<p>Debt issued after a muni bankruptcy can be very good debt to buy because the risk of it not being paid is far less than many other forms of debt.</p>
<p>If Detroit can wipe out its debt, then future bond sales will go fine. Why? Because the markets have very short memories. They demonstrate that regularly. Witness lending to S. America!</p>
<p>But I wonder if Detroit can in fact wipe out enough debt. Put aside the pension issue - which will be litigated and may take years - the population base is old, poor and decreasing in number. (Yes, there are revivals but in such a gigantic area they are more like little clumps separated by blight.) How would that project? The debt burden might be cut to the level of a functioning city of 700k people … but Detroit needs massive money to fix infrastructure, which that base of people can’t afford … and who knows how many people will be there in 10 years? </p>
<p>I wouldn’t be surprised to see Detroit go closer to 500k people. Why? A main reason is that work is in the suburbs and the cost of buying in the suburbs isn’t that much - and it’s safer with lower property taxes, much better services, a quantum difference in schools, etc. So where will the kids come from? Why would a working family with suburban jobs move into the city? They’d have to pay for private school and that alone would be more than the cost of a house payment in any number of decent suburbs. (The house in Bloomfield Township - with a Bloomfield Hills address - where I lived as a child is probably worth maybe $220k. Really good schools, low millage, great services, very safe.)</p>
<p>If you project 500k people or something above that but in the neighborhood, then … </p>
<p>In other words, the uncertainties about Detroit’s physical future and the costs of making its infrastructure functional are both real barriers for future bond sales. Compared to those, the stain of bankruptcy would be nothing in the markets.</p>
<p>BTW, one of the reasons I really didn’t like Mayor Young was he believed in tearing stuff down. I think some of that was visceral: his neighborhood had been destroyed in the name of renewal (and racism) and rather than take that as a sign the past should be treasured he took it as a prod to wreck the old. Like knocking down the only Civil War era block of buildings rather than leave them vacant in hopes of future use. So he was literally the opposite of the kind of starry eyed liberal wanting to preserve and putting everything in the name of community. He was about big business and leveling stuff to make way for big projects he hoped would bring big jobs. He was wrong about most of that: GM’s Poletown plant hasn’t brought much. (Look up the Hamtramck Assembly Plant for a taste of the history. And btw, to show how things change, Hamtramck is now a center for Bangledeshis.)</p>
<p>Given Detroit’s loss of population, I do not see why Detroit cannot sell big parts of the city to neighboring counties and use the proceeds to pay off debt. Transferring responsibility for parts of the city to other localities would also enable those areas to carry the cost of police, fire, etc for the people living there.</p>
<p>Or maybe the city could be taken over by the State and run better.</p>
<p>The cities immediately surrounding Detroit are having a rough time too though. The further you get from the center, the better things get. The cities immediately surrounding Detroit don’t want parts of the city. They can barely afford to keep themselves afloat. </p>
<p>The city has been taken over by the state- that’s what the Emergency Financial Manager is all about. The state declared the city to be in a state of emergency financially and sent in a manager to take it over and fix it. </p>
<p>What the city needs is more people like Illitch, Karmanos, and Gilbert to invest in it, to build things there, and to bring things there. They need to get rid of the waste and corruption and focus the money on services for the people, starting with safety.</p>
<p>There have been many plans to shut off parts and let them revert to nature with no services. But here is where political dysfunction rules: the Council won’t even approve urban farming on anything more than a small scale. A farm was just approved by the Emergency Manager - it will start by planting trees - but they could do much more. The Council refuses to accept reality.</p>
<p>Plans were floated years ago to break Detroit into 3 or 5 separate entities that could organize the vast area of the city into smaller, more sensible units. It’s surprises me how reluctant people are to give up on old, artificial city borders.</p>
