Changing Gears is a public media project about the future of the industrial Midwest. Each week, reporters Dan Bobkoff in Cleveland, Niala Boodhoo in Chicago and Kate Davidson in Ann Arbor cover issues of interest to the Great Lakes region. Changing Gears also sponsors public events and conversations.
Detroit is running out of money, and now it’s time for drastic action.
Officially, leaders expect they’ll be out of cash by the end of June. For the past few months, a review team has been looking at the city’s finances to determine whether the state should appoint an emergency manager in Detroit.
Today, Michigan’s governor hinted strongly that there’s enough of a problem for him to appoint an emergency manager.
But, in an effort to preserve some local control, and avoid a political showdown in the state’s largest city, Snyder has instead offered a “consent agreement” to Detroit leaders.
They’ll stay in power, in return for a state role in the oversight of financial matters.
The agreement was presented to Detroit’s city council this morning, and the city has until March 28 to respond. If it’s approved, the document could change Detroit for years to come.
“This week we sent out over 500 letters to property owners in Hubbard Farms, Springwells Village and Southwest Detroit,” he announced, “telling them if they own a home adjacent to a vacant city-owned lot, they can purchase this lot for a mere $200.”
“No coming downtown,” the mayor said. “No added bureaucracy. The city will mail back the deed.”
The initiative is a response to the overwhelming problem of abandoned property in Detroit. It’s a problem we explored in our stories about Detroit “blotters” — which you can see here and here.
Blotting describes what happens when homeowners annex the vacant lot, or lots, next door. They create expanded properties, between the size of a lot and a city block. Sometimes, residents can purchase these side lots. Often, they’re constrained by bureaucracy or money, so they may just throw up a fence to ward off the dangers of abandonment. Continue reading “Blotting Update: Detroit Wants To Sell You This Lot”
Detroit faces the possibility that its elected officials will be superseded by a state-appointed emergency manager. It’s happened in four other Michigan cities and there also is an emergency manager for the Detroit Public Schools.
Our partners at Michigan Radio compiled a list of Seven Things You Should Know about Michigan’s law. It’s a complicated situation that’s different from other places in the Midwest, but there are some similarities with what’s been done elsewhere in the United States.
Here are the answers to some questions about Michigan’s law.
Q. Why does Michigan have an emergency manager law?
A: The original process was put in place in 1988, in response to deep financial problems in Hamtramck, an enclave of Detroit . (You may know Hamtramck best as the home of a General Motors plant.) In 1990, the law was strengthened to provide “emergency financial managers” for municipalities as well as school systems that were facing bankruptcy.
Earlier this year, the 1990 law was amended to strengthen the powers of what are now called emergency managers. These managers, who would be appointed by State Treasurer Andy Dillon in consultation with Gov. Rick Snyder, essentially replace elected officials during the term of their appointment. Continue reading “Q&A On Michigan’s Controversial Emergency Manager Law”
Three stories making news across the Midwest today:
1. Bing defiant over looming Detroit takeover. A state takeover of Detroit and its ruinous financial situation has seemed imminent for weeks, if not months. On Thursday, Michigan Gov. Rick Snyder told Mayor Dave Bing he would initiate a 30-day review of the city’s finances, a precursor to the appointment of an emergency manager. Bing then gathered the city council and other leaders and declared his opposition. “We are Detroit,” he told the Detroit Free Press. “Detroit needs to be run by Detroiters.” Free Press columnist Rochelle Riley wonders whether the unified front is too little, too late. She asks, “Why does it always take a crisis?” before city leaders finally work together.
2. Milwaukee mayor China bound. Milwaukee Mayor Tom Barrett leaves Sunday for his second trade mission to China. He’ll spend a week visiting Beijing and the growing port of Ningbo, which already has an informal sister-city relationship with Milwaukee, according to the Milwaukee Journal Sentinel. Barrett tells the newspaper he’ll pitch the city’s strengths in manufacturing and industries related to water, food and beverages in hopes of luring more jobs and investment. He’ll also talk to Ningbo police commanders about purchasing Harley-Davidson motorcycles for officers. The Metropolitan Milwaukee Association of Commerce’s China Council will pay for the trip. In a related item, Chinese officials tell the Associated Press they want to convert some of the country’s U.S. government debt into investment in renovating American roads and subways.
3. U.K. investigates Groupon practices. Chicago-based Groupon Inc. is being investigated by Britain’s Office of Fair Trading over concerns about unfair promotions and exaggerated savings, Bloomberg reports today. The investigation commenced in July and expanded after receiving a complaint. “Given Groupon’s track record, we have serious concerns about its ability to adhere to the advertising code,” the U.K.’s Advertising Standards Authority said in a statement. In a written response, Groupon said it is “constantly evolving business process” and cooperating with the probe.
