Detroit files for Chapter 9 bankruptcy [UPDATED: Detroit is Eligible]

At least Detroit is the first city to admit it. I feel that if more mayors/governors came out of the closet, we may be able to focus on where our faults lay.

Until then we will just have to wait and see who is able to swallow his/her pride. That would be great for us all.

I'm not shocked by this and I'm on the other side of the Atlantic!

I visited Detroit ten years ago due to work and at the time and I was told by many that it was in a right mess, both in terms of maintaining law and order and "balancing the books". I remember being driven around and thinking that the rough areas seemed to have no end. I truly feel sorry for any good people left in Detroit, especially the public services.

I tell you something though, the film Robocop was way ahead of its time...minus the sci fi aspect, everything else is coming or has come true!

Gotta love this, it gets so bad that people literally run away
from the city, but now somehow its not the cities fault, its
the big bad people who let them borrow the money they
squandered, don't get me wrong, im no fan of banks but
this just seems idiotic to me...... the city should never have
been allowed to borrow that money period apparently.......

What the heck is wrong with our governments these days,
its like they have no clue what responsibility even means.

This is what happens eventually in a debt based economy. The rickity card cities have got to come tumbling down eventually. Sure, debt is not out problem, let the grand kids deal with it. It's disgusting, and a shame, it all catches up eventually, how can people just screw over future generations like that?

I give this story a week of media coverage at tops.

...government goes into too much debt and the private sector and corporations bail out the government. Basically they buy out the debt and save the country but in the process take over completely. All branches of government are corporate after that. Scariest scifi scenario I've seen in a long time.

reply to post by PsykoOps


Scariest scifi scenario I've seen in a long time!

I've thought about the "problem of Detroit" a few times over the last few years, and it seems to me that there are a few things they could have done to make the city viable.

Traditionally, cities are created because there is a draw there to bring people in. There needs to be a hook to establish a city. Much of the West coast was created by mining, other cities were created by agriculture, Detroit was created by the motor industry. Once those original industries are redundant the population and varied business takes over. Cities transform into more diverse places with more than just one industry as a focus.

In the case of Detroit, they relied entirely on one business and the population never diversified. The government there missed numerous opportunities to promote their city as anything other than a motor city. They failed to bring in new industries or promote other businesses even as they watched the motor industry declining and moving out.

Assuming they can create any revenue to do it (maybe with federal funds or private business investment?) I would designate a dilapidated area of the city a regeneration project, close it off, invest in infrastructure, invite a couple of tech businesses in for tax free operation. Then I would create a national marketing campaign to offer those homes to young entrepreneurs and internet businesses, self employed people and so on, at a knock-down rate.

The home working tech and internet business is still growing, and there is likely to be another boom in the coming years as more and more companies abandon their high-rise offices in favor of allowing their employees to work using the technology we have from home. There will be smaller business hubs appearing all over the place, with companies and individuals going a mile down the street to work from their laptop, instead of commuting a hundred miles to do the same job.

This is going to be a growing area for the next decade, and Detroit could become a viable city again if only they can invest in bringing in youth, with the temptation of cheap homes and a community of like-minded people. They need a new industry, and the easiest one to target would be the young tech home worker and self employed 20-somethings who cannot afford to buy elsewhere.

It had to happen, the UAW chased the automakers out of Michigan years ago to other parts of the US with more demands and poor workmanship then the Imports moved in with cheaper and better quality automobiles.

I am absolutely fascinated with Detroit.

When the only way is up, who knows what could happen.

We were in Detroit just this week visiting the passport office. First time ever visiting Detroit and, I have to admit I didn't know what to expect. I have seen the reports and I knew that the city as been in decline for a long time. We got there around 8am and spent most of the day downtown waiting on a passport. I have to say that everyone that we had contact with was really nice and very helpful. Not one person was negative, and they all were willing to help us have a good experience.

I was however surprise how dead downtown was. We rode the people mover starting at the Cobo center, and didn't see a lot of people. We also stopped at one of the casino’s and it was almost empty. I realize that the part downtown we were at was nothing compared to other parts of the city.

