DETROIT MAYOR : NAPOLEON v. DUGGAN

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^ Former Med Center CEO Mike Duggan / Wayne County Sheriff Ben Napoleon

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Yesterday, Detroit voters chose the two finalists who will compete to be the City’s next Mayor : Wayne County Sheriff Benny Napoleon and former Detroit Medical Center CEO Mike Duggan. Napoleon led the printed ballot overwhelmingly. Duggan, however, who had to run as a write-in because he turned in his nomination papers two weeks before he qualified as a city resident.

Still, the results were quite clear. As published by the Free Press, “with 100% of the precincts reporting, (Benny) Napoleon had 28,352 votes or 30% of the total votes cast, to 50,328 votes or 53% for write-in candidates, with (Mike) Duggan presumably garnering the vast majority of those. Duggan said about 97% of write-ins were (for him).”

Total turn-out was low — about 18 % of Detroit’s registered — but higher than prerdicted.

Duggan’s 52 % of the vote, as a write-in, shows that committed voters know very well what they are about. Pundits, especially many who presume to represent today’s version of the GOP, incline to doubt that inner-city people of color, many of them living in poverty, can vote intelligently and negotiate such intricacies as a write-in vote. Anyone who has ever worked a campaign in a large American city knows this put-down to be utterly untrue; yesterday’s 50,328 write-in votes — 97 % for Duggan — disproves these pundits’ nonsense beyond all doubt. Indeed, the city’s write-in voters had to spell Duggan’s name correctly, as there was also another write-in candidacy for a man of the last name “Dugeon.” 97 % of Detroit’s write-in voters knew the difference and knew which difference they wanted. That, dear Here and Sphere readers, is informed voting.

That Mike Duggan happens to be White, in a city in which four of every five voters is of color,l also says something about informed voting and the readiness of voters disparaged by “conservative” pundits to select precisely. Obviously, many Detroit voters have had enough of Mayors who have coasted to office on assumption that voters of color will always vote for mayors of color. Detroit looks to be rising from its ashes, and a substantial portion of its voters are ready to endorse whomever seems likelier to extend that rise. As a successful executive, Mike Duggan clearly made sense to such voters. Thanks to Duggan and his Primary voters, even if, in November, Detroit chooses Benny Napoleon, a man of color and a successful county official, skin color will likely not be the determinant that it has long been presumed.

Indeed, the issue between Duggan and Napoleon is one familiar across most of today’s political America : should local control be led by neighborhood activists or by businessmen ? Duggan says that as a business CEO, he can better convince Michigan’s Governor Snyder to return management of the city to the Mayor’s office — today the city is run by Kevyn Orr, an administrator appointed by Snyder. Napoleon, on the other hand, stresses that citizen involvement, in the neighborhoods — led by him — will free the city from State management sooner.

Either course begins as soon as the next mayor is chosen and well before power to run Detroit is returned to its Mayor pursuant to the city successfully presenting a bankruptcy reorganization plan. Yesterday’s vote starts a saga of a city rising from past miscarriages — the primary of skin color among them.

—- Michael Freedberg / Here and Sphere

THE DETROIT BANKRUPTCY IS A STEP OF PROGRESS

Am re-posting our bankruptcy-law analysis of the Detroit bankruptcy. Updating it, too.

The issue of pension obligations has come to dominate the bigger picture of this bankruptcy. it shouldn’t, for the reasons given in this article. Pensioners will be treated as a separate creditor class, one whose vote to approve any reorganization plan must be given, or the plan cannot be confirmed by the Court.

There is also now a campaign going on to elect a new Mayor, as current mayor Dave Bing declined to run again. Much is being made of the new Mayor’s lack of authority over a city being run by a court-appointed manager. The much being made is beside the point.The campaign raises all sorts of vital issues ; the future of the city — toward what goal or goals / who will be involved / How long will it take ? what about race relations inside the city ? crime ?  schools ? Businesses and zoning ?

All of these will be discussed by the City;s voters, and when, eventually, the mayor to be elected does take control — and that will happen once the City gets its reorganization plan conformed by the court — the discussions and decisions made in this Mayor campaign will ground whatever city will be built thereupon.

Game on. Let the politics begin.

— Michael Freedberg / Here and Sphere

 

Here and Sphere

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^ Detroit : on the move at Movement

Three weeks ago Here and Sphere published Susan Domitrz-Sapienza’s extensively researched story on the comeback of Detroit. As she noted, the economy of “Automobile City” had already reached its bottom and was — and is now — expanding along several lines newly established. The decision of the city’s state-appointed manager to file a Chapter 9 (Municipal) bankruptcy petition would seem, at first, to contradict our reporter’s finding. In fact, the Chapter 9 filing conforms our reporter’s conclusion.

