Detroit bankruptcy

Detroit Mayor Dave Bing says he’s pleased with how his administration has “moved the needle forward on Detroit’s future.”

Bing talked about his accomplishments and challenges as mayor in a farewell speech to the Detroit Economic Club Wednesday.

DETROIT (AP) - A federal judge has cleared the way for Detroit's Public Lighting Authority to immediately sell $60 million in bonds to begin fixing thousands of broken streetlights.

Judge Steven Rhodes issued his order Friday - three days after he allowed Detroit to become the largest U.S. city to enter bankruptcy.

Total financing for the lighting plan is expected to reach $210 million.

Rhodes' ruling also means $12.5 million in annual utility taxes approved by the state Legislature to back the bond sale will not be affected by the bankruptcy.

Steve Carmody / Michigan Radio

All eyes are on Detroit this week, following Tuesday’s historic ruling on Detroit’s eligibility for bankruptcy. For those living outside the city, it's easy to separate themselves from Detroit's problems. 

But many experts say Detroit is not alone.

Detroit is not Michigan's only city that faces enormous budget challenges. Unfunded liabilities and retiree debt are adding up all across our state.

Ted Roelofs, a contributing writer to Bridge Magazine, recently wrote a piece that argues that other cities in Michigan will not be immune to rising legacy costs that, in part, did Detroit in.

Roelofs and John Pottow, a bankruptcy expert at the University of Michigan, talk with us about the future of other Michigan cities in the wake of Detroit’s bankruptcy.

Listen to the full interview above.

The Detroit Institute of Arts
Flickr

What’s going to happen with the Detroit Institute of Arts?

 

That’s the question on the minds of many Michiganders after the city of Detroit was deemed eligible for Chapter 9 bankruptcy on Tuesday.

Daniel Howes, a business columnist with The Detroit News, talks with us about all things DIA – a recent appraisal of the institute’s collection, emergency manager Kevyn Orr’s interest in the museum, and a possible rescue plan cooked up by a federal judge.

Listen to full interview above. 

Rene Passet / Flickr

There was another plot turn in the long story of Detroit's struggles yesterday.

A federal bankruptcy judge looked at all the evidence and declared, yep, the city of Detroit is indeed insolvent.

It's new, for sure, but for many who have lived and worked in Detroit, it's just more of the same.

Derrick May is one the founding fathers of techno music. Detroit was the birthplace of the genre, and May has achieved a lot of success traveling around the world playing shows. (Listen to his breakout hit here.)

When I was growing up in the 1960s, there was a popular genre of fiction: Novels about the world when and after the presumably inevitable nuclear war happened.

One that I remember was set in rural Florida, one of the few places that avoided total destruction. The survivors set up what amounted to a working subsistence and barter economy. 

But for some, the psychological adjustment was impossible. The town banker sat among piles of paper money that he had always revered as sacred, and which suddenly had no value whatsoever. Unable to adjust, he kills himself.

Things are not nearly that bad in Detroit. But yesterday, there were clear signals that sacred cows really are going to be sacrificed. Public pensions were thought to be sacrosanct, protected by the state constitution. Well, they aren’t, according to Federal Bankruptcy Judge Steven Rhodes. Federal law trumps state law. 

Steve Carmody/Michigan Radio

The judge’s decision to let the city of Detroit pursue Chapter Nine bankruptcy protection could have an effect on the municipal bond market.

Municipal bonds have long been viewed as one of the safest investments out there. But bond holders may be among the biggest losers in Detroit’s bankruptcy.

Peter Martorano / Flickr

This Week in Michigan Politics, Jack Lessenberry and Christina Shockley discuss Detroit's bankruptcy eligibility.

As many observers expected, Judge Steven Rhodes ruled yesterday that Detroit is bankrupt, and that the city can proceed with its Chapter 9 filing.  Judge Rhodes said the city did not negotiate in good faith with the creditors and it was clear the state planned the inevitable bankruptcy as soon as Kevyn Orr was named emergency manager for Detroit. Judge Rhodes also said public employee pensions can be cut as part of the restructuring. He also ruled Michigan's Emergency Manager law constitutional.


On this historic day, Detroit, Michigan's largest city, is found eligible for Chapter 9 bankruptcy protection. Federal Judge Stephen Rhodes saying, "It is indeed a momentous day. We have here a judicial finding that this once proud and prosperous city is insolvent."

But, just what does all this mean for Detroit? For our state? What happens next?