I will say this, the part of the city I did see, and the people I did meet left me with a good first impression and will be going back.

I will be praying for the good people in Detroit, they don’t deserve to go through this.

reply to post by Senduko


The rating companies are to blame as much as anyone. It's like giving the football star a passing grade, just so he can keep playing.
www.rollingstone.com...

Here's something that could be eye opening....

Detroit has become the largest city in US history to file for bankruptcy, owing 100,000 creditors $18.5 billion.

100,000 creditors



100,000 creditors

The list of those owed includes the names of all of the city’s active employees and its retirees, a list of properties that have tax claims with the city, numerous bondholders, business creditors and companies that insured Detroit debt.

The largest creditor is the city's general pension scheme, which is owed $2 billion.

A plan devised in June called for city-employed retirees to accept less than 10 per cent of what they were owed under pension plans. But earlier this week the city's two pension funds sued Detroit's state-appointed emergency manager in an attempt to stop the cuts in retirement pay. An insurance group also threatened legal action.

It looks like the present and former employees will get the blunt end.

Justified ?

Detroit may become the model poster boy for other cities and states.

Too much long term debt without a clear view of future income to make da payments.

Being from Michigan, I have to ask..is anyone really surprised?

Corrupt management, ridiculous pension plans that were never going to be able to be realized, people fleeing the city in droves for years. It doesn't take a psychic to see this has been coming for DECADES. It's the same thing that happened to GM.

Bulldoze the city, kick the union thugs out and rebuild.

this is awesome news... Bankruptcy is there to help, and will definitely help the city!

thank god the state government had the 'cojones' to go through with it, and in doing so has earned a ton of respect from the people here.

first step in fixing the out of control debt.

I for one am very very happy.

reply to post by xuenchen


Yeah, let's take the old folks an let them live on less than $200 a month...that's fair.

I gotta wonder though...if you will kick around people like retirees and active employees.....what is to stop them from kicking around the residents.

I wonder if this is less about people and more about developers.
Now don;'t get me wrong...bringing in investors....developers...would bring in tax income..which is sorely needed....but I don't believe in coincidences....
In the last week, these stories hit the papers.
Gilbert's Rock Ventures to offer to buy stalled Wayne Co. jail site

Rock Ventures LLC, a unit of Dan Gilbert’s business empire, will offer today to buy the unfinished Wayne County Jail at Gratiot and Madison, as well the Frank Murphy Hall of Justice, two nearby jails and a juvenile detention facility.
.....

In its answer to the county’s request for proposals, due this afternoon, Rock envisions transforming the jail and criminal justice sites into what it will describe as a mixed-use retail, entertainment, residential and office development that would serve as a gateway to downtown from the east.

and
Developer seeks new life for crumbling Packard Plant

An Illinois developer is in talks with the Wayne County treasurer to buy the notorious Packard Plant out of foreclosure for its $974,000 unpaid tax bill and convert the decayed landmark into a commercial, housing and entertainment complex.

Bill Hults, of Evanston, Ill., told The Detroit News he’s leading a group of investors who want to rehabilitate the crumbling 3.5-million-square-foot plant and build housing nearby.

finally
New proposal for redevelopment of old Tiger Stadium site

According to the DEGC, The Parade Company proposes developing on the site with a scaled down baseball field, retail, housing and Parade Company headquarters.

Maybe it's just investors wanted to get in on the ground floor of the Detroit rebuild....you decide.

Further indications of shenanigans.
Detroit files for bankruptcy, setting off battles with creditors, pensions, unions

An attorney for the pension funds who was seeking a temporary restraining order in Ingham County to block the historic bankruptcy filing said he felt blindsided because he agreed to delay an emergency hearing by five minutes at the request of attorneys for Snyder.

During those five minutes, he said, attorneys filed the bankruptcy petition in Detroit, which generally results in a stay in all other pending lawsuits involving the city. Ingham County Judge Rosemarie Aquilina later issued a temporary restraining order preventing further actions to cut pension benefits, but said she would have issued one to stop the bankruptcy filing altogether, if given the chance.