To learn why, one needs to know a bit more about bankruptcy law than the common perception. Most people think of the word “bankruptcy” as the end, a kind of giving up the ghost. This perception is false. There are two kinds of bankruptcy cases. The one that most people think of is “liquidation,” in a liquidation, yes: the petitioner is in fact giving up…

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THE DETROIT BANKRUPTCY IS A STEP OF PROGRESS

Image

^ Detroit : on the move at Movement

Three weeks ago Here and Sphere published Susan Domitrz-Sapienza’s extensively researched story on the comeback of Detroit. As she noted, the economy of “Automobile City” had already reached its bottom and was — and is now — expanding along several lines newly established. The decision of the city’s state-appointed manager to file a Chapter 9 (Municipal) bankruptcy petition would seem, at first, to contradict our reporter’s finding. In fact, the Chapter 9 filing conforms our reporter’s conclusion.

To learn why, one needs to know a bit more about bankruptcy law than the common perception. Most people think of the word “bankruptcy” as the end, a kind of giving up the ghost. This perception is false. There are two kinds of bankruptcy cases. The one that most people think of is “liquidation,” in a liquidation, yes: the petitioner is in fact giving up the ghost — is ending things. There is, however, an entirely different kind of bankruptcy petition : the “reorganization.” In a reorganization filing, the petitioner seeks to restructure its affairs so that they can prosper again. All municipal, Chapter 9 filings are reorganizations.

The reorganizing petitioner seeks to — must — present a reorganization PLAN to the bankruptcy trustee appointed to the case, for approval by its creditors, the Trustee, and the Court. So,me corporate reorganizations fail, but a municipal reorganization cannot : cities have tax revenues that must be paid, and these are quantifiable. all that a city’s reorganization plan needs to is match tax revenues — and maybe also the proceeds of sales of city-owned real estate — to debts. Clearly, in such reorganization, the city’s creditors (including its pensioners) will probably be offered less than full repayment; and yes, each class of creditors must separately approve the reorganization plan. Many amended plans may be filed. But a city’s revenue can be counted on, and, as a reorganization plan may take up to five years to perform, the city’s revenues over that period are likely to offer creditors a fair return.

In addition, financing is often available to reorganization debtors after they file that was not available before ; because (1) post-filing debt is not included in the bankruptcy and thus is not subject to payment of less than full amount due and (2) the reorganization plan, as it becomes an order of court, makes the city’s post-filing credit standing easy to compute. A Detroit bondholder, for example, can readily exchange pre-filing bonds for post-filing bonds, if such are offered.

So much for the bankruptcy law as it applies to the Detroit filing.

The bigger point is that no bankruptcy petitioner files a reorganization until its finances look promising enough for it to present a feasible Plan. Such is the case with Detroit. Its finances are improving. real estate is selling fast. New businesses are starting up. Chrysler’s Jeep Cherokee plant is booming — as was reported recently in the Bew York Times. The Movement EDM Festival is bringing thousands of young visitors to the city on Memorial day weekend. Artists are setting up shop in Detroit, where rents for lofts are cheaper than cheap. Real estate tax revenues will only increase.

All of which is why Detroit’s bankruptcy filing signals the city’s recovery, not its failure.

—– Michael Freedberg / Here and Sphere

COMEBACK CITY : THE DEEP FALL AND HIGH RISE OF DETROIT

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(photo : courtesy : edgoodfellow.com)

If you want to know the future of America, look to Detroit. That’s how the city feels about itself, and the feeling may just have a point. There’s hardly anyone to whom “Detroit” does not mean “automobiles.”

Detroit is well aware of its significance, its status as automobile icon. “The world has a fascination with Detroit, in general,” says Rick Ruiner, of Detroit’s own “The Ruiners,” now celebrating their 16th anniversary as a band. “It’s a bit like watching a boxer bloodied and beaten down in a fight. Some (people/spectators) are rooting for them as they struggle to get back up during the ten count, others are not. People in Detroit are very persistent and proud- – they tend to get back up.”

To understand how Detroit is now getting back up, it’s vital to grasp how huge was its fall. Remember : the American middle class was birthed in Detroit. As the auto industry’s hub, from the 1920’s, the city’s businesses created manufacturing jobs on a large scale, with good pay — for hundreds of thousands who came to Detroit from everywhere to seek them.  — and kept on creating and maintaining them. But then the American auto industry hit a wall, and Detroit jobs all but disappeared. With them almost went the entire city.
Detroit’s decline was that of  the most important industry in the entire US economy.  As the auto business encountered foreign competition, huge capital costs, enormous unfunded pension liabilities, its own grievous design misreads, and, finally, an unsustainable surge of in-house financing defaults, its problems compounded — and mirrored — difficulties that all of American industry was falling into. The decline began well before 2008, but that was the year it hit home to everyone. As President Obama recalled it, in his 2012 State of the Union Address, “Let’s remember how we got here. Long before the recession, jobs and manufacturing began leaving our shores. Technology made businesses more efficient, but also made some jobs obsolete. Folks at the top saw their incomes rise like never before, but most hardworking Americans struggled with costs that were growing, paychecks that weren’t, and personal debt that kept piling up.”