This hour, we'll get answers to those questions as we're joined by Jack Lessneberry, Michigan Radio's Political Analyst, and Eric Scorsone joins us for a look at the economic consequences of the nation's largest Chapter 9 bankruptcy ever.

user Daviddje / Flickr

Let's take time now to put today's ruling by Judge Rhodes into historical context. How does the painful journey into Chapter 9 bankruptcy fit into Detroit's past, present, and most importantly, its future?

We're joined by someone who has covered the news in Michigan for five decades: Michigan Radio's political analyst Jack Lessenberry.

Listen to full interview above.

Detroit bankruptcy judge Steven Rhodes.
John Meiu / Detroit Legal News Publishing LLC

Michigan Radio’s Sarah Cwiek was in the courtroom today when U.S. Bankruptcy Judge Steven Rhodes ruled that Detroit was eligible for Chapter 9 bankruptcy.

Stephen Henderson, the editorial page editor of the Detroit Free Press, has been covering the bankruptcy trial on the pages of the Freep.

Sarah and Stephen talk with us in the studio today to discuss what happened today, and what it means for Detroiters.

Listen to full interview above. 

mich.gov / Michigan Government

Today, U.S. Bankruptcy Judge Steven Rhodes ruled that Detroit is eligible to enter Chapter 9 bankruptcy protection, and to cut the pensions of city retirees.

What does it mean for residents? Current city employees? City pensioners?

Eric Scorsone, a municipal finance expert from Michigan State University, talks to us about what lies ahead after today’s ruling.

Listen to full interview above.

Detroit bankruptcy judge Steven Rhodes.
John Meiu / Detroit Legal News Publishing LLC

U.S. Bankruptcy Judge Steven Rhodes ruled this morning that the city of Detroit is allowed to protect itself from its creditors under Chapter 9 municipal bankruptcy protection. In his ruling, Rhodes said pensions can be treated like any other debt and are subject to potential cuts. We've been following the news as it unfolds today.

Update 3:31 p.m.

Michigan Attorney General Bill Schuette issued a statement today saying he supported the bankruptcy ruling, but was "deeply disappointed" with Rhodes' ruling that pensions are eligible for cuts.

Bob Jagendorf / Flickr

 Today, Judge Steven Rhodes of the United States Bankruptcy Court ruled that while the City of Detroit did not negotiate with creditors in good faith, it did file for bankruptcy in good faith. His ruling makes Detroit eligible to file for the largest municipal bankruptcy in this country’s history.

David Shepardson, Washington reporter with the Detroit News has been following the bankruptcy. He joined us to talk about this historic ruling, and what to watch for in the coming months. 

Listen to the full interview above.

Today, virtually all eyes are on Detroit, where U.S. Bankruptcy Judge Steven Rhodes rendered his historic decision this morning. That’s exactly as it should be. There is no more important story in the state right now, and our futures are all tied in with the Motor City. But that’s not the only thing happening.

I always feel uneasy when the media’s attention strays too far from the legislature. That’s a bad idea, for the same reason leaving a two-year-old unattended in the kitchen is a bad idea. There are sharp objects, and they can hurt themselves and others.

User: Brother O'Mara / flickr

Judge to announce Detroit bankruptcy eligibility today

A judge is expected to announce today whether Detroit is eligible for bankruptcy. If so, Detroit will be the largest public bankruptcy in U.S. history. It has $18 billion in debt.

Anti-abortion coverage proposal moves forward

"State lawmakers will consider a proposal to put new restrictions on abortion insurance coverage in Michigan. A state board yesterday certified that Right to Life of Michigan has collected enough signatures to send its petition to the Legislature. Under the measure, women would only be able to purchase abortion coverage as a separate policy. It could not be part of standard health plans," Jake Neher reports.

State workers might get pay hike, but pay more for health care

"The state Civil Service Commission is considering giving state workers a two-percent pay increase, while requiring many of them to pay more out-of-pocket for health insurance. The proposal is meant to end a contract impasse between the state and public employee unions," Jake Neher reports.

Tomorrow will be a historic day in Detroit. That's when a federal judge will decide whether the city is eligible for Chapter 9 bankruptcy protection. On today's show, we took a look at the different ways Judge Steven Rhodes could rule.

Then, we took a look at the future of newspapers. As newsrooms get smaller, and more people hop online for information, will the industry be able to reinvent itself and keep up with the times? 

And, the U.S. Supreme Court heard arguments this morning in a case that pits Michigan against an Upper Peninsula Indian tribe. We discussed the case with Rick Pluta, who is reporting from Washington D.C..

Also, we spoke to a new Michigan music duo, The Accidentals. 

But, first on the show, the Board of State Canvassers today certified a voter-initiated petition that would put new restrictions on abortion insurance coverage in Michigan. The proposal would ban abortion coverage in standard health insurance plans. Women would only be able to purchase abortion coverage as a separate rider. The measure now goes to the state Legislature, which has 40 days to pass it. If not, it will go to voters on the 2014 ballot.

