Detroit Case Study




Shafroth, Frank

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Center for State and Local Government Leadership, George Mason University


Detroit filed for municipal bankruptcy protection on July 19, 2013. The city is in dire fiscal straits and now in a U.S, bankruptcy court for what the city’s emergency manager termed “the Olympics of restructuring.” The filing is a critical step to ensuring continuity of essential services and critical to rebuilding an economy for the city. Michigan Governor Rick Snyder appointed an Emergency Manager in March, who in June announced a moratorium on repayment of all unsecured municipal debt. The emergency manager, Kevyn Orr, issued a report and declared the city insolvent. Detroit cannot stay on its current path and survive, and now its fate will be determined in a federal court, where the city’s financing and operations must be completely restructured. After decades of population decline (In 1950, there were 1,849,568 people in Detroit. In 2010, there were 713,777), the city today is home to an estimated 40,000 abandoned lots and structures. Between 1978 and 2007, Detroit lost 67 percent of its business establishments and 80 percent of its manufacturing base. The city has spent $100 million more, on average, than its revenues since 2008. According to the census, 36 percent of its citizens are below the poverty level, and, last year the city reported the highest violent crime rate for any U.S. city with a population over 200,000. Writer Billy Hamilton calls the city “either the ghost of a lost time and place in America, or a resource of enormous potential.”



Detroit, Municipal bankruptcy protection, Emergency managers