He continued: “In 2008, the house of cards collapsed. We learned that mortgages had been sold to people who couldn’t afford or understand them. Banks had made huge bets and bonuses with other people’s money. Regulators had looked the other way or didn’t have the authority to stop the bad behavior. It was wrong. It was irresponsible. And it plunged our economy into a crisis that put millions out of work, saddled us with more debt, and left innocent, hardworking Americans holding the bag. In the six months before I took office, we lost nearly four million jobs. And we lost another four million before our policies were in full effect.”

Detroit was hit harder than any other major city. As two of its three  auto companies stood on the verge of bankruptcy — and the other, Ford, was hard pressed too — Detroit found fully one-half of all its workers out of work — a 50% unemployment rate. Not even in the Depression did cities fall so far. Making the situation worse still, Detroit became the second most violent city in America — with nearby Flint, MI, according to FBI statistics for 2012, occupying the number one spot. And the 50% unemployment rate pertained only to those who remained; many did not. Detroit from 1950 to 2010 lost fully 50 percent of its population.

The consequences of this abandonment have been huge. One third of the city’s buildings have been burned or abandoned. Seven out of ten murders remain unsolved. Only one quarter of students in the Detroit Public Schools graduate. Statistically, Detroit students have a better chance of going to prison than graduating from high school. (numbers supplied by the documentary “Autopia.” More about Autopia below.)

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Yet despite these frightful numbers, Detroit today has moved past them. Turn around is in the air. For many years, mainly local artists drove this a change of gears. In addition to Rick Ruiner and his wife, Nancy Friday, big stars locally born,  like Kid Rock, Eminem, Jack White, Aretha Franklin, Jeff Daniels — and many others — put their craft and positivity to work on many Detroit causes. A major example of the city’s artist-driven innovation is the Detroit Electronic Music Festival. The DEMF (2000-2002), Movement (2003-2004), Fuse-In (2005), and under its current name, Movement Electronic Music Festival – each name reflecting shifts and changes in festival management – is held every Memorial Day weekend in the city’s Hart Plaza. “It is a landmark event that brings visitors from all over the world to celebrate techno music in the city of its birth” (www.movement.us). As the Movement website says, “Detroit’s Movement Electronic Music Festival has evolved into one of the world’s largest electronic music festivals.”

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The Movement Festival at night

Significantly, the DEMF has built a Detroit reputation the opposite of crime city. as its website puts it, “the first DEMF occurred in May 2000 and concluded with few hitches and no reported crime. It was applauded by city leaders and tourism officials as an injection of youthful energy into the city” (www.movement.us).

According to Autopia, a wave of young artists and entrepreneurs is moving to Detroit from all over the world. Nina Friday, for example, hails from Russia. Why this move ? Economics, for one thing. Unlike New York and Los Angeles, Detroit is an extremely affordable city and thus very attractive to up and coming artists. “You can buy a loft for around $25,000 and live on $700 a month,” notes Autopia. Houses go for as little a $ 5,000. Prices like these leave a not-yet-rich artist with plenty of cash left over to bask in Detroit’s many amenities: the Detroit Institute of Art, the Detroit Medical Center, Henry Ford Hospital, The Riverwalk, shops, specialty stores, restaurants, bars, festivals, concerts, sports, casinos, shopping, park activities, shows and walk-ability — and all of it, on hand throughout the city.
Little Caesar’s Pizza Founder and CEO, Mike Illitch, has also been a key figure in Detroit’s revitalization. As his Illitch Holdings, Inc. webpage puts it, “An avid sports fan, he and his wife Marian in 1982 purchased the struggling Detroit Red Wings professional hockey franchise and turned the team into a Stanley Cup champion (team). Also in 1982, Illitch purchased Olympia Entertainment which manages several restaurants, sports, and entertainment venues and properties. Hockeytown Café, which opened in 1999 and is managed by Olympia Entertainment, is recognized as one of the top sports bars in the country. Five years later, in 1987, Illitch purchased the neglected Fox Theatre and restored it to its original 1928 splendor. Many thought it was impossible to revive a business in downtown Detroit but since the reopening in 1988, it is consistently rated as one of the top grossing theatres of its size by Pollstar.”