MLive reporter Jonathan Oosting joined us today to discuss the issue.

Joy VanBuhler / Flickr

Tomorrow will be one for the history books, not just here in Michigan but across the nation.

Tuesday morning is when Federal Bankruptcy Judge Steven Rhodes will rule whether or not Detroit is eligible for Chapter 9 bankruptcy protection.

Detroit News reporter Chad Livengood has covered the bankruptcy trial, and he joined us today to talk about what might happen tomorrow morning.

Listen to the full interview above.

Tomorrow morning, Federal Bankruptcy Judge Steven Rhodes will announce whether or not Detroit can file for bankruptcy. If, as expected, he does authorize this, it will mean grim times ahead.

The city almost certainly will lose some assets; creditors will get paid only a fraction of what they are owed, and elderly and retired city workers may lose at least some of their pensions.

None of this will be easy, or fun. But we all have to hope that is exactly what the judge does. Otherwise, the city will be in the position of a dying lamb among a flock of turkey buzzards.

The city has close to 100,000 creditors who together are owed probably more than $18 billion. If the judge rules Detroit is ineligible for bankruptcy, then that will take the freeze off all the lawsuits creditors filed against the city before the Motor City asked for bankruptcy protection back in July. 

Peter Martorano / Flickr

In this Week in Michigan Politics, Christina Shockley and Jack Lessenberry discuss a proposal to block abortions from being covered in basic health plans, how Warren Buffett is backing millions of dollars in an initiative to help small businesses in Detroit, and look to next week when Judge Steven Rhodes will decide if Detroit is eligible for bankruptcy.

User: Brother O'Mara / Flickr

Federal judge will announce if Detroit is eligible for bankruptcy next week

"A judge says he'll announce Dec. 3 whether Detroit is eligible to get rid of its debts in bankruptcy court," the Associated Press reports

Michigan and federal government investigate fungal meningitis outbreak

"Michigan Attorney General Bill Schuette is joining forces with federal authorities to investigate last year’s fungal meningitis outbreak. Michigan was hardest-hit by the nationwide outbreak that’s linked to tainted steroids from a Massachusetts compounding pharmacy," Sarah Cwiek reports.

Enough signatures collected to propose a ban on abortion coverage

"Michigan abortion foes have collected enough signatures to put a proposal before lawmakers to ban abortion coverage from health plans unless a separate policy is bought," the Associated Press reports.

Detroit Skyline
Dave Linabury / Flickr

As Detroit has slid its way down the slippery slope to bankruptcy, the eyes of the world have been fixed on the Motor City.

Whether it was Time Magazine renting a house for embedded reporters, Bob Simon of 60 Minutes comparing Detroit to Mogadishu, chef Anthony Bourdain comparing Detroit to Chernobyl, using the description "post-apocalyptic," the outsiders' view of Detroit has been, to put it gently, negative.

Our next guest has raised the question: what happened when outsiders are shaping Detroit's narrative? When Detroit and its leaders and stakeholders can't articulate a consistent message, someone else is going to do it. And how is that Narrative-Shaped-By-Outsiders going to affect Detroit's destiny?

Detroit Free Press Staff Writer Mark Stryker explored this in a recent piece "Seeking Detroit's Voice: Lack of message lets others shape the narrative." He joined us today to discuss the issue.

Listen to the full interview above.

 A new report says declining revenues and bad Wall Street deals—not out-of-control spending or generous pension benefits--contributed the most to Detroit’s bankruptcy.

The report from the left-leaning think tank Demos also accuses Emergency Manager Kevyn Orr of attacking the problem in “inappropriate” ways that are “not rooted in fact.”

Bob Jagendorf / Flickr

Ever since Detroit’s became the biggest in American history to seek bankruptcy protection, the term “death spiral” has been in the spotlight.

The spiral often begins with promises made to municipal workers. Pensions and health coverage are becoming too much for many cities and states to bear. But the law tells mayors and governors that those pension plans need to remain intact.

As pension costs mount, they try raising taxes, or turning to the municipal bond market. And when those doors are slammed shut, what happens? Essential services get cut, pink slips start flying, and businesses and homeowners get out of town, leaving behind a smaller and poorer population even less able to cover a city’s soaring costs.

It's anyone's guess as to when the ruling will come, but most seem to think the bankruptcy will be approved in some form.

