OT: Detroit files for bankruptcy
Feel free to lock this thread (would probably be a good idea), but it will be posted ad nauseum if it's not up.
Detroit has filed for bankruptcy.
http://finance.yahoo.com/news/detroit-emergency-manager-files-bankruptcy-201540926.html
I was working at a hotel by Cowboys/Rangers stadium in Arlington a few months ago whenn the Tigers were in town. A big group of guests were from Detroit (Go Tigers) and told me that about 1/7 people in Detroit actually pay taxes, which doesn't sound right to me but also would not surprise me in the least if it were true. The rest just live off welfare or some other type of government aid and contribute nothing to the city. Sad indeed.
It's still a ridiculous percentage but 1/7th hasn't been reported anywhere.
Also, the comment about the rest of the people living off welfare or government money is ignorant and uninformed as well. There are many property owners that do not live in the city, or this country, and have been holding onto properties for one reason or the other. Some just buy up the properties on the cheap and try to sell them quickly. If they do not sell, they wait for the county to take them back in three years. Others are people that move out of the city and just left the house behind to collect taxes. Again, the county takes the houses back anyways after three years and puts them in a tax sale auction.
But as a property owner here in the city, the city needs to focus on lowering the tax rates, properly appraising property values, and actually reviewing petitions to lower property taxes when they come across their desk.
can the city sell acreage to neighboring cities (dearborn, etc) to generate revenue and lower the amount of infrastructure coverage costs to the city?
They could have sold/leased Belle Isle to the state, but didn't.
I think this is a phenomenal idea that no one has seriously pushed. Detroit is just too big. They should give a chunk of the east side to Grosse Pointe, parts of the southwest side to Dearborn, etc. It would alleviate alot of pain with infrastructure costs.
You can fit the entire cities of New York, San Francisco, and Boston into the city of Detroit. Unless, of course, by the "city" you mean the downtown area and not the geographical area.
I believe the above poster's comment was more about geography than economics. You claimed that Detroit was small compared to other major cities but in actuality, as was pointed out above, it's square mileage is larger than that of Boston, San Francisco and Manhattan combined.
I said compared to other metro areas Detroit's size. Compared to similar cities, the city of Detroit is small. And yes, this is clealry about economics because we're talking about why Detroit is declaring bankrupcy.
NY and SF can get away with having smaller city limits because of the economics. They can make tons and tons of money off of a smaller area, because their downtown areas (and just beyond) generate an enormous tax base. Lesser cities cannot do that.
The other thing that NY and SF have is the cities contain the expensive areas to live. Many of the Midwestern cities are less like that (more suburban) so it's important for the city limits to include at least some of the desireable "suburb" areas.
EDIT: So I did a little research, and the above poster is wrong. Here are the land areas of the cities mentioned:
Detroit: 138 sq mi
NYC: 302 sq. mi
SF: 47 sq mi
Boston: 48
Houston: 600
Philadelphia 134
Chicago 227
Dallas: 340
Indianapolis: 365
Columbus: 217
Phoenix: 516
San Diego: 325
Los Angeles: 469
Point is, there are certainly cities smaller than Detroit (though not NYC, by a long shot) but Detroit is certainly smaller than a lot of other cities like it, especially those outside of the East Coast.
Manhattan, SF, and Boston are clearly smaller htan the city limits of Detroit. However, those cities have substantially more people and much higher property values. It's an interesting spatial comparison, and illustrates the physical size of Detroit and the scale of the disaster, but it simply misses other critical factors.
But that's not a function of the geographic size of the city, it's a function of the fact that many people do not want to live, work, or play inside of the city limits. The city is more than large enough to hold many more people and businesses but more than half the population has chosen to leave over the course of the last several decades.
Blaming the size of the city is misidentifying the problem. Holding everything else equal, simply making the city bigger would not change the fact that the tax base is not strong enough to support a stronger delivery of city services because people would simply move even farther away.
Plenty of major cities including Portland (133.4 sq mi), Salt Lake City (109.1), Seattle (83.9), and Kansas City (124.3) are smaller than Detroit, so I think it's fair to call Detroit "midsized" at worst.
I agree with your last comment. I just don't understand why you keep insisting it's because Detroit is too small. All of the stuff that exists in Livonia, GP, and Dearborn could easily fit within the limits of the city. The amenities are in suburbs because they want to be in the suburbs. If the city were bigger, they would still want to be in the suburbs.
I don't think you get it...
if livonia et al was included in detroit, the people would move out of those areas to other cities.
Detroit has way too much land and not enough people, BECAUSE no one wants to live there. What's more, you couldn't possibly raise kids in detroit with a good conscience: the schools are crap (and I am a teacher there), the crime is rampant, and it's just plain dirty...
size is irrelevant when you consider the government of the land.
jdon
I think you're imagining a Detroit-Wayne County merger. Yes, that would help immensely, But the state would have to force such a thing as neither jurisdiction would willingly propose such a thing.
no matter how you slice it, Detroit is effing HUGE for a city of 750,000 people. It was built to house twice as many.
cities want a piece of Detroit? I don't know the area well, but are the bordering parts nic (meaning have a higher tax base) compared to the neighboring city?
