Detroit Seeks Bankruptcy, 18 Billion in Debt

[SOUSGT 357]

From the New York Times:

DETROIT — Detroit, the cradle of America’s automobile industry and once the nation’s fourth-most-populous city, has filed for bankruptcy, an official said Thursday afternoon, the largest American city ever to take such a course.

Officials in other financially troubled cities may feel encouraged to follow Detroit’s path, some experts say. A rush of municipal bankruptcies appears unlikely, though, and leaders of other cities will want to see how this case turns out, particularly when it comes to pension and retiree health care costs, said Karol K. Denniston, a bankruptcy lawyer with Schiff Hardin who is advising a taxpayer group that came together in Stockton after its bankruptcy.

“If you end up with precedent that allows the restructuring of retirement benefits in bankruptcy court, that will make it an attractive option for cities,” Ms. Denniston said. “Detroit is going to be a huge test kitchen.”

http://www.nytimes.com/2013/07/19/us/detroit-files-for-bankruptcy.html?pagewanted=all&_r=0

Edited July 18, 2013 by SOUSGT

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This will be the one to follow. The appointed administrator for the City seems to have the right stuff to address the serious problems in Detroit without letting the politics get in the way.

I am betting that his first priority will be in strengthening the Citys' basic services like police, fire, teachers, sanitation, etc., get them on firm footing and then address the pension issues that have crippled the City. There simply are not enough people, properties and businesses left in Detroit that are capable of paying enough in taxes to fund both current necessary services and the pension and benefits of those who have served the City and retired.

I am sure there are still people receiving benefits who worked in Detroit during its' renaissance period ( think Renaissance Center ) when it was thriving. But for the last few decades its been all down hill and now there is not enough money to continue to pay them and sufficient numbers of existing and new workers to make the City function.

I'm not advocating throwing anyone under the bus, I'm just saying it will be very interesting to see how they deal with all of this because as was previously stated, this will be the model on which many other Cities will rely on to address their own looming fiscal cliffs.

[SOUSGT 357]

The case will also set a legal precedent that will be watched closely by other major cities across the country struggling under the weight of years of accumulated debt and underfunded pensions covering millions of public sector retirees.

"But Detroit is not unique. It’s the same in Chicago and New York and San Diego and San Jose. It’s a lot of major cities in this country. They may not be as extreme as Detroit, but a lot of them face the same problems.”

http://www.nbcnews.com/business/detroit-bankruptcy-could-hit-millions-public-sector-retirees-6C10681571

[IzzyEng4 427]

Bridgeport, CT declared banckrupcy protection in the late 80s / early 90s if I remember it right. Its unfortunate but a lot of these once large industrial cities continue facing financial problems. Some have turned around, others still suffer.

[mfc2257 464]

Bridgeport, CT declared banckrupcy protection in the late 80s / early 90s if I remember it right. Its unfortunate but a lot of these once large industrial cities continue facing financial problems. Some have turned around, others still suffer.

They did seek protection but a judge determined the city to be strong enough to avoid the bankruptcy process.

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“We refused to throw in the towel and do nothing. We refused to let Detroit go bankrupt. We bet on American workers and American ingenuity, and three years later, that bet is paying off in a big way.”

-- President Obama in his weekly address, Oct. 13, 2012.

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[nfd2004 750]

Bridgeport, CT declared banckrupcy protection in the late 80s / early 90s if I remember it right. Its unfortunate but a lot of these once large industrial cities continue facing financial problems. Some have turned around, others still suffer.

Izzy, I think Waterbury, Ct DID declare bankrupcy, and today, somehow, the city is surviving.

Twenty years from now, I can see Detroit as a model city. No place in the world was worse than huge ghetto areas of New York City during the 70s and 80s. Blocks and blocks, actually miles and miles of large burned out buildings. Garbage and burned out cars on every block. The change started with one area approximately three square blocks. It was right off of I-95 and an industrial park was built that had once been a large area of burned out buildings, piles of bricks and trash.

Shortly after that came a few blocks in the area of Charlotte St and 170 St in the South Bronx. The area had been visited by both Presidents Reegan and later President Carter. It resembled parts of Germany after WWII. Today, that neighborhood is home to raised ranch houses with yards and white picket fences. A few miles away is a Days Inn Motel. It is advertised as a short distance from Yankee Stadium. That Days Inn Motel was once an abdonded burned out factory similiar to what the City of Detroit has today.

Private investors made the first move with that Industrial Park. Private home ownership on Charlotte St in the South Bronx made the second move. Today it is hard to find a vacant building or an abdonded car on any street in NYC. Back in the 80s I just thought the place would have to be written off. I was wrong. It didn't happen. In fact many of those once burned out ghetto neighborhoods have gone from cheap low income housing to expensive condo units and apartments. Sections like Harlem in Manhattan and Williamsburg in Brooklyn, once ghetto areas are now big SSSS.

I'm not the guy that will invest in Detroit. But somebody will. And my guess is that things will change for the better when the right people see what this major US city has to offer. I believe if it worked in NYC when a place like the Bronx couldn't afford to pay for its own services, my guess it could work in a place like Detroit too.

[SageVigiles 1,194]

Did Waterbury declare bankruptcy or did OPM come in and take over?

[nfd2004 750]

Did Waterbury declare bankruptcy or did OPM come in and take over?

Alex, that's a good question and now that you bring it up, I'm not really sure.

I know that for the Waterbury firefighters (and police) there were some painful give backs forced onto them.

As for Detroit, what is now a burned out wasteland will probadly some day become the kind of area that most of us wish we had invested in. Lets face it, it can't get worse, it can only get better.

(Alex being from Connecticut I heard that once burned out area in Bridgeport, off of I-95, is now supposed to be developed, into what, I'm not sure)