $80 million deficit (1980) and a $120 million deficit in 1981. To confront the crisis, Young raised the municipal income tax rate for city residents by 50% and 200% for nonresident commuters. He campaigned successfully and won\u00a0a referendum vote on the tax increases. Detroit avoided default–and moved on to its “golden years” of the administration of Dennis Archer (1993-2001).<\/p>\n

Secondly, the economic development cornerstone strategy throughout his twenty year period in office (1973-1993) was\u00a0CBD and manufacturing renewal in alliance with corporate\u00a0movers and shakers. Young was committed to retain a significant\u00a0General Motors presence in Detroit and mitigate the downsizing of the automotive industry. Probably the best example of Young’s GM commitment is the destruction of the Poletown neighborhood.<\/p>\n

\"Heart<\/a>

Heart of Poletown Neighborhood: St Albertus<\/p><\/div>\n

As background to Poletown, the late 1970’s-mid-eighties were transformative years for the American auto industry. Honda, the first Japanese automaker to build a US facility (Marysville Ohio), was in process of\u00a0investing (over the 1980’s) $2 billion in new facilities–in just Ohio. Nissan, Mazda, and Toyota, as well as Mitsubishi and Subaru, followed suit.\u00a0During the eighties, then, Auto Alley was born.\u00a0Coleman Young demanded that General Motors aggressively consider the City of Detroit in any expansion. GM, needing to compete with the new technology and innovation introduced by the Japanese (as well as achieve fuel reduction demands to counter the oil crisis and recession), responded by requiring of Detroit\u00a0no less than one square mile of cleared land, deliverable within eighteen months,\u00a0on which it would build a modern, competitive facility (a Cadillac plant).<\/p>\n

Some argue1<\/sup>\u00a0this was a GM bluff, while others2<\/sup> argue that GM “manipulated the political process to get an ideal site without much cost…”. Whatever–Coleman Young was determined to make such a site available to GM in the allotted time period. Working with the\u00a0adjoining Polish suburb of Hamtramck, Detroit got state and federal funding in order, condemned 1000 homes (including two Catholic churches (sixteen churches in total), removed about 4200 residents (largely white, Poles),\u00a0relocated an\u00a0estimated 600 businesses, and delivered the site on time and under budget to GM.<\/p>\n

The facility was constructed and is still in operation with a workforce of about 3000 in 20133<\/sup>.To be sure, one facility does not an auto industry make and the controversy, image and heartbreak associated with Poletown remain with many to this day–indeed, eminent domain\u00a0as an economic development tool\u00a0never was quite the same (the Michigan Supreme Court has since reversed its Poletown decision). But it would not be fair to say that in this critical period Coleman\u00a0Young and Detroit sat idly by and watched the loss of automotive jobs within the city.<\/p>\n

The administration of Dennis Archer (1994-2001), while like Young’s was a mixed bag–but on the whole, we sense that Archer was able to keep Detroit’s head above water. Almost all agree that he moderated the tone of politics in the city, and between the city and the suburbs. He continued Young’s focus on working with white business and corporate leaders.\u00a0 $11 billion of projects were built in the course of his administration–that helped stabilize the tax base, unemployment,\u00a0and population migration. During\u00a0Archer’s administration crime rates went down and employment levels went up.<\/p>\n

\"The<\/a>

The Renaissance Center<\/p><\/div>\n

Archer poured $100 million into Detroit’s empowerment zone. City employment levels continued their decline, and budget deficits were avoided. Downtown employment,\u00a0 estimated at 421,000 in 1994, was 417,000 in 2000. Detroit City unemployment during the same period dropped from 15.8% to 7.3%.\u00a0The Renaissance Center, negotiated by Archer opened for business in 2003.\u00a0Archer built\u00a0\u00a0the new Tiger Stadium–a very controversial use of tax dollars and incentives–and rightfully or wrongly, he made a deal with casinos to build three casinos which generated an estimated 8,000 jobs and $150 million in new taxes. The casino taxes substituted and pretty much compensated for declining property and sales taxes. Worth note is that when Archer left office in 2000 overall non-pension related debt was just over $4 billion (2013 dollars)–about the same level as held in 1970 (2013 dollars)\u00a0. It can be argued that\u00a0Detroit, as\u00a0of 2001,\u00a0had responsibly adjusted to past\u00a0major population declines and\u00a0their social consequences.<\/p>\n

