Detroit bankruptcy city’s only real choice to survive
Word late Thursday that the city of Detroit filed for bankruptcy was neither unexpected nor particularly bad news, given the economic mess Motown is and has been in, for years.
Kevyn Orr, a bankruptcy expert hired by the state in March to stop the city’s fiscal free-fall, apparently made the final call to file in federal bankruptcy court under Chapter 9, the bankruptcy system for cities and counties.
It’s the largest municipal bankruptcy in the nation’s history.
Gov. Rick Snyder, who appointed Orr, quickly noted that the filing should help the city pay what it owes, which, according to The Associated Press, could add up to billions of dollars.
According to AP, the city’s woes have piled up for generations. In the 1950s, its population grew to 1.8 million people, many of whom were lured by plentiful, well-paying auto jobs. Later that decade, Detroit began to decline as developers started building suburbs that lured away workers and businesses.
Then beginning in the late 1960s, auto companies began opening plants in other cities. Property values and tax revenue fell, and police couldn’t control crime. In later years, the rise of autos imported from Japan started to cut the size of the U.S. auto industry.
AP reported by the time the auto industry melted down in 2009, only a few factories from GM and Chrysler were left.
Detroit lost a quarter-million residents between 2000 and 2010. Today, the population struggles to stay above 700,000, AP stated.
What the city, in terms of employee numbers and services to residents, will look like after Chapter 9, we can’t say.
We can say, however, that there is no where in Detroit to go but up. So in that regard, the bankruptcy filing is in all likelihood a positive move.