|A Detroit intersection. Source: nextcity.org|
Three weeks ago the Detroit Free Press produced a special report that painted a view contrary to many public perceptions about Detroit’s financial history. The Free Press pored over city budget documents dating back to the 1950s and found some interesting things:
The numbers, most from records deeply buried in the public library, lay waste to misconceptions about the roots of Detroit’s economic crisis. For critics who want to blame Mayor Coleman Young for starting this mess, think again. The mayor’s sometimes fiery rhetoric may have contributed to metro Detroit’s racial divide, but he was an astute money manager who recognized, early on, the challenges the city faced and began slashing staff and spending to address them.
And Wall Street types who applauded Mayor Kwame Kilpatrick’s financial acumen following his 2005 deal to restructure city pension debt should consider this: The numbers prove that his plan devastated the city’s finances and was a key factor that drove Detroit to file for Chapter 9 bankruptcy in July.
The State of Michigan also bears some blame. Lansing politicians reduced Detroit’s state-shared revenue by 48% from 1998 to 2012, withholding $172 million from the city, according to state records.
Decades of mismanagement added to Detroit’s fiscal woes. The city notoriously bungled multiple federal aid programs and overpaid outrageously to incentivize projects such as the Chrysler Jefferson North plant. Bureaucracy bogged down even the simplest deals and contracts. In a city that needed urgency, major city functions often seemed rudderless.
When all the numbers are crunched, one fact is crystal clear: Yes, a disaster was looming for Detroit. But there were ample opportunities when decisive action by city leaders might have fended off bankruptcy.
Perhaps the most interesting piece of information to me is the absolute devastation of property value in Detroit. The Motor City’s assessed property values peaked at the same time the overall population peaked, in the 1950s. By about 1955, Detroit’s total property value was about $45 billion in 2012 dollars. By 1980, property value sunk by 67 percent, to just $15 billion. However, the decline did not stop there. Property values bottomed out at $8.8 billion in the late ’90s, before the housing bubble lifted values over the next decade. Today’s total property value of approximately $9.6 billion.
Once again, I maintain that Detroit was devastated by white flight in a way that no other American city has suffered. The city could not counter the loss in property value, and without new growth or investment in the city, bankruptcy was bound to happen.
The Detroit News took a more human approach in its special report by examining actions and policies on a decade-by-decade basis. Those who have studied Detroit’s collapse will be quite familiar with much of the News’ analysis, but like the Free Press makes the case that bankruptcy was virtually inevitable.
Two quotes stuck out in my mind that capture the Detroiter’s attachment — or lack thereof — with place. Kevin Boyle, a Northwestern University professor raised on the city’s East Side, said:
“It was always a city built on money. People came to Detroit for jobs, not the natural beauty or the great weather. There was never a commitment to place. It was to money. And then the boom ended.”
And then this quote:
“You had a system that pits against each other immigrant whites and blacks from the South,” said the Rev. Richard Sauerzopf, who studies Detroit for Michigan State University’s Global Urban Studies Program.
“In Detroit, the solution wasn’t to make it work. It was to leave.”
I suppose the very unfortunate and very public embarrassment that is municipal bankruptcy is causing at least some in the city to develop some introspection. Can this be the basis for much needed change?