The judge said the bankruptcy filing was made at 4:06 p.m., five minutes before her emergency hearing began.

A furious Ronald King, a lawyer representing Detroit’s General Retirement System and the Detroit Police and Fire Retirement System, said he agreed to the five-minute delay that he now believes was not requested in good faith.

Yeah,I can see where this is going to be fair to all

This is by far the best thing that could happen to Detroit, let me explain.

I have lived here all my life and have seen Detroit when it was still a viable city, and right through the corrupt Coleman young years, then onto his corrupt criminal successor Kwame Kilpatrick.

The city is currently under massive renovations and billionaires from Michigan and many other states are buying up every building and vacant surrounding land. Billionaires Dan Gilbert, Mike Illich owner of Little Caesars and many more have been buying up land and putting literally billions in to the city.

online.wsj.com...


The reason this bankruptcy is great is the fact the State of Michigan will have to step in and take over, then they can clean house, put in people that are competent and surgically remove all corrupt administrators. Detroit has been bled dry for years by the uselss trash that has been in charge of the city, so it's about time that we see a new beginning because it has been on a downward spiral since the riots of the late 60's.

Time will tell, but Detroit only has an upward climb at this point.

Peace Out,

RT

P.S. I have traveled the entire world for many years, and I still love Michigan and the Detroit area.

reply to post by DontTreadOnMe


I agree.

The 'carpetbaggers' will certainly be part of the restructuring.

Lots of bank loans and financial activity.

The average citizen might be left out or only get minimal benefits.

Originally posted by tothetenthpower

Senduko
reply to post by xuenchen

 

Yeah.. Tenth was so kind to remind me i was 30 seconds to late lol.

But doesn't matter, So what happens next? Marshall Law?

I'm feeling cheeky today

Hmm I'm not familiar with bankruptcies for cities, how the hell does that work?

~Tenth

The current executive council will be removed, and accountants will take over the city. They'll look over the budgets and tax regimes, look for assets that can be sold off, creditors that need to be paid, expenses that can be reduced, investments and policies that should be made to boost revenue or cut costs. One way is to encourage people to move into higher density neighborhoods and abandon other areas that can be returned back into countryside

First thing is - lots of people would buy property in Detroit suburbs just to do it up a bit and "flip" it back onto the market. Problem is the city council sees anyone with money to renovate a home as a cash cow, and charges a "planning permission fee" that far outweighs any profit that could be made. So the city just went into a downward spiral because of this. The other hazard is squatters:

www.myfoxdetroit.com...

Chapter 9 Municipality Bankruptcy is basically a restructuring of debt. I think probably the closest parable to it would be Ch. 11 Reorganization bankruptcy with some key differences.

Important points:

1. Liquidation of assets owned by the municipality are not legally provided for as it could be a violation of state sovereignty (10th Amendment). In other words, the City of Detroit is not up for sale.

2. Municipal bond treatment varies depending on the bond type. General obligation bonds may be restructured and the city is not required to make payments. Special revenue bonds (ie bonds for a very specific purpose, voted in) are secured.

3. Pensions involved would be for city workers only as a debt incurred by the municipality. This would most likely be local firefighters, police, and other city employees. State employees would be in unaffected state-run pensions and so on.

4. City services will not cease as those are provided for via the General Fund. What is solely affected by Chapter 9 are the debts held by the city--that $19 billion. Bonds, loans, and pensions.

reply to post by stormcell


Actually the main reason for people not investing, and renovating homes in Detroit is the fact that they get trashed, stripped of building materials even before the project is finished, but this is mainly in the residential areas.

A more viable police force will have to be established to secure up and coming areas, because let's face it if people get robbed, looted, or assaulted in an area most likely they will never return.

One of the reasons Detroit fell apart was no one gave a squat about anything, if you called the police most of the time they didn't even show up. This is changing in certain areas that large investors are sinking money into though.