The administration of Kwame Kilpatrick is another matter. It’s hard not to do a hatchet job on somebody that wound up in jail, along with half his family and most of his “friends” (including the wife of Congressman Conyers who was on the City Council). Detroit’s ex-Treasurer and several pension fund trustees have since been indicted in a pay-to-play scandal. (Last week, on October 11, 2013 he was sentenced to twenty-eight years in jail). During\u00a0the Kilpatrick\u00a0years (to be fair he got caught in the beginnings of the\u00a0Great Recession and General Motors-Chrysler bankruptcies) 25% of Detroit’s population headed for greener pastures elsewhere. Downtown employment\u00a0plummeted to 270,000 from 417,000. From 2005 onward budget deficits skyrocketed–and by any stretch city finances and pensions\u00a0were badly mismanaged. The state, controlled by the same political party as Kilpatrick, could not in good conscience wrap their arms around him and stuff his pockets full of more money. A state-led bailout was out of the question. Indeed, Governor Granholm was responsible for “blowing the\u00a0whistle” on Kilpatrick.\u00a0Besides, Michigan\u00a0state government in this period had its own problems, politics and priorities which tended to consume its attention.<\/p>\n

Our last thought concerning the Kilpatrick administration’s fiscal heritage was than Detroit’s non pension debt burden in 2001 when\u00a0Kilpatrick assumed office was a bit above $3 billion (2013 dollars). By 2005, at the end of his first administration and his reelection year, Detroit’s non pension debt burden had increased by 300% to nearly $9 billion (which included nearly $1. 5 billion of mis-labeled pension related debt testifying to the compromised nature of fiscal management during these years).<\/p>\n

In the course of all this fun, it might be mentioned that Kilpatrick, in the midst of many of these scandals,\u00a0was overwhelmingly reelected in 2005. Nobody forced Detroit citizens to vote for Kilpatrick and …well…\u00a0Enough said. You get what you vote for!<\/p>\n

In 2009, the current mayor David Bing took over to finish out Kilpatrick’s remaining term after he headed off to jail. In January, 2011 Michigan’s current Republican governor Snyder assumed office.<\/p>\n

Did Suburbanization and the\u00a0Flight of Whites and Jobs Push Detroit in Bankruptcy?<\/strong><\/p>\n

Our natural inclination is to answer this question would be to sarcastically observe that if this the\u00a0answer was yes,\u00a0every Northeastern and Midwestern central city would and\u00a0should have\u00a0been in default\u00a0by 2013. Detroit is in bankruptcy and the other cities\u00a0ain’t.<\/p>\n

\"Detroit<\/a>

Detroit and Suburbs<\/p><\/div>\n

Let’s not debate the obvious. Whites did move out of Detroit and left the city to blacks, many of whom were relatively new migrants of the “Great Migration”. In 1940 Detroit was 91% white; by 1980 Detroit was majority black (66%). In 2010, the 1940 percentages were almost\u00a0turned on their head\u00a0with whites 11% and blacks 83%. Also, let’s freely acknowledge that\u00a0the 1967 race riot, one of the nation’s worst, had an undeniable and negative\u00a0effect on Detroit’s population and job loss through the seventies. City-suburban racial tensions were arguably\u00a0considerably worse than any other major metropolitan area in the nation.<\/p>\n

Clearly, white flight and suburbanization were major factors in explaining central city decay–throughout the entire Northeast, South and Midwest. The fiscal crisis which\u00a0confronted by Coleman Young as described above\u00a0was likely the consequence of white (and black middle class) suburban\u00a0migration. Residential segregation and spatial job\u00a0mismatch resulted,–in Detroit and most other Northeastern-Midwestern cities.<\/p>\n

\"Ford<\/a>

Ford Assembly Plant in 1910 Detroit<\/p><\/div>\n

The loss of Detroit’s pre-1980 manufacturing jobs, however, was actually more pronounced than population losses. In 1947,\u00a03272 manufacturing firms resided in the City (overall employment 338,400); by 1972 there were 2,398 manufacturing firms (180,400 employees)–a loss of over 150,000 manufacturing jobs (-47%). Detroit had\u00a0lost nearly half of its manufacturing employment\u00a0by 1972<\/span>. Only a decade later\u00a0105,700 manufacturing jobs\u00a0remained in the city by 1982–a loss of\u00a0almost seventy percent of Detroit’s 1947 manufacturing employment4\u00a0<\/sup>. In 2013 an estimated 23,000 remain.<\/p>\n

