A Solution for How Detroit Can Rise Again

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Detroit Skyline
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Hello Everyone:

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Amidst all the hand hand wringing about the city of Detroit, Michigan, Kevyn Orr, the emergency city manager offers up an optimistic view on how the city can save itself.  Mr. Orr points to the examples of northwest Washington D.C., South Beach Miami, and upper Manhattan as now vibrant communities that weren't so thriving fifty years ago.  However, in as little as twenty-fives years, these communities have turned themselves around.  What is the secret to their success?  Let's find out what Mr. Orr has to say, shall we?

Upper Manhattan
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Kevyn Orr cites Northwest Washington D.C. as one example.  In 1991, this section our nation's capital was still reeling from the 1968 riots.  Mr. Orr knows this from his experience of living and working in the city at the Federal Deposit Insurance Corporation, Resolution Trust Corporation, the Justice Department, and Jones Day Law Firm.  Mr. Orr also pints to South Beach Miami in the early eighties as both a dangerous and dull place, even during the heyday of Miami Vice.  Mr. Orr has ambitious plans to navigate Detroit out of bankruptcy by the time his term expires next fall, regardless of opposition from the city's creditors who want to cut public services and make the tax payers return their money.  Sounds pretty typical?

South Beach Miami, Florida
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Mr. Orr's biggest challenge isn't dealing with the creditors nor reviving the city's mid- and downtown business district, which he notes, has been growing from the ground up without government planning.  His primary concern is planting the seeds for growth in the outlying areas where ninety-five percent of Detroit residents live.   When Michigan Governor Rick Snyder asked Mr. Orr to assume control of the insolvent city this past spring, Mr. Orr was hesitant to take the job.  Mr. Orr worked on Chrysler''s bankruptcy in 2009, when he was still at Jones Day.  However, Mr. Orr was convinced that the task was really about common sense and judgement calls.  Quite honestly, the city is in such a dire state that it really needs something I like to call "adult supervision," meaning someone who is willing to take control and make the decisions and execute the action that need to be done.

Northwest Washington D.C.
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The unions have been critical of Mr. Orr's appointment, calling it "undemocratic."  So I suppose taking the time to hold an election for a receiver or lobbying the governor to appoint someone from the unions is much better?  In June of this year, Mr. Orr proposed a plan to slash the $18 billion debt, which includes $9.2 billion in unfunded retirement liabilities, to reduce taxes in order to reinvestment in public services.  I can already smell the Tea Party brewing.  In fact, Mr. Orr went to the unions and asked to negotiate, instead, the labor unions sued the governor and state treasurer.  Good going there.  Then they sued the governor and Mr. Orr, yeah, way to go.  To escape the unions' bully tactics, Mr. Orr Chapter 9 bankruptcy under the United States Bankruptcy Code, which shields debtors from litigation.  This should not have been a big shock to anyone.  You can't ignore blight when you have houses being over run by landscape.

The capital-market creditors aren't exactly pleased about Mr. Orr's plan to treat General Obligation bonds as unsecured debt despite being the backing of the city's "full faith and credit," which said creditors should have known means very little.  The Cassandra-like investors are warning that he is setting a precedent that could mean increased borrowing costs for municipalities in the future.  Mr. Orr's primary responsibility is to the city's 700,000 residents, not capital market creditors, and the 30,000 retirees and workers.  Despite union opposition, Mr. Orr believes he has the support of the people he calls the silent majority.

In the four months since Mr. Orr has assumed control, things seem to be looking up.  New streetlights have been installed and dilapidated houses are scheduled to be cleared.  Detroit has placed orders for new Tasers, vests, cars, and computers for the police department and plans to contract out garbage collection to save an estimated $15 million per year.  Cosmetic upgrades if you ask me.  What's really needed are more substantive upgrades.  Giving the police department new tasers, vests, computers, and cars are all well and fine but what would be genuinely  is a program of community-based policing and a more efficient 9-1-1 system. The big problem is that Detroit is a twentieth century city trying to compete in a twenty-first century world.  Mr. Orr is doing his best to sound enthusiastic about all this cosmetic work, saying "What big city still does some of these services?"I think he's trying to convince himself more than anyone else.

