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Sunday, March 31, 2013

Detroit - "Olympics of Restructuring"

March 2013 has been a historic month for Detroit.

The Governor declared the City to be in a financial emergency, which of course, was news to no one. Earlier this week, his appointed Emergency Financial Manager, a Kevyn Orr who studied at UM before moving out of state, started on the job. Interestingly, one of his first comments was to note that Detroit is the "Olympics of Restructuring." No disagreement with that observation from this corner.

Emergency managers have a mixed track record, but it seems like Mr. Orr is off to a decent start. Mayor Bing is on board and seems heartened to finally have a "partner" to work with to get things done in the city. The City Council has been remarkably more accommodating than many might have expected. In his first week, Mr. Orr has also extended an olive branch of collaboration, which is encouraging. I hope the personal tax kerfuffle he endured this week also tempers his actions - Detroit has its crooks but it also has many well intentioned people...sometimes things just fall through the cracks. The EFM can cut just about anything or everything, but that doesn't mean the ax will be more effective than pruning shears in all cases. At the end of the day, you can only cut so much - growth and revenue are the most effective solutions to Detroit's problems.

Mr. Orr has a very difficult task ahead of him, and we can only wish him all the best. It is encouraging that the business community is continuing its investments and support despite the civic mess. Dan Gilbert's vision and investments (which I was fortunate enough to be able to tour this month) are quite remarkable and almost exactly what I would have recommended for downtown, and the private funding for new emergency vehicles is as heartening as it is necessary. That being said, I hope such largess doesn't come without too many strings attached (e.g., an implicit requirement that the new vehicles be dedicated to Downtown/Midtown would not be helpful).