<p>Another issue has surfaced as well - as in Flint - meaning the relocation of residents from battered areas to create denser, safer neighborhoods where services could be restored. And yet, even though the properties are worth next to nothing (literally, look at the amounts in sales for past due taxes), people refuse to leave. Even when they’re the only house on a block. </p>
<p>Some years back, a group proposed establishing absolute protection zones for shoppers around some of the intersections where stores were clustered. The idea came from the sad reality that inner city kids have in many areas been sort of locked into small neighborhoods where they are relatively safe from other kids. Cross over the line and you could die. The bus lines became essential safety lines to move young people, mostly then young men, in relative safety. But they had nowhere much to go. The shopping areas became confrontation zones. So the idea was police heavily in visible presence areas where people could come without fear and use that to attract merchants. Well anyway, the city wouldn’t buy it. I think they felt it would send the wrong message about the city, as though people somehow could be told water is sour cream. (That’s a Sholom Aleichem reference.)</p>
<p>The Council needs to go. I don’t understand how they can be so self-destructive. It doesn’t make any sense to me. How does it benefit them? It clearly doesn’t benefit Detroit.</p>
<p>The Council has changed significantly, but it still acts the same. It’s the culture of the city government and it goes deeper than the Council, I think.</p>
<p>Interestingly, there has been a significant increase in police presence over the last two weeks around the Ren Cen. There had been three incidents of muggings that all employees in the Ren Cen were alerted to. These occurred during the lunch hour and women’s purses or phones were stolen at gun or knife point. Initially, there was an increase in Ren Cen security presence but this week, the DPD has been parking with their lights on along the streets where employees have to walk to get to their cars and in one of the parking lots. </p>
<p>Ironically, I feel MORE nervous with the increased police presence. It’s an interesting phenomenon. I should feel more safe with the police around everywhere, but it reminds me that there is a real threat - a reason they are there. I mentioned it to someone else on the shuttle to our parking structure today and she agreed. I guess we can be in denial when it isn’t right in our face. I’m thankful for the increased security though.</p>
<p>That makes sense, BM. </p>
<p>That makes me so sad about the Ren Cen. My fiance and a bunch of friends went to Youmacon at the Ren Cen last month and they were all kind of amazed at how safe they felt (his brother lived in Detroit for a few years while working in DPS and said it’s the safest he’s ever felt there). </p>
<p>Yes, obviously it’s partially because it’s a huge event, but I was hopeful that things were turning.</p>
<p>What then is the solution? </p>
<p>If half the population left, where did they go? Usually when cities lose population the population goes into the suburbs. I get the impression that did not happen to Detroit.</p>
<p>I loved when all the Youmacon kids were there. It was so fun to see all the costumes at lunch on Thursday 
</p>
<p>The population left the state, razorsharp, not just the city. The whole state population declined. Michigan is the only state in the country with a declining population over the last 3 years. Originally, they went to the suburbs, but now, people left the state because of the recession. </p>
<p>Several corporations were involved in an effort to get people to move to the city by giving significant financial rebates for buying a house or signing a lease in certain areas near downtown. A lot of people did move to that area of the city, but the rest of the city is disappearing. There are several things that need to happen to get people to move to the city. The abandoned, uninhabitable houses need to be demolished. The insane cost of insurance (car and home owners) need to come down some and the property taxes have to be lowered. There is no incentive to live in the city when you have to pay double the income tax (people who work in the city pay like 1.2% but residents pay 3%) plus thousands of dollars for auto and home owners insurance and 3 x the property tax. All that combined with out of control crime, unresponsive 911 services… fewer fire, police, etc. Who is going to move there when it’s like that?</p>
<p>You have to fix those things to get people to go there.</p>
<p>The new police chief does seem to be making significant efforts to clean things up. On Monday, we could see they had shut down a road and there were helicopters and police cars everywhere. They raided an apartment complex and arrested 50 people who had outstanding warrants- all living in one apartment complex! That’s just nuts.</p>
