TOPICS > Economy

With Detroit on Brink of Financial Disaster, State Steps In

December 6, 2011 at 12:00 AM EST
With Detroit on track to completely run out of cash in four months, Michigan's government began a 30-day review of the Motor City's beleaguered finances Tuesday. That process could lead to a state takeover. Desiree Cooper of Detroit Public TV reports.
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JUDY WOODRUFF: Now: Detroit’s budget crisis.

The Motor City is on track to run out of cash in four months. Today, the Michigan state government began a 30-day review of the city’s troubled finances, a move that could lead to a state takeover.

Special correspondent Desiree Cooper of Detroit Public TV has the story.

DESIREE COOPER, Detroit Public TV: Detroit is on the verge of a financial disaster. Hundreds, possibly thousands more city workers could soon be laid off, while Mayor Dave Bing tries to stave off a state-appointed emergency manager who would take control of city government.

Bing is now demanding that the city’s fire and police unions accept another pay cut.

DAVE BING D -Mayor of Detroit: For decades, the city has refused to face its fiscal reality. We cannot continue to operate that way. Without change, the city could run out of cash by April, with a potential cash shortfall of $45 million by the end of the fiscal year.

DESIREE COOPER: In the last 60 years, Detroit has lost more than half of its population. This is a common scene in once-comfortable middle-class neighborhoods like Yorkshire Woods: abandoned homes being leveled by city wrecking crews.

More than 3,000 structures have come down since Mayor Bing took office two years ago. Bing wants to take down 6,000 more by the time his term ends in 2013. These demolitions are a key component of Bing’s plan to turn Detroit around.

It’s called Detroit Works. With a sprawling city, 139 square miles, and few resources for city services, Mayor Bing took the Detroit Works project as an opportunity to redefine the city’s physical, economic and social landscape. He began by taking inventory, taking a close look at what Detroit really has.

Demographers have identified at least 100 distinct neighborhoods within the city limits. With that in mind, Detroit Works unveiled its short-term plan, classifying the city’s neighborhoods by their quality of housing and stability of population.

The degree of city services and investment would depend on whether the neighborhood is deemed steady, transitional, or distressed.

RAINY HAMILTON, Architect, Hamilton Anderson Associates We have to get this right now. I mean, we have serious structural problems, as you look at density, as you look at the vacancy of property, as you look at the infrastructure.

DESIREE COOPER: Architect Rainy Hamilton grew up in Detroit. His firm compiled the report that Detroit Works is based on. He says focusing on areas with the most people and the most viable homes makes sense.

RAINY HAMILTON: We shy away from talking about moving, but we have to understand that it’s easier for me to provide service to you, if I’m providing police protection, fire protection, if I have a community that is solid.

DESIREE COOPER: So it’s a density…

RAINY HAMILTON: It’s a density issue.

DESIREE COOPER: Beginning last fall, Detroit Works has been holding community meetings across the city, looking for input and support.

Karla Henderson heads Detroit Works.

KARLA HENDERSON, Detroit Works Project: We’re making decisions with resources right now, where we pave streets, where we invest in public lighting, where we invest in housing stock. And so we need to make those decisions right now while the long-term plan is being developed.

DESIREE COOPER: Under the Detroit Works plan, three demonstration areas were picked. In those areas, efforts would be monitored and assessed to see what will really work to fight blight and bolster property values. Detroit Works had to pick and choose where to focus first.

Some neighborhoods are now getting more attention than others. Palmer Woods is one of them. It sits in the middle of one of the Detroit Works demonstration areas. Homes worth a million dollars in the suburbs go for a quarter of that here. For many, it’s a chance to live in an upper-crust neighborhood for a fraction of the cost.

Now, have you been in this house for 25 years?

WOMAN: Yes, almost 24-plus.

DESIREE COOPER: OK. Barbara and Spencer Barefield have what they consider a small house amongst Palmer Woods’ mansions.

SPENCER BAREFIELD: You can’t talk about Palmer Woods without talking about the auto industry. The wealthy individuals that started the car companies made Palmer Woods their home.

