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Barry D. Wood

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A Democratic Mayor and Republican Governor Cooperate to Revive Detroit

Posted: 09/19/2012 5:06 pm

On September 12th, Detroit's brave Democratic Mayor Dave Bing and Michigan's pragmatic Republican Governor Rick Snyder agreed to refurbish Belle Isle Park, a neglected cultural gem in the shadows of a once great city. The magnificent two-mile long refuge in the Detroit River between the U.S. and Canada was laid out by Frederick Law Olmsted and is even larger than his masterpiece, Central Park in Manhattan.

As Detroit over the past decade sank closer to dysfunction and fiscal calamity, the city was unable to properly maintain the park. Crime and security concerns deterred visitors while Belle Isle's conservatory, zoo, aquarium and nature trails either closed or decayed. Under the Bing Snyder deal Belle Isle will become a state park with non-city Michigan residents having to pay the annual $10 fee that gives access to all state parks.

In signing the accord Snyder said that establishing Belle Isle as a state park, "provides needed financial relief to Detroit without it relinquishing ownership and brings long overdue restoration to the park." Bing said it "is a win-win situation for the city and the entire state, by preserving a historic destination in the city of Detroit."

This budding partnership between Bing and Snyder is a marriage of convenience as the mayor and governor have come together primarily to avoid a Detroit bankruptcy, an outcome dreaded by both. Last April they agreed to transfer final say on the city's devastated finances to a financial officer and advisory board. With default on Detroit's $10 billion debt looming, the consent agreement forestalled the harsher alternative of the governor appointing an emergency manager, as has happened in Flint, Pontiac and Benton Harbor.

Bing, a 68-year-old former NBA star who succeeded disgraced mayor Kwame Kilpatrick in 2009, had run out of choices. "From my position," he said, "I had two options: Sign the consent agreement or let an emergency manager come in. We opted to sign the agreement."

Detroit's financial stabilization agreement requires a balanced budget, something it hasn't had in 10 years. With its credit rating cut to double C this year Detroit can't sell bonds to cover deficits in its general fund. For the fiscal year that began July 1 the city's overall budget is $2.6 billion, a 16% cut from 2011/12. Assistance from the state is projected to rise slightly but is down substantially from 2000. Pummeled by continuing economic decline, the city's other revenue sources -- taxes on income, gaming, and property -- are all down.

To narrow the deficit, Bing in July announced that city workers -- including firefighters and police -- would take a 10% pay cut. Bing defended the measure as tough but necessary. Since Detroit can no longer borrow, he said, "without action the city will shut down."

Bing also plans to cut city employment by 20%, or 2,500 jobs. Last month he embraced a consultant's recommendation that the bloated water and sewerage department cut its work force by 80%. Detroit's powerful public service unions are enraged and mounting legal challenges.

For his part the governor says the state will help stabilize Detroit finances. Snyder, a venture capitalist who once headed Gateway computer, was elected governor in 2010 in his first bid for public office. Promising to reinvent government, Snyder has registered progress in turning around battered state finances. Aided by a recovering auto industry he says the same thing can happen in Detroit. "The city and state," he says, "must show outsiders they can work together to solve problems."

Detroit's financial disaster is the result of fiscal neglect while the city's tax base and population were falling precipitously. Detroit's finances have been hammered by the 40% downsizing of the auto industry, the loss of 300,000 jobs in southeast Michigan, and a home foreclosure rate that has been among the highest in the country.

Once the nation's fourth largest city, Detroit now ranks 18th behind Indianapolis, Columbus and Charlotte. Its population has slipped below 700,000 and demographers say as many as 1,000 people continue to leave each month. Detroit's population is down by two-thirds from 1950 and has fallen by a quarter of a million since 2000. While white flight accounted for the early decline, in recent years Detroit's black middle class has joined the move to the suburbs or out of Michigan.

The most alarming effect of the population exodus is the huge inventory of abandoned and derelict buildings stretched out over a city that geographically is larger than San Francisco, Manhattan and Boston combined. Entire neighborhoods are hollowed out. Detroit has from 40 to 70,000 abandoned buildings, many of which have become havens for drugs and other criminal activity.

Drive the 5.4 miles along Michigan Avenue from downtown Detroit to Dearborn and it's hard to find a single strip mall where city residents can shop. The vacuous corridor passes the empty lot where Tiger Stadium once stood and the derelict skeleton of what was the grandest train station between New York and Chicago. Amid the abandoned structures only the occasional filling station, bar or bodega peeks out from a gutted landscape.

How, one wonders, can this city be brought back to life?

Grim as the outlook appears, there are clear signs of turnaround. Downtown areas adjacent to Comerica Park, Ford Field and along the riverfront are becoming vibrant. Retail and residential activity increasingly radiates out from the core with rents rising and young entrepreneurs moving in.

A Whole Foods supermarket is under construction near the Art Institute and Wayne State University. On the northwest side 900 jobs are expected from a new shopping mall. Snyder has reached agreement with the Canadian government for a new bridge connecting Windsor and Detroit, promising many high pay construction jobs.

Bing, up for re-election next year, has boldly challenged city council militants who oppose any cooperation with a Republican governor. He has a fight on his hands to win approval for the 30-year Belle Isle lease to the state. Snyder, who sees himself as a problem solver, promises to be a supportive partner. Even more than his Democratic predecessor Jennifer Granholm, he seems committed to the city, recognizing that Michigan's recovery is incomplete if Detroit doesn't turn around.

An earlier version of this article appeared on marketwatch.com.

Barry D. Wood, raised in Michigan, has been writing about Detroit for two decades. A Washington based economics journalist, he is North American economics correspondent for RTHK radio in Hong Kong.

 
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