Still, the central point is that it was the suburbanization of manufacturing, not the collapse of the auto industry that stripped Detroit of its manufacturing heritage. And that was a done deal thirty years ago. The rise of Auto Alley merely removed the lipstick from the corpse of Detroit’s manufacturing employment. (For those desiring a more detailed review of the impact of Auto Alley on Michigan and the Detroit Big Three see Part II at the end of our review article.)<\/p>\n

Certainly that gap in does not stop some from arguing that white suburbanization and spatial jobs mismatch\u00a0are responsible for Detroit’s current fiscal plight. Paul Krugman5<\/sup>, for instance, citing a recent Harvard-Berkeley “Equality of Opportunity” research report,\u00a0 states that “the city may be just too spread out, so that job opportunities are literally out of reach for people stranded in the wrong neighborhoods”.\u00a0 Tell that to Detroit’s\u00a0Wayne County. Wayne County has\u00a0essentially lost population since 1960.\u00a0In the 2000-2009 period alone, Wayne County lost 187,000 jobs and nearly 69,000 manufacturing jobs.<\/p>\n

To us sprawl, inequality and job spatial mismatch would have been much more\u00a0persuasive thirty years ago than it is today. The relevant spatial\u00a0 job mismatch in 2013\u00a0is\u00a0that\u00a0a Detroit resident had\u00a0to commute to Kentucky or Indiana, not to Wayne County.<\/p>\n

Did Detroit spend itself silly?<\/strong><\/p>\n

Detroit, at the time of its bankruptcy filing had generated a revenue-expenditure imbalance exceeding several hundreds of million dollars annually–and this was projected to grow substantially each following year. Revenues in 2002 were $1.5 (rounded) billion dollars (Detroit’s revenues chiefly\u00a0originated from an income tax, property tax, excise tax, casino wagering tax,\u00a0 parking and tolls from tunnels and bridges to Canada). In 2011 revenues were about $1.2 billion (about 20% decline). Expenses were $1.4 billion in 2002 and $1.1 billion in 2011–about a 21% decline. Positive general fund end of year balances ceased in 2005, skyrocketed in 2009 and after settling down in 2010, resumed its upward momentum in 2011\u00a06<\/sup>. As a sort of benchmark measure, the Detroit Free Press has reported that\u00a0revenue in 2009 as about $1.3 billion (2013 dollars)–about the same as Detroit’s revenue in 1952 (2013 dollars). By 1960 revenue hovered around\u00a0$ 2 bilion (2013 dollars) and stayed a little south of that until 2000. Between 2001 and 2009 revenue declined over 30%. By 2011 revenue had declined to about $1 billion or so. Clearly, the revenue implosion is a post 2000 phenomenon.<\/p>\n

As early as 2011 Detroit’s general fund\u00a0was fiscally imploding and no longer viable without substantial and chronic outside assistance. Why? Was it because Detroit was spending too much and hiring unsupportable numbers of employees?<\/p>\n

\"Coleman<\/a>

Coleman Young Municipal Center<\/p><\/div>\n

In 1959 there were 29,004\u00a0Detroit municipal employees or 58 employees for each citizen\u00a0<\/span> In 1974 (Coleman Young was elected in 1973) there were 27,574 municipal employees7<\/sup> or about 61 citizens per employee; in 1989 there\u00a0were 20,036 or\u00a0about 51 citizens to each municipal employee;\u00a0in 2002 there were 20,799 employees or 46\u00a0citizens per\u00a0employee. Detroit presently has\u00a011, 645 municipal employees with an average salary of $56,491, about 1 for every 61 residents.<\/p>\n

The Washington Examiner using Census Bureau’s 2011 Census of Public Employment\u00a0compiled a study which demonstrated that at least nineteen major\u00a0cities in 2013 had per capita city employee\u00a0ratios far exceeding Detroit’s. San Francisco has 1 to 28 citizen ratio, but Washington D.C. beat it with a 1 to 25. New York has a 1 to 32, Cleveland 1 to 50, Seattle 1 to 56. The same is true in regards to average wage. Oakland’s average wage was $98,705;\u00a0Los Angeles\u00a0$93,\u00a0517; Seattle $81,488;\u00a0Sacramento $78,823; Portland $76,186; Jersey City $ 73,220; Newark 71, 267.<\/p>\n

