A model in Detroit's post-bankruptcy plan

Many private and public institutions had to come together in a shared vision for the city to allow it to emerge so quickly and well from America's largest municipal bankruptcy.

AP Photo
The skyline of Detroit is seen on Nov. 7, the day a judge cleared the city to emerge from bankruptcy.

Over the past century, Detroit has served as a world-class model in two areas: manufacturing (cars) and music (Motown). Now add a third: How to emerge from a municipal bankruptcy with amazing speed, cooperation, and hope. 

On Friday, a federal court approved a plan for the city that represents a well-negotiated sacrifice by various stakeholders combined with pledges of substantial investment by private and public bodies. The plan erases $7 billion in debt and will provide $1.7 billion in new money. It took only 15 months to negotiate and may prevent years of litigation and stalemate.

“We give the city back with the fresh start and second chance the city needs,” Judge Steven Rhodes said.

The plan’s lesson for other troubled cities lies in its “grand bargain,” which ties together the interests of several philanthropic foundations, municipal workers, and the Detroit Institute of Arts. The big charities will give millions to help save the museum’s valuable art collection, and that money will help save most of the pensions of city workers. Benefactors of the museum also made large contributions. This part of the deal, said Judge Rhodes, “borders on the miraculous.”

In addition, the insurers of the city’s bonds will be given a financial stake in a few of Detroit’s money-making operations, such as a public arena, a traffic tunnel, and public garages. If all parts of the plan hold together, Detroit might live up to its new motto as “America’s great comeback city.”

The negotiations required finding a common vision among many institutions to overcome their differences. That effort was aided by a new spirit of community among the city’s nearly 680,000 residents, as seen in the efforts of groups like Detroit Future City and Arise Detroit! In addition, the federal government, the state of Michigan, and Detroit’s surround municipalities also added financial support.

“We need to recognize that all of us came together,” Gov. Rick Snyder said.

Detroit still has far to go to reduce its blighted areas, prevent a recurrence of government corruption, and bring viable businesses to neighborhoods. The city schools need much improvement as does public safety.

“Detroit’s inability to provide adequate municipal service runs deep and has for years,” Judge Rhodes said. “It’s inhumane and intolerable and it must be fixed. This plan can fix these problems.”

The plan that brought an end to America’s largest municipal bankruptcy is only a start. But the collective hope that brought it together should propel Detroit to rebuild itself, as so many other American cities have done. Detroit’s greatness may not lie in its past but in its future.

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