<p>BTW, there is an article in the NYT about Stockton emerging from bankruptcy without fixing its pension issues - which it can’t because it’s part of the CA system. Skepticism about the city’s financial future.</p>
<p>BUT … Stockton is in CA, not MI and it’s problems come from massive over-investment and crash, a boom & bust. Stockton will grow. Detroit has been busting for decades. It peaked in the late 1950’s.</p>
<p>[Negotiations</a> with creditors, appeals next in Detroit bankruptcy process | The Detroit News](<a href=“http://www.detroitnews.com/article/20131203/METRO01/312030072/Next-up-Detroit-Plan-adjustment-settle-debts]Negotiations”>http://www.detroitnews.com/article/20131203/METRO01/312030072/Next-up-Detroit-Plan-adjustment-settle-debts)</p>
<p>As an analyst said in an interview the other day, California and Illinois are relatively wealthy states; Michigan is not. California cities and Illinois cities will weather this era of financial distress much better than Detroit will.</p>
<p>I’d be careful making that assumption about Illinois. The issue for Chicago is that they can’t get business to stay or come in. It’s shaky there, and the violence issue mirrors detroits from 30 years ago. </p>
<p>I don’t want my kids to move back there, which is part of why we left. I find the Detroit story so heartbreaking, and I have no idea about Stockton, but I think Chicago in thirty years is the same story. Maybe faster.</p>
<p>I just spent some time in Chicago. I heard a bunch about how “unions” are driving out business … and then everywhere I went I heard “this area used to be terrible” or “this entire area is now really desirable.” The improvements, the investment in housing and commercial areas away from the wealthiest sections has been considerable. </p>
<p>What kills places can be simplified to a lack of money. Revival is the bringing in of money to a poor area. That is happening in big parts of Chicago. The opposite is true of Detroit. Money left Stockton but that was a classic bust.</p>
<p>Chicago is a case of extreme wealth inequality, but it has a lot of good things going for it. Their tech sector is home grown and has a very commercial feel. Young people are still flocking to the city. The city has more and more neighborhoods that are getting better, and the suburbs have expanded about as far west as one can go. Living across the border in Indiana I envision the once great city of Gary being swallowed up by developers and truly becoming a Chicago suburb in the next twenty years. I don’t imagine that Chicago will become Detroit because they have much more economic diversity.</p>
<p>I’ve spent over forty years living in Chicago. I can say unequivocally that the city is losing not gaining population. Lost five percent in the last census. </p>
<p>Let’s meet back here in thirty years and talk.</p>
<p>Well Poetgrl, today’s Wall Street Journal has an interesting take on the return of corporations to the cities; specifically Motorola Mobility’s moving of its headquarters from the suburbs to the former Sears Tower in downtown Chicago.</p>
<p>I don’t know if the trend that the WSJ thinks is happening is a trickle or a flood, but I did form an opinion or two about the desirability of various internships that Lake Jr. has applied to for the coming summer. I noticed that many if not most of the engineering firms are situated in the burbs or small cities, where public transportation is not ample. I kept asking myself ‘everyone wants a job, but how do these firms expect to attract talented young people when the R&D lab or the engineering facility is in the middle of nowhere?’</p>
<p>According to this, Chicago gained population between 2010 and 2012: </p>
<p>[Chicago</a> (city) QuickFacts from the US Census Bureau](<a href=“http://quickfacts.census.gov/qfd/states/17/1714000.html]Chicago”>http://quickfacts.census.gov/qfd/states/17/1714000.html)</p>
<p>:confused:</p>
<p>Some of the nicest people I have met were those I met in downtown Chicago. The city was very clean for a city. I went in the summer and it was beautiful. Unfortunately, I drove just outside the downtown area only to see drug dealers etc. </p>
<p>I still have yet to learn what the solution is for Detroit. Maybe the people living there will just have to continue living with poor services and high taxes and high insurance rates. </p>
<p>I remember reading an article about the old Detroit mansions built in the early automobile era which had fallen in disrepair and were on sale for very little money. I sort of wish I had one of those, if it came with an guard.</p>