The one silver lining of progress, to date, is Detroit's revitalized midtown and downtown, where venture capitalists and private foundations have invested million.  This is goes to the point I was making regarding an article posted on Planetizen's Linkedin page ("A re-imagined Detroit begins to take shape"http://www.freep.com/article/20130803/NEWS01/308030068/ARISE-neighborhood-cleanup).  Part of my point is that private invest is necessary if public dollars are going to follow.  One example is Quicken Loans chairman Dan Gilbert, who moved his company's headquarters to Detroit, attracting eighty-five other companies through Rock Ventures, Mr. Gilbert's incubator company that provides office space for startups.  These start ups bring with them young, technology oriented people who act as urban pioneers,  These young people, who Mr. Orr believes are the untold story of Detroit, bring with them an entrepreneurial spirit, revitalizing the city's dormant night life and a synagogue (really).

Corktown, Detroit
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Not far outside the city's downtown business district is an emerging hipster (groan) colony of Corktown.  Here, the Motor City "cool kids" are fixing up cheap, rundown houses, and planting organic vegetable gardens.  Before you roll your eyes for the hundredth time and bemoan the coming of yoga studios and a Whole Foods, this trend is actually supporting another point I made about the role of historic preservation.  Most people tend to think of preservation as a bunch of rich folks throwing money to save some obscure building and turn it into a museum.  However, these young people are taking a more hands-on approach by actually fixing up these older building themselves.  Thus, they are rehabilitating the older buildings and re-using them.  After all, "The greenest building is the one already built."  How's that for sustainable architecture?!

Social problems still exist in Detroit.  While Corktown is beginning to take on all the trappings of civilization, you further out and the scenery starts to resemble a John Ford western movie.  There are no shopping centers or grocery stores.  There are about 66,000 vacant lots and 78,000 abandoned or blighted building, including an old Packard factory that takes up 130 square miles.  The yards are over gown and the buildings have broken windows which contribute to a heighten sense of discomfort.   These neighborhoods were deserted decades ago by "white flight" for the suburbs.  These flight into the isolated splendor of the suburbs was accelerated by the 1967 race riots and during the regime of Mayor Coleman Young, which inflamed racial tensions.  Ironically, pot-stirrers the Reverends Al Sharpton and Jesse Jackson are leading the charge against Gov. Snyder's appointment of an emergency manager.  I say ironically because Keyvan Orr is African-American.  In the words of Rev. Jackson, Mr. Orr would create a "plantocracy," that is a "plantation-ocracy.  One reason, a city like Atlanta is thriving, for now, is that its African-American Mayor Maynard Jackson and Andrew Young were able to set aside their difference and work towards a common goal.

Much of the problem is just plain old complacency.  Basically, for the longest time, Detroit was rich, lazy, dumb, and rich.  How does a city that was once the heart of change in the United States during the twentieth century?  Failure to adapt.  The law of evolution, adapt or die.  Again, we can look at Atlanta, for now.  Fifty years ago Atlanta was a small town, now it's among the ten largest economies in the United States.  Even though I recently blogged about the looming financial crisis headed the city's way, what brought the city to its position of prominence was adaptive political leadership that encouraged entrepreneurship and development.  So what's Mr. Orr's solution?

Mr. Orr plan for recovery is to plant the seeds of recovery and leave the city with a plan that will move development out from the city center to the neighborhoods.  "Detroit Future City," formulated by public leaders, community groups, businesses and philanthropist, is the model for Mr. Orr.  This plan focuses on blight remediation, lighting and public safety ins six demonstration districts, with the hopes of it spreading outward.  There is a risk factor that comes with returning control back to the city elected officials-politics.  These is especially fraught with anxiety because it was the corruption, neglect, and mismanagement of the very same leaders that doomed the city.  While civic elections in November offer a glimmer of hope, it still remains to be seem what the future will bring.

While it's easy to fall for Keyvan Orr's optimism, the fact remains that Detroit, Michigan needs more than just someone to "plant the seeds."  We have the example of young, technology oriented urban pioneers going into rundown neighborhoods and taking matters into their own hands.  Private investment is also the key to bringing back the city.  While small improvements light selective demolition and fixing broken windows are a start, encouraging entrepreneurship and development is the real key to bring the Detroit area back.

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