DESIREE COOPER: Palmer Woods consists of dedicated Detroiters, the more affluent Detroiters who are part of the tax base the city desperately wants to hold on to.

But, even in Palmer Woods, homeowners are struggling, some even thinking about leaving Detroit. The Barefields are staying put, although city living here comes at a high price. Detroit’s property and income taxes, along with more expensive car insurance, are a part of it. Cooling and heating a big home on a moderate income makes it even tougher.

The city can’t help reduce the Barefields’ $900-a-month utility bill, but it can help by giving preferential treatment in this community’s upkeep, maintaining roads, sidewalks and streetlights. That could mean the difference between residents staying or leaving.

Then there are the neighborhoods outside the Detroit Works demonstration zones. On the Far West Side, 12,000 people call the Brightmoor neighborhood home. While Palmer Woods was historically where the auto magnates used to live, Brightmoor was home to many of the first-generation autoworkers who migrated to the city in the ’30s, ’40s, and ’50s. Today, most of that tax base is long gone.

CHARLES PUGH, Detroit City Council President: Brightmoor is a challenge, because it’s so sparsely populated. It’s so rural, almost. I mean, you drive through there, and you’re like, where am I?

DESIREE COOPER: City Council President Charles Pugh serves the entire city of Detroit.

CHARLES PUGH: You go in some neighborhoods of Brightmoor, there’s like one occupied house. Every other house, the other 40 houses are burned-out shells.

DESIREE COOPER: With parts of Brightmoor so decimated, Pugh would like the residents to consider moving to more viable neighborhoods nearby, so the city can redirect scant resources away from those almost empty tracts of land.

While the mayor says he will continue providing services like police, water and fire protection, Detroit Works won’t be investing in new construction here. Karla Henderson says the city will only spend its sparse funds on developments in the healthier neighborhoods.

KARLA HENDERSON: I recall somebody telling me early on that there has not been any new housing built in the city of Detroit since the ’80s that hasn’t received some type of city subsidy. So, the city really has an ability to control and steer development where it Is most appropriate.

DESIREE COOPER: The neighborhood coalition the Brightmoor Alliance takes issue with the Detroit Works plan. Its members believe Detroit Works is choking off the most distressed neighborhoods outside the demonstration zones.

Reverend Larry Simmons is a leader of the group.

REV. LARRY SIMMONS, Brightmoor Alliance: And that’s why, with all due respect to the city, love the mayor, but it doesn’t matter what they do. Mayors come and mayors go, but the people remain.

DESIREE COOPER: So what I’m hearing is, not only do you take exception, but this entire community is taking exception?

REV. LARRY SIMMONS: Yes. And…

DESIREE COOPER: why?

REV. LARRY SIMMONS: Because the whole idea that the value of a community is determined by its density is proven wrong. What’s the least dense community around here? Bloomfield Hills. So…

DESIREE COOPER: Bloomfield Hills, a rich, suburban…

REV. LARRY SIMMONS: Yes, but nobody is talking about redensifying them.

DESIREE COOPER: Bloomfield Hills, a suburb north of Detroit, is one of the country’s wealthiest communities, with a tax base to match.

Brightmoor lies far on the other end of the spectrum. The Brightmoor Alliance has long been resigned to the idea they will have to find their own way to survive. It’s here Riet Schumack has been operating a community garden for several years, pushing for self-sufficiency. Now she and others are looking to take the next step toward a new future.

RIET SCHUMACK, Brightmoor Alliance: The same people who are willing and able to do urban farming also have some ideas about what their house is supposed to look like. They might not want to be hooked up to a traditional sewer system. They might come up with some really innovative, self-sustaining, 21st century solutions to energy problems. And…

DESIREE COOPER: So they might want to live off the grid.

RIET SCHUMACK: That’s right.

DESIREE COOPER: As Detroit teeters on insolvency, more neighborhoods could soon be left to find their own solutions for survival, and the first place they may turn to is Brightmoor.