Detroit Reborn After Huge Bankruptcy 07/15 12:27
DETROIT (AP) -- It's been five years since Detroit bottomed out after
decades of decline, admitting in the largest U.S. municipal bankruptcy filing
ever that the country's one-time industrial engine could no longer pay its
The turnaround since then has been remarkable, with major investments that
have brought new jobs, the rebirth of neighborhoods whose best days were half a
century ago and the restoration of street cleaning and lighting --- services so
basic yet important to a sense of community. It also cost some people more than
Jean Estell, 65, worked about three decades in Detroit's recreation and
public works departments before retiring in 2004. Like other retirees, she lost
part of her pension and all of her retiree health coverage in the bankruptcy
settlement with creditors, and she's worried about being left behind in this
"I'm glad we're doing better. I want us to do better," Estell said of the
city. "But it looks like somewhere or other they can find some money and give
us our money back. At least some of it."
Before the bankruptcy settlement, she received about $2,300 per month.
Estell said she gets about $63 less per month from her pension and now has to
pay for her own health care. Prescription co-pays that once were $3 now are $25
for some of the roughly eight medications she takes, and her doctor visits cost
"I don't go as often as I should. You get sick and you suffer through it,"
Given where Detroit stood five years ago, things could be worse for the
city's roughly 670,000 residents, including current and former city workers
affected by the settlement, said James McTevia, a turnaround expert and
managing member of McTevia & Associates in suburban Detroit.
"Before Detroit sought the protection of the courts to resolve its financial
problems, the citizens --- who are the real people that count --- were in a lot
worse shape than they are now," he said. "Before the bankruptcy, the citizens
were not getting the services they deserved. They were having trouble with
water, sewer, garbage, feeling secure."
Indeed, when state-appointed emergency manager Kevyn Orr filed for Chapter 9
protection for Detroit on July 18, 2013, residential streets hadn't been swept
in about three years and the city was well on its way to tearing down thousands
of homes abandoned during the exodus of more than a million people that began
in the 1950s.
With its tax base decimated, Detroit's faced $14 billion in long-term debt
and a $327 million budget deficit in 2013. City workers, including police and
firefighters, had their pay cut. Employees were forced to take unpaid days off.
Detroit emerged from bankruptcy in December 2014, having restructured or
wiped out $7 billion in debt. The city was forced to follow a strict spending
plan and has been able to build cash surpluses while posting three consecutive
years of balanced budgets.
Weeks after Detroit was released from active state oversight, Moody's
Investors Service upgraded the city's credit rating this spring --- the third
upgrade in less than three years.
"Since Detroit came out of bankruptcy, there have been billions of dollars
spent in Detroit," McTevia said. "People that were once fearful in investing in
the city just fell over themselves to invest in Detroit. If you go to Detroit
now, it's a different city than it was five years ago. It has a different image
and it is a vibrant city."
At Fred's Key Shop, a family-owned Midtown locksmith that has been in
business for more than 50 years, workers have seen the change. Fred's is a few
blocks from a year-old professional hockey and basketball arena and a planned
commercial, residential and entertainment district.
"We're busier than ever," said office manager Bryan Knoche. "More people are
moving into Midtown and that means more business to be had. There also weren't
fancy restaurants five years ago. There's definitely a lot of money coming into
the area and people coming in from New York and L.A."
So far, such opportunities have eluded former Detroit business owner Steve
Brown, 58, said he once had 15 employees and contracted with Detroit to help
repair streets. Now he works for his father's trucking company.
The contract and the bulk of his work ended after the city entered
bankruptcy. Brown said he considered switching over to demolition work, but had
trouble getting a loan to buy the equipment.
"I didn't have enough funds to get started like I wanted to," he said.
Some parts of the city, like downtown and the Midtown cultural district, had
been on the upswing before the bankruptcy filing but many broken neighborhoods
still suffered. Savings from the bankruptcy has allowed Detroit to spend more
to improve quality of life. Street sweeping resumed last year, and Detroit has
thousands of new street lights. Police and paramedics show up more quickly when
911 is called.
Investors are building hundreds of apartments, condominiums and homes in and
around the downtown area. The city, along with philanthropies and nonprofits,
is fixing up older homes.
There's still room for improvement.
Alice Holland, who lives in Brightmoor, said crews cut the high grass in
vacant lots but don't clear enough of the illegally dumped trash from the
neighborhood, which clogs drains and causes streets to flood during strong
"You'll see me ... taking my stick and cleaning out the drains," she said.
"I like the city and what's going on. You can fix up downtown, but fix up the