Kevyn Orr, Rick Snyder and a Genuine Effort to Reinvent Detroit

Emergency manager Kevyn Orr and Gov. Rick Snyder say they want the city to emerge from bankruptcy as a livable, sustainable city. It looks like they really mean it.
by | July 22, 2013

When the discussions about the appointment of an emergency manager for Detroit first surfaced about a year ago, a lot of people worried that this would be all about cutting -- slashing city services, laying off public employees, turning as much as possible over to private operators and selling off city assets. That's not at all how things seem to be turning out.

At Friday's news conference in which emergency manager Kevyn Orr and Gov. Rick Snyder discussed the city's bankruptcy filing, the two men stood at a podium festooned with signs labeled "Reinventing Detroit." It's clear that that is just what they mean to do: They intend not just to cure Detroit's insolvency but to create a sustainable, livable city.

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Orr has been forthright from the moment he was appointed that he wants to restore basic public services. At that press conference, he said the bankruptcy plan he submitted contains a 10-year commitment to spend $125 million annually to remediate blight and address the needs of the city's residents. Snyder said his first priority was to reassure Detroiters, communicating with them and addressing their concerns.

As Orr and Snyder well understand, there's no way that Detroit can simply cut its way to fiscal health. And while the creditors now negotiating with Orr may not care much about Detroit's sustainability or livability, surely they can do simple math. Detroit's debt per capita is over $25,000, a figure that dwarfs the per-capita debt of other recent municipal bankruptcies: Vallejo, Calif., at $1,509; San Bernardino, Calif., at $2,310; Stockton, Calif., at $3,425; and Jefferson County, Ala., at $6,373.

At what point were those creditors going to stop lending Detroit money? It's doubtful that they anticipated coming face-to-face with the likes of Kevyn Orr. As an expert bankruptcy attorney who played a significant role in the bankruptcies of General Motors and Chrysler, Orr understands Chapter 11, the federal law on corporate bankruptcy. He also understands the municipal-bankruptcy law, Chapter 9, and how the two are different. Unlike a private company, a city cannot simply be liquidated, with the owners turning over the keys to a federal bankruptcy judge. After a city files for bankruptcy, it still has to provide for the basic needs of its residents -- answering 911 calls, lighting the streets, maintaining the sewers, providing reliable public transportation.

At the news conference, Orr made several references to the doctrine of Chapter 9 as shaping his plans for the city. His commitment to a sustainable Detroit is clear, and it's a personal one: In an email to me, Frank Shafroth, director of the Center for State and Local Government Leadership at George Mason University, recounted a conversation with Orr. Shafroth said Orr told him that a crucial factor in his decision to take the emergency-manager position had been the urging of his wife, who told him that it was one of those rare opportunities in life to do something that really matters.

Orr is very clear that he's in a hurry. He has 15 months left in his appointment to execute his plan for Detroit. I think he's going to get it done, that Detroit will emerge from bankruptcy as a livable community -- not prosperous, surely, but a city that works for the people who live there.

The situation in Detroit is extraordinarily bad, but there are lots of other cities across the country in pretty bad shape as well. Some of them -- among them Scranton, Pa., Flint, Mich., and Yonkers, N.Y. -- have been under one form or another of state supervision for a long time with little improvement. Now, in Detroit, I think we may be seeing the beginnings of a model for how to do state intervention that works.

Mark Funkhouser  |  Director, GOVERNING Institute
mfunkhouser@governing.com

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