Detroit’s 11,645 employees with an average wage of$ 56,491\u00a0is not the cause of Detroit’s present bankruptcy filing. A final note on the personnel and wage subject is that over the 2002-2011 period, fire and police employment was reduced by 31% and overall personnel was reduced by 33%. In that police and fire expenditures grew (+22%)\u00a0in this period, this\u00a0demonstrates a disconnect between employment levels and expenditures. Pension costs and overtime are the likely chief culprits.<\/p>\n

In this context, it is also worth mentioning the $80 million deficit to the general fund caused by the city bus system enterprise agency operations. One might wonder why a separate transportation authority might have plugged a rather large hold in the city’s expenditure deficit.<\/p>\n

So, if employee employment levels or wage costs are less the issue–what about a decline in property taxes due to housing abandonment8<\/sup>?<\/p>\n

Over the last ten years, Detroit had a\u00a0 peak property taxable value of $10+ billion; in 2011 property assessed value\u00a0was $9.4 billion–a decline of a mere 7%. Property tax collections, however, had declined to less than an 80% rate. This is probably a combination of socio-economic distress, housing abandonment\u00a0and bureaucratic inefficiencies. In that property tax revenues were 15% of the general fund, the loss of 20% of property tax projected revenues was certainly a serious hole–and one that would be worse each following year. This loss of property tax revenues, however, in an of itself, was, however, in our opinion, not sufficient to justify a bankruptcy filing in 2013.<\/p>\n

\"Motor<\/a>

Motor City Casino<\/p><\/div>\n

 <\/p>\n

The decline of the City’s income tax receipts, almost 30% from 2002 to 2011, also could have caused a more serious deficiency in revenues. The income tax declined in two spurts, 2002-2004 (-13%)\u00a0and 2008 to 2010 (-21%). Both spurts were directly traceable to serious national recessions than to population exodus and housing abandonment. Moreover, these losses were more than offset by the new found revenues associated with the casino wagering tax\u00a0 which greatly expanded in the post-2005 period.<\/p>\n

What was not offset by casino taxes was a post-2002 28% decline in “state shared revenue”. The decline in state funds occurred every year, with one exception, since 2002. The present Republican governor took office in 2011 and the governor throughout the period of post-2000 state revenue decline was Democrat Jennifer Granholm (2003-2011).<\/p>\n

In our opinion, the most serious expenditure issue our research uncovered was pension and health care benefit costs which rose from less than 8% of total general fund revenues in 2002 to over 19% of general revenues by 2011 ($195,314,563 in 2002 to $458,479,862 in 2011. By 2011, $.17+ cents of every revenue dollar was needed to pay the annual required contribution to pension and health care benefits (p.10-11).\u00a0Comparing \u00a0cities, St. Louis at 8% in 2010, Chicago at 20%, and Baltimore, Pittsburgh and Detroit at 16-17%, indicated these costs are wide-ranging across large cities and that Detroit is at the higher end (p. 11).<\/p>\n

The issue of pension costs is further intensified by a 2005, $1.4 billion “certificates of participation” 2025\u00a0issuance which increases debt service obligations which are not included in the above figures. Detroit has no fiscal slack and the unabated rise of annual\u00a0pension and health expenditures since 2002 may arguably be the single most critical factor in the revenue-expenditure general fund imbalance.<\/p>\n

To summarize thus far, our initial take is that Detroit has been in serious decline since 1950 and should be at minimum considered as a “legacy city”, a Great Lakes chronically declining central city of the old 1920’s industrial age. At the same time, the picture of Detroit as a hopeless basket case heading for inevitable bankruptcy is very overstated. Detroit kept its head above water until 2000 or so. Clearly, Detroit was hurting and the 1990-2000 decade was for Detroit a more a fragile stabilization than a modest revival which several Northeastern and Midwestern central cities were able to muster. With competent, even if divisive, city government Detroit had more or less weathered a massive social and demographic transformation which had stripped it of most of its manufacturing base. It is possible the heritage of past city-suburban (racial-based) controversy haunted any Detroit’s late twentieth century comeback, and certainly the economic weakness of the state of Michigan as the effects of Auto Alley unfolded hurt also (but affecting more suburban and second-third tier cities, however–but see our Part II if\u00a0a more\u00a0detailed assessment is important to you). Post 2000 was another matter.<\/p>\n