Grosse Pointe is probably the only city that borders Detroit that has a high enough tax base to look at buying portions of the city neighboring it. But most of the other cities that border are having their own issues and don't have much to gain.
And if the chunk of land has a reasonable tax base, how would getting rid of it help Detroit?
You're right that it's not realistic to sell parts of the city to neighboring suburbs, because there's no evidence that the suburbs would want to take on the liability. It is absolutely the case, however, that the large physical size of Detroit makes the provision of city services prohibitively expensive. 700,000 people live in a Detroit that was big enough to house 2M people at relatively moderate levels of density. That has lead to blocks with one or two occupied houses. Maintaining infrastructure and other city services like garbage, street lights, buses, police, fire, sewers, etc. designed to serve 2M with a current population of less than half is unsustainable. Detroit absolutely should be putting policies in place to consolidate its population around a central core. Increased density will not only make those areas more attractive, but will also decrease the marginal cost of service provision.
This idea of "just sell off parts of the city" (i.e., real property) raises myriad issues, some noted elsewhere in this thread.
In addition to the other barriers previously mentioned, there's a more fundamental problem to this notion of "just sell some of the city to neighboring cities". Just like any other city, Detroit only owns some of the land in its borders (think parks, city service buildings, etc.). Individuals own a ton of the land in Detroit, and would be within their rights to decline to sell their property. Economically savvy ones may hold out (especially since some of that property was bought on the cheap as an investment) to maximize their sales price. Others may identify with Detroit and not want to sell.
In theory the government could force the sale, but that would be a "takings" and consequently result in payments needing to be made to the individual owners. That would cost money, and it's hard to see neighboring cities raising millages to buy troubled portions of Detroit.
Of course city lines can be redrawn through the political process, but that also won't raise money for Detroit. In fact, it would likely cost Detroit money because the more desireable outlyling areas are also likely the revenue producing areas. So Detroit ends up with a higher percentage of blighted areas. It gets very complex very quickly.
The main thing for me is this whole bankruptcy thing is unbelieveably sad. I hope that this allows a restructuring of Detroit's finances, and allows it to recapture some of its prior glory.
it's feminine accusative singular, not ... whatever that is.
yep, that's my takeaway.
also surprised no one has posted michael scott 'declaring bankruptcy' thus far.
eh it's early.
What a disgrace.
It's going to be a real test for municipal pensions and bonds. The pension issue will take years to sort out, hence this being a career maker for certain folks in the legal profession. Doesn't exactly inspire current city workers and you need police and fire protection. This could undermine public faith in municipal bonds to some degree and could raise interest costs for many cities and municipalities. The ability to tax and collect taxes has always been the bedrock of government issued bonds. This is the biggest city failure ever, so there will probably be some ripple effects.
Sad day for a city that used to be the fifth largest in the U.S.
In the long run that's a good thing, but the can's been kicked for so long that it will almost certainly require hosing at least one cohort of pensioners in the near term.
I am not an attorney, but work with municipal bonds.
This will be fascinating. Does federal bankruptcy law trump the state constitution? The constitution basically guarantees pension benefits, but what is the city going to do if they can't discharge those liabilities? Are pensions superior to bondholders or other secured creditors?, etc... This one or Stockton, CA (do pensions take a haircut along with bondholders?)are going to the supreme court. My guess is 3 years from now.
* Federal Law > State Law, even when the state law is the state's constitution
Wholeheartedly agree. But this is political now, so who knows. If they do not follow bankruptcy law, tax exempt financing will get hit hard.
Does the Gov and his appointed Emergency Manager...do they TRUMP state constitutional law? This will be challenge by the residents of the state along with Detroiters. Remeber this EM law was voted down the by state and city voters.
at the heart of this matter is that the people of the state voted against something and the governor just did it anyway...
I would do just about anything to bring back Detroit...except move there.
I believe the WSJ reported a couple months ago that the art in the Detroit Art Museum is owned by the city--there is no separate tax exempt entity that is the art museum. Therefore, the art is arguably a city asset that could be liquidated to pay for the debts the city has accumulated. I am sure the city will do everything possible to preserve the collection, but there is a chance creditors might try to go after it and have it sold off. Think about the negative PR from that, if it happened, not to mention the devastating long-term effect on the city.
I enjoy the DIA, but I think everything inanimate should be on the table. I'm not interested in seeing the city keep a Howdy Doody doll, but people who worked for the city for 30+ years can lose a significant portion of their future retirement income. That is a terrible situation to be 65+ and have your benefits you worked for slashed. The DIA brings tourists and their money into the city, so you don't want to lose your income earners. But you have to evaluate if the benefits outweight the costs.
It's so short-sighted, though, to sell off an irreplaceable and priceless asset like the DIA to make up a budget shortfall. The DIA is one of the truly amazing and unique things the city has going for it. Selling off the DIA collection would be a huge tragedy.
Totally agree, but the human suffering that would result from slashing retiree's health and pension benefits by 90% would be a huge tragedy as well.