Detroit’s bankruptcy process, like this long and dreadful winter, is unlikely to end anytime soon. While it is still officially a “fast-track” bankruptcy, it is definitely a muddy track.
As of now, federal bankruptcy Judge Steven Rhodes has a hearing June 16 to consider the city’s “plan of adjustment” bankruptcy proposal, but that now seems certain to be pushed back.
We don’t yet know if the judge will approve the city’s latest proposed settlement with two big banks.
We don’t know if the state Legislature will do its part and step up to save some of the pension funds and the Detroit Institute of Arts.
We do know that it is almost certain that some creditors will appeal and sue over any agreement that gives them less than what they want.
While the way in which the bankruptcy goes down is important, what's more important is what happens afterwards.
The bankruptcy, again like this dreadful winter, is something everyone wants over as soon as possible, but there may be a silver lining to the final settlement being delayed. While the way in which the bankruptcy goes down is important, what’s more important is what happens afterwards.
How does Detroit survive, stay solvent and be in a position to someday be prosperous again?
Bankruptcy may get rid of the crushing debt. It may even free up some money to improve city services, like police protection and blight removal.
But bankruptcy won’t solve any of the core troubles Detroit faces, which include hundreds of thousands of people who lack education and job skills. There will still be infrastructure problems, lots of poor people and tens of thousands of ruined buildings.
For years, I’ve argued that the solution would be to merge Detroit with surrounding Wayne County. I still think that is the best option, and the one that makes the most sense.
Especially now that it is clear that we need to press the reset button on county government, as well as the city.
But here’s another idea that might be worth thinking about. A few weeks ago I met with former State Senator Jack Faxon, one of the few surviving delegates to our state’s last constitutional convention.
Faxon, who has lived most of his life in Detroit, wrote the constitution’s language protecting state pensions. He went on to be the Legislature’s leading patron of the arts.
Yesterday, he offered me a new idea for fixing Detroit: Shrink it.
Yesterday, he offered me a new idea for fixing Detroit: Shrink it.
There are parts of the city today that are largely vacant lots. Detroit has barely more than one third of its peak population.
Faxon would have the Emergency Manager appoint a boundary commission to determine which parcels should be separated and return to township status. If they did that, he argued, the county would be responsible for providing those areas with services.
Clearly the Legislature, which has the power to create or dissolve cities, could allow that.
This may sound bizarre, but Detroit hasn’t always been its present 139 square miles. Back in 1920, it was only 78 square miles, and had a lot more people than now.
This may not be the right solution, but what nobody can deny is that Detroit, in its present form, doesn’t work - or that bankruptcy will magically fix that.
Something major has to change.