The City Implodes: Post-2000 Detroit<\/strong><\/p>\n

The triple whammy that hit after 2000 was more than sufficient to render Detroit’s tenuous municipal finance system unsustainable.\u00a0Detroit no longer had the resiliency to avoid a bankruptcy. After 2010, it was\u00a0more a question of when.<\/p>\n

\"Kwame<\/a>

Kwame Kilpatrick<\/p><\/div>\n

There is one very awkward and politically incorrect\u00a0issue\u00a0which\u00a0our portrait of Detroit has put aside. From our perspective, Detroit\u00a0had at some point\u00a0crossed that not so invisible,\u00a0but loudly unspoken, line where race\u00a0had become a critical issue in Detroit’s ability to solve its problems and devise a\u00a0solution to revitalize. Unlike most Northeast and Midwest central cities, Detroit exhibited a\u00a0 post-1980, relatively robust, black in-migration. By 1980, the Great Migration\u00a0was pretty much over–not so for Detroit. With more than 4 out of 5 residents black, Detroit was more than\u00a0a black majority city.<\/p>\n

The lack of racial diversity (yes, we are aware that Detroit’s\u00a0Asian population is growing dramatically) is one thing–but the key element in a\u00a0revitalization of the city had to include the retention of\u00a0the black middle class (and working class). But that was not to be after 2000. The post-2000 flight of the black middle and working class was huge. Detroit lost more than a quarter million residents, 25% of its 2000 population, during the last decade. By comparison, Cleveland lost 17% (80,000) and Cincinnati (10%) but Minneapolis-St Paul grew 31%, Columbus Oh 11% and Chicago nearly 7%. Detroit lost the most by far and\u00a0recorded the highest rate of population loss of major central cities in the Northeast-Midwest. A considerable part of Detroit’s black middle class left the city after 2000.<\/p>\n

Brooking Institute\u00a0demographer William Frey in his analysis of the 2010 census data10<\/sup> associated “black flight” as a prime factor in Detroit’s population loss (about 41,000 whites left\u00a0but\u00a0more than 185,000 blacks).\u00a0Post 2000 population trend\u00a0contrasted rather dramatically from the previous decade (1990-2000) when 106,000 whites and about 2,000 blacks left Detroit. Not only was the 2010 decade was the first decade ever that the number of \u00a0black city residents did not increase, but it was the first decade that blacks left the city in relatively huge numbers. This post-2000 exodus almost inevitably included\u00a0much of Detroit’s black middle class. The exodus of\u00a0Detroit’s black middle class\u00a0was Detroit’s first bankruptcy whammy.<\/p>\n

The scandals-mismanagement of the Kwame Kilpatrick administration-family was the second whammy. The Mayor eventually resigned, was convicted of 24 federal crimes including RICO,\u00a0and went to jail. In 2005 Time\u00a0Magazine labeled him as one of the nation’s worst mayors, ever.\u00a0His reelection in 2005 is testimony to a suspicion that effective governance in Detroit would be difficult to sustain in the future. The political reset button had to be pushed.<\/p>\n

We\u00a0won’t belabor the obvious third\u00a0 post-2000 whammy(s): the 20o1-2003\u00a0\u00a0“dot com recession” and\u00a0the 2008 Great Recession. The weakness and near collapse of the national economy, with all that implies (including two of Detroit’s Big Three Auto firms going into bankruptcy) was, arguably Detroit’s coup de grace.<\/p>\n

Suffice it to say, after experiencing these losses, an overall\u00a0weak national economy (the jobless recovery-remember)\u00a0and the governmental mismanagement, there was no way Detroit’s precarious fiscal condition could be sustained. Although statisticians and methodologists\u00a0will someday, no doubt conclusively identify which of these events was the most significant, it matters little to us.\u00a0\u00a0One followed the others or overlapped.\u00a0Any statistical correlations in our opinion are unlikely\u00a0to\u00a0shed little real light on the question of which is most important. To argue that any one punch in the gut was the most significant is a bit arrogant, even for the Curmudgeon.<\/p>\n

Debt and 2013 Bankruptcy<\/strong>:<\/p>\n

At this point we switch our focus to the bankruptcy filing itself. We are not in this review going to comment upon the post-bankruptcy economic development revitalization plan of the City. That would be interesting, we admit, but first things first, let’s get a better handle on the bankruptcy.\u00a0Detroit’s bankruptcy filing outlined a $18 billion dollar municipal debt structure:<\/p>\n

\"It<\/a>

It Speaks For Itself<\/p><\/div>\n