Three stories making news across the Midwest today:
1. Detroit’s fiscal crisis looms. The amount of time Detroit has to address the city’s looming financial crisis is “relatively short,” Gov. Rick Snyder tells the Detroit Free Press, before he must decide whether to commence a financial review of the city under the state’s controversial emergency manager law. The city could be insolvent as soon as April, according to reports. In response, the city council issued a proposal that was more far-reaching than Mayor Dave Bing’s earlier this week, proposing a 20-percent income tax increase and 2,300 layoffs, among other items. “We are running out of time,” councilman Andre Spivey tells the newspaper.
2. Groupon stock sharply declines. Shares of Chicago-based Groupon are “getting pummeled” for the third consecutive day, reports the Chicago Tribune this afternoon. They are now trading 15 percent below the initial public offering price of $20 on Nov. 4, and down 35 percent since Friday’s closing price of $26.19. Groupon had cautioned investors that trading could be volatile because it offered only a 5.5 percent stake in its IPO.
3. Shale boom could miss Ohio. Shale gas may not create the economic prosperity across Ohio that Gov. John Kasich has touted as a jobs creator, warns a new report. The problem? The gas industry has been too successful. There’s so much natural gas supply across the U.S. that prices are falling. And no one is quite sure how much actually lies beneath the Buckeye State, reports The Plain Dealer. The jobs gain, once predicted to number as many as 200,000, “will happen on some scale,” Andrew Weissman, executive director of Energy Business Watch, tells the newspaper. “But the question is whether it moves quickly or whether it moves slowly so that it only has a modest impact on Ohio’s economy.”
Detroit faces a bleak fiscal future and needs to change. In a hurry.
That’s the message Mayor Dave Bing delivered in a speech about the city’s grave financial condition. Detroit faces a cash-flow shortfall of $45 million as soon as April, at which time it would be insolvent. Without immediate changes, the state of Michigan will likely appoint an emergency manager whose power exceeds the mayor and city council.
In order to stave off a move that would be unprecedented for Michigan’s largest city, Bing has proposed a variety of fixes: an across-the-board 10 percent pay cut for city employees, increasing employees’ share of health-care premiums by 10 percent, a not-quite-1-percent tax increase on city businesses, the privatization of the city’s lighting and transportation departments and retiree pension reforms.
He also requested $220 million from the statehouse, a give-back for cuts in revenue sharing (a request that almost certainly will not be granted).
Is Bing’s overall plan enough to thwart state intervention? Reviews are mixed.
With his city’s financial fortunes sinking, reports say Detroit Mayor Dave Bing tonight will propose
privatizing the bus system and its electrical system in a bid to save $100 million.
Bing is set to speak at 6 pm ET, in a speech his office says will offer “solutions to long-standing service problems.”
A recent financial audit showed the city could run out of cash by July, even if it cuts 2,200 jobs.
The Detroit Free Press says that includes a plan to find private managers for the city’s bus system, and to find outside operators for Detroit’s electrical system. Earlier this month, bus drivers staged a brief sickout to protest what they maintain is an unsafe system. Meanwhile, the city’s electrical system has failed several times in recent years, leaving downtown offices in the dark.
Catherine Phillips, a union negotiator, told the Detroit News that the privatization of the Detroit Department of Transportation is estimated to yield $30 million in savings.
The paper says the city could seek outside managers for the bus system as soon as Dec. 1. Watch Bing’s speech tonight and let us know what you think of his proposal.
In the 1950s, more than 1.8 million people resided within the 140 square miles that comprise the city of Detroit. Some sixty years later, the city’s population has tumbled to 713,777, according to 2010 U.S. census figures.
The geography hasn’t changed.
From deploying police officers to demolishing vacant structures, the mechanics of governing a spread-thin population have become a central challenge for the city’s mayor, Dave Bing. He doesn’t sugarcoat the glum news for remaining residents: The city must shrink.
“We cannot continue to support every neighborhood in the city of Detroit,” he said last week while speaking at the Charles H. Wright African American Museum. “We don’t have the funding to support everybody.”
Far from using grandiose rhetoric, Bing has delivered unpopular sound bytes on a regular basis since taking office in May 2009. Halfway through his term, one of his biggest accomplishments just might be tempering expectations.
On Tuesday morning, Detroit Mayor Dave Bing gave a candid assessment of the Motor City, its struggles and hopes for its future during a press conference with reporters in town for “Transformation Detroit,” a three-day event examining the city’s future. Here’s a glimpse at five interesting statistics and quotes Bing delivered:
1. Asked about the most difficult aspects of luring outside companies into Detroit, the mayor said health care and pension costs prevented the city from offering competitive relocation packages. “If we don’t have health-care reform and pension reform, we’re just blowing in the wind, quite frankly,” Bing said.
2. He said more than 80,000 empty home are located in Detroit, contributing to the blight outsiders often associate with the city. Under Bing, the city demolished approximately 3,200 homes in the past year. His goal is 10,000 by the end of his term. “It’s the tip of the iceberg,” he said.