Forget an emergency manager: Let Detroit go bankrupt, some city leaders say

By Steve Neavling on January 11, 2013703 Comments

Rather than hand over Detroit’s budget, parks, buildings and services to the Republican-controlled state, a growing number of residents and leaders are advocating for municipal bankruptcy.

Earlier this week, Councilman Kwame Kenyatta said bankruptcy is preferable to the appointment of an emergency manager, who could have unilateral authority to tear up union contracts, sell public assets such as Belle Isle and reduce police and fire services.

Kenyatta’s position echoes those of many other Detroiters who are suspicious of a state takeover and Gov. Rick Snyder, who has appointed emergency managers in Benton Harbor, Ecorse, Flint, Pontiac and Allen Park, and in the Detroit, Highland Park and Muskegon Heights school districts.

Citizens For Detroit’s Future, a civic group, delivered letters to city leaders this week, urging them to support Chapter 9 bankruptcy over a state takeover.

“It is clear to city residents and our suburban neighbors – Detroiters all – that our city is being maligned daily, and a conservative agenda being perpetrated against it to get what our late Mayor Young called, the city’s ‘Crown Jewels'” the group’s leader, Tom Barrow, said.

The idea is unorthodox and would be strongly opposed by suburban communities because their bond ratings would be adversely impacted. Further, the state would likely challenge any bankruptcy filings.
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For Detroit, Chapter 9 has its pros and cons. Some of the city’s debt likely would be dissolved, freeing up money for basic services. For the most part, the city’s elected officials would maintain authority, not a Republican-appointed emergency manager.

But under bankruptcy, the city’s ability to borrow money would be crippled, and the state likely would withhold extra funding.

“The state has no right getting involved in our affairs,” Amanda Ward, a Detroiter, said. “This is our city. If we run out of money, that’s what bankruptcy is for. The state would rob us dry.”

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Steve Neavling is an investigative journalist and former city hall reporter for the Detroit Free Press. Living on the city’s east side, Neavling explores corruption, civil liberties and the underbelly of an oft-misunderstood city.

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Allen Park, Bankruptcy, Benton Harbor, Chapter 9, Commissioner Kwame Kenyatta, consent agreement, detroit, Ecorse, emergency manager, Flint, Gov. Rick Snyder, Mayor Dave Bing, Pontiac, steve, Tom Barrow

Forget an emergency manager: Let Detroit go bankrupt, some city leaders say added by Steve Neavling on January 11, 2013
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Steve Neavling

Steve Neavling lives and works in Detroit as an investigative journalist. His stories have uncovered corruption, led to arrests and reforms and prompted FBI investigations.