If it's not, at least one expert seems to think bad things could happen. From Crain's Detroit Business:

"If the bankruptcy is disallowed, frankly, expect all hell to break loose," said Anthony Sabino, a lawyer who teaches business law at St. John's University in New York. "Detroit will be at the mercy of its creditors in individual lawsuits spread amongst federal and state courts. That chaos alone could doom the city."

Hell breaking loose? Doomed?

Well, a bomb wouldn't drop, but the downward financial spiral would certainly continue as creditors that haven't been paid would sue for the money they're owed.

User: Brother O'Mara / flickr

Budget director's brother proposes $5 million state project

"A company run by the brother of Michigan’s budget director proposed a $5 million project that is part of the state budget. The company is now bidding to win the contract," Rick Pluta reports.

Report blames Wall Street for Detroit bankruptcy filing

"A new report says declining revenues and bad Wall Street deals contributed the most to Detroit’s bankruptcy. The report from the think tank Demos argues that Detroit IS bankrupt — but that’s because of the city’s cash flow problems, not its debt," Sarah Cwiek reports.

Another Heidelberg house up in flames

"Fire has destroyed another house that makes up the Heidelberg Project outdoor art installation in Detroit. The fire burned early this morning at the structure known as the Penny House on the city's east side. A building known as the "House of Soul" was destroyed by fire earlier this month," the Associated Press reports.

When we talk about Detroit's bankruptcy filing, the point seems to almost always be made that this is historic. That Detroit is the largest city in U.S. history to seek bankruptcy protection. But, that was almost not the case. In the mid 1970's New York City was on the brink of financial crisis. On today's show: What can Detroit learn from New York's comeback?

And, as of today, the University of Michigan Hospitals and Health Centers will no longer sell sugar-sweetened drinks. It's a not-too-subtle push to get healthy, but is it taking away our choice as a consumer? Is it going too far?

Also, the Michigan Women's Hall of Fame has just announced its latest list of inductees. We took a closer look at one of these influential Michigan women.

First on the show, Republicans in Lansing are split over whether people who bankroll so-called “issue ads” should be allowed to remain anonymous.

Issue ads attack or support politicians or causes without using what are called “magic words" like “vote for” or "oppose." Unlike campaign ads, the money behind issue ads can be anonymous.

But, late last week, Michigan Secretary of State Ruth Johnson proposed new rules that would require disclosure of issue-ad donations.

Johnson said, too often, issue ads are just thinly disguised political ads, and people should know who is paying for them.

But, many Republicans disagree. In fact, within hours of Johnson's proposal, the GOP-led Senate acted quickly to amend a campaign finance bill that would make Johnson's new rules illegal.

Rich Robinson, Executive Director of the Michigan Campaign Finance Network, and Jonathan Oosting, Capitol reporter for MLive.com, joined us today.

Peter Martorano / Flickr

In virtually every discussion and report about Detroit's bankruptcy filing, the point is made that this is historic. That Detroit is the largest city in U.S. history to seek bankruptcy protection.

But, that nearly was not the case. New York City was a hairs-breadth away from earning that unenviable distinction in 1975.

We wondered what comparisons could be made between Detroit's crisis today and New York's in the 70's, and if there are lessons Detroit could learn from New York's recovery.

Out next guest has taught at Yale for 46 years, he was part of five New York City governments and he is a noted urban planner, educator and author of The Planning Game: Lessons from Great Cities and The American City: What Works, What Doesn’t.

Alex Garvin joined us today from New York City.

Listen to the full interview above.

Patricia Drury / Flickr

To call Detroit’s legacy costs underfunded would be, well, an understatement.

According to the city’s numbers, Detroit’s pension and retiree healthcare funds are about $9.2 billion short.

But Detroit is not the only Michigan city with major legacy costs — not by a long shot.

Legacy costs, or costs undertaken by local government for future use, have been taken on by more than 280 of Michigan’s 1,800 communities, according to data compiled by Bridge Magazine.

And while Detroit has the highest amount of total unfunded legacy cost, the per capita numbers show a slightly different picture.

As we know, no major city has ever been in the position Detroit is in now. What was once the Arsenal of Democracy, a proud and vibrant city of two million people, is now in bankruptcy court, asking a federal judge to let it be reborn.

The city has lost two thirds of its population and far more of its wealth. There are tens of thousands of abandoned buildings.  Earlier this year, Detroit was taken over by the state, and is now being run by a state-appointed emergency manager.

City services are so bad the voters, the vast majority of them black, just elected a mayor who is a white political boss from the suburbs, in the desperate hope that he could somehow fix things. Mike Duggan clearly intends to try.

The scope of the problem is almost beyond imagining, in part because for too long, nobody was willing to admit the facts, not even to themselves. Now, the city has been forced into a rendezvous with reality.

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