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Mike Illitch of Little Caesar’s

The Illitch family continued its commitment to the city with the “purchase and subsequent renovation of the adjacent Fox Office Centre,” making way for a new headquarters for Little Caesar’s in Detroit. “Illitch fulfilled a lifelong dream when he purchased the Detroit Tigers in 1992. Along with the purchase of the Tigers, Illitch needed to address the issue of building a new stadium to replace the outdated ballpark where the team had played since 1912. The new Comerica Park opened in 2000 with the majority of funding supplied by Illitch.” (Illitch Holdings.) The success of the Illitch companies have inspired other investors and brought them to the city.

Most recently, a $650 million plan was proposed to the Downtown Development Authority for a new hockey arena. Leading this project are Olympia Entertainment and Mike Illitch. Plans call for a 650,000-square foot arena along with office and retail development, which by the time of completion will span 45 blocks downtown. Illitch states to the Detroit Free Press, “It’s always been my dream to once again see a vibrant downtown Detroit. From the time we bought the Fox Theatre, I could envision a downtown where the streets are bustling and people were energized. It’s been a slow process at times, but we’re getting there now, and a lot of great people are coming together to make it happen. It’s going to happen and I want to keep us moving toward that vision.”

Moving forward has faced obstacles by the plenty. In addition to financial crisis — as the city’s real estate tax base shrank and all but crumbled — and possible bankruptcy, there have been political scandals and corruption all too well publicized. Detroit has become used to dysfunctional civic government, with one former mayor going to jail and many other officials nicked by scandals and misfeasances. All of it is well known to those who watch cable news; yet Detroit itself seems to have simply shrugged off its dirty laundry moments. The economics of dirt-cheap real estate and a strong base of skilled labor has, for many entrepreneurs, made a Detroit investment too good to pass up. And Detroit firms are beginning aggressively to tout the city’s prospects. For example, five companies headquartered in Detroit are offering incentives to their employees to reside in the greater downtown area. By this initiative, Blue Cross/Blue Shield of Michigan, Compuware, DTE Energy, Quicken Loans and Strategic Staffing Solutions, collectively known as the “Detroit Five Downtown” are currently offering up to $20,000 in forgivable loans towards an employee’s purchase of a Detroit home as a primary residence. As for renters, the firms offer $2,500 towards the cost of an apartment for a first year, and an additional $1,000 to the second year of a lease extended. (Current renters can also receive this $ 1,000 lease extension payment.) By the same program, existing homeowners residing in the city now are eligible for up to $5,000 in matching funds to pay for exterior improvement projects costing $10,000 or more.

It’s not just the “Downtown Five’ who are kicking it up. Other downtown businesses are now offering these incentives. The momentum continues.

Private security businesses are thriving as Detroit Police officers became scarce. The wealthier neighborhoods in the city pay for their protective services, and, as unpaid volunteers, they even patrol the streets in the poorest neighborhoods.

Architectural Salvage Warehouse gathers in and stores up household fixtures, sinks, cabinets, and floors from abandoned and vacant homes and makes them available to home owners. Residents are able to stop by and pick up such materials as they may need for remodeling — even reconstruction — of their Detroit homes. Former prison inmates, who were disadvantaged or early released, are hired and given a second chance at life while they specialize in the art of deconstruction.

THE “DETROIT URBAN GARDEN” MOVEMENT

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(photo courtesy : blog.thedetroithub.com)
Other citizens have focused on building a green infrastructure. With plenty of open land now available in the city, thanks to so many structures having been demolished during the down and dirty decades, Detroit is home to over 1500 separate “urban gardens.” This “Greening of Detroit” uses plots of land to plant produce that provides free, healthy food to the community. One of current Detroit Mayor Dave Bing’s most forward visions is to build a city with a healthy ecosystem.

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Mayor Dave Bing (photo courtesy bet.com/news)

Still, a word of caution sounds. Although the auto industry is recovering some of its profitability, and despite the 2008, Treasury bailout of GM and Chrysler has saved tens of thousands of jobs, Detroit will never be the same one-industry city that it was 40 or 50 years ago. It will be home to an automobile industry much altered and to diverse enterprises aplenty. it has no choice. As former Michigan governor Jennifer Granholm notes in Autopia, “Where there is crisis, there is opportunity. We don’t want people to say this is the end of Detroit – it is certainly not – but we do want people to learn from our experience, which has not been very pretty. We also want to serve as a wake-up call to the country.”

Detroit now knows what the rest of America has learned at the same time: that change is difficult and it’s a lot of hard work. that you have to keep up with the times, that you have to innovate. that if you don’t,  the world will move forward without you, and you will be left behind – without job or future. Given our global economy, competition strikes from all sides. Detroit now admits that education and diversification key the city’s economic strength going forward. No longer can its economy embed itself safely in one industry.

To predict how the future of America will work out, look to Detroit.

—- by Susan Domitrz-Sapienza / Here and Sphere Correspondent