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Detroit bankruptcy: 'Enough is enough,' governor says of decline

July 19, 2013|By Cindy Carcamo

Calling it the lowest point in Detroit history but a chance to stabilize a city spiraling into decline for decades, Michigan Gov. Rick Snyder announced Friday that the state-appointed emergency manager had filed for Chapter 9 protection. 

The move makes Detroit the largest city in the nation to file for bankruptcy. The former auto industry powerhouse is now being closely watched by debt-ridden and cash-strapped municipalities across the United States.

“Let’s get Detroit on the path to be a great city again,” Snyder said in a morning news conference. “Today is a major step on getting on that path .... It’s time to move forward.”

The news conference came one day after Snyder authorized Detroit Emergency Manager Kevyn Orr to seek federal bankruptcy protection for the city, which has an estimated $18 billion in debt. For decades, Detroit has suffered job losses in the auto industry, plummeting population and the inability to provide decent basic services to its residents because there aren’t enough people paying taxes.

The city has also ranked among the top 10 most violent in the United States for 24 of the last 27 years, Snyder noted. He went on to reiterate a long list of city troubles, such as an average police response time of about 58 minutes. The national average is about 11 minutes.

“That’s a tragic situation. If you look at the history, it’s been a large period of decline .… It’s time to say enough is enough,” Snyder said.

Despite the bankruptcy, he made it a point to say that life in the city is business as usual and that normal operations will continue. The bankruptcy will give Detroit the chance to do better and come out stronger, he repeated.  A sign reading “Reinventing Detroit” hung from the lectern from where he spoke.

“People are still going to work and still are getting paid,” he said.

A couple of days ago, Orr sent a letter to Snyder declaring that he believed there was no alternative to filing for bankruptcy. Fiscal mismanagement, population decline, poor services and crumbling infrastructure are all to blame, Orr wrote.

“This has been a decision that in one fashion or another has been working its way through the city for the better part of six decades,” Orr said to a room full of reporters. “We’re finally at the point that we simply cannot kick the can down the road any further.”

Detroit now beats out Stockton, Calif., as the biggest city to seek bankruptcy protection. San Bernardino filed for bankruptcy protection last August.

In its heyday of the 1950s, Detroit touted a population of 1.8 million, making it one of the five largest cities in the nation. Migration to the suburbs, a race riot in the 1960s and the shrinking auto industry contributed to the population losses.

Now, thousands of abandoned buildings with neglected lots can be found throughout the city and only 713,000 residents remain.

Orr filed for bankruptcy with those citizens in mind, he said. Still, city officials plan to be reasonable with those they're indebted to, such as unrepresented retirees with government pensions, Orr said.

“We will be fair,” he said, “Even under the guise of Chapter 9.”

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cindy.carcamo@latimes.com

Twitter: @thecindycarcamo

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