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Old 05-09-2017, 05:36 PM
 
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Moderator cut: This casual remark about satanism is not really a part of the question, but it derails the whole thread, again and again.

Anyway, I know that Detroit declared Bankruptcy a while back and I was wondering what kind of impact it had on the area economy and if it has led to a more positive image of the city or negative?

Last edited by Yac; 05-11-2017 at 01:37 AM..
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Old 05-09-2017, 07:50 PM
 
Location: Michigan
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Initially it was a negative image of the city. Like "Oh man, Detroit got so bad they declared bankruptcy!" Now suddenly it's like "Wow Detroit really turned around pretty quick after that bankruptcy. Amazing."

Of course, the bankruptcy affected more quality of life issues than purely economic ones. For instance, there wasn't exactly enough money to keep on paying police officers which is pretty important in a city struggling to rein in its high crime rate. Belle Isle had to be leased to the state because the City simply didn't have the funds to maintain the park in addition to all other parks in the city. EMS response was bad. Like, life threatening bad. Debt was accumulating, pension obligations were getting bigger (and it was discovered the city hadn't even been paying them for a while). Buses were falling apart and falling behind schedules. It was bad.

Sure, in someway this does eventually have effects on the local economy and it already has in various ways, but in general, it wasn't a very optimistic time to be a resident of Detroit. If these problems weren't addressed, the city would assuredly continue to lose residents which has been the biggest detriment to economic growth.

Post-bankruptcy, the city does seem like it's on a brighter path albeit not without its bumps. Crime is still somewhat high, but it's at least falling and the police force is expanding and becoming more responsive and efficient. All the city's streetlight were replaced and updated with brighter and clearer LED lights. Parks are finally being renovated and maintained. New bus lines have been added, some routes now with 24 hour service. The city has been able to tear down many vacant and blighted structures as well as rehabbing and stabilizing homes in borderline neighborhoods. Things that needed to be done are getting done, it seems.

Plus, since bankruptcy, the city's budget has been balanced each year, so the mayor says. Pension obligations will still become a problem in the future, but all the more reason to get Detroit's tax base growing again.

That's really the only big question mark so far; whether all this effort has simply stopped the bleeding or put the city on a path towards prosperity. Time will tell. Downtown Detroit is really taking off, but like with most cities, people feel that there's too much investment in a concentrated area, mainly for newcomers/the affluent, but not as much for the rest of the city. Or is this "rebirth" simply temporary or lipstick on a dying pig? Downtown is not without its success with a little tax incentives and subsidies.

But anyway, the point is the bankruptcy confronted the city with some problems that couldn't be pushed off any longer. I personally think Detroit is better off now and better positioned for a comeback than it otherwise would be had it not gone through bankruptcy.
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Old 05-09-2017, 08:49 PM
 
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The reason I asked is that my former hometown, Hartford, CT is now in serious financial trouble and may have to declare Chapter 9 Bankruptcy. I heard that Detroit went through this not too long ago.

Pensions are also a big problem with Hartford. I suspect this is the case with most medium sized and larger metro areas that are anchored by a central city.

I think most of us are hoping that Detroit will fully rebound and become a great city again. At least the core manufacturing companies (Auto Makers) are still there. CT has lost GE to Boston and now AETNA is talking about leaving Hartford. Not good.
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Old 05-10-2017, 07:25 AM
 
Location: Grosse Ile Michigan
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Detroit has a problem because the special manager massively underestimated a liability or overestimated some future revenue (I think it was the former, but I do not remember). They we going to file a lawsuit over this, I did not hear what happened, but it was a huge dollar figure. Otherwise, the bankruptcy has no impact on the City now. Basically the City was able to start over and is doing reasonably well (except for this long term problem mentioned above).
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Old 05-10-2017, 10:14 AM
 
Location: Michigan
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Quote:
Originally Posted by WILWRadio View Post
The reason I asked is that my former hometown, Hartford, CT is now in serious financial trouble and may have to declare Chapter 9 Bankruptcy. I heard that Detroit went through this not too long ago.

Pensions are also a big problem with Hartford. I suspect this is the case with most medium sized and larger metro areas that are anchored by a central city.

I think most of us are hoping that Detroit will fully rebound and become a great city again. At least the core manufacturing companies (Auto Makers) are still there. CT has lost GE to Boston and now AETNA is talking about leaving Hartford. Not good.
I've only glanced at Hartford's situation, but I can see that the city isn't in as dire straits as Detroit was, but still it looks like it might get tougher before it gets better. In any city's case, hard decisions have to be made even if bankruptcy is avoided. It basically comes down to what's the lesser of two evils for most decisions.
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Old 05-11-2017, 05:10 PM
 
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AnimatedMartian. I've noted that Detroit has a ton of very cheap homes for sale. I suspect most are fixer uppers and are probably vacant. That could be used to its advantage since cheap homes will attract new home owners provided that employment can be found in the area. That is one major problem Hartford will face. Fairly high real estate prices and very high property taxes prevent many potential home owners from buying in the city.

Has the City of Detroit tried to do something along the lines of buying some of the available properties and then either sell them to investors or potential home owners for say a $1 or perhaps for the price of any back taxes should they exist on said property? Could be a great way to unload some of those homes.

It sounds like some of the city departments that were cut to shreds by the bankruptcy are beginning to stabilize. That is a good sign especially if bus service is expanding and hiring new police is now possible. And new street lights is obviously a great bonus.
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Old 05-11-2017, 05:13 PM
 
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Originally Posted by Coldjensens View Post
Detroit has a problem because the special manager massively underestimated a liability or overestimated some future revenue (I think it was the former, but I do not remember). They we going to file a lawsuit over this, I did not hear what happened, but it was a huge dollar figure. Otherwise, the bankruptcy has no impact on the City now. Basically the City was able to start over and is doing reasonably well (except for this long term problem mentioned above).
Was that the former Piston Dave Bing? Or was he the Mayor for a while?

Yeah, I was wondering how the city was rebuilding in the aftermath of the bloodbath. It sounds like Detroit has really benefited from this and is starting to see a slow but steady rebuild of its infrastructure and also its image. Hopefully the tax base will expand which is the only way to sustain city services of course especially if the Pension costs cannot be addressed.
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Old 05-11-2017, 05:35 PM
 
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Just curious. I found out only half of Hartford's properties are taxable. The other half are tax exempt. Totally nuts. Anyone know what percentage of Detroit's properties are taxable and non taxable?
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Old 05-11-2017, 06:48 PM
 
Location: Michigan
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Quote:
Originally Posted by WILWRadio View Post
AnimatedMartian. I've noted that Detroit has a ton of very cheap homes for sale. I suspect most are fixer uppers and are probably vacant. That could be used to its advantage since cheap homes will attract new home owners provided that employment can be found in the area. That is one major problem Hartford will face. Fairly high real estate prices and very high property taxes prevent many potential home owners from buying in the city.

Has the City of Detroit tried to do something along the lines of buying some of the available properties and then either sell them to investors or potential home owners for say a $1 or perhaps for the price of any back taxes should they exist on said property? Could be a great way to unload some of those homes.

It sounds like some of the city departments that were cut to shreds by the bankruptcy are beginning to stabilize. That is a good sign especially if bus service is expanding and hiring new police is now possible. And new street lights is obviously a great bonus.
Generally anything under $50,000 is not a home fit to live in (there's often damage be it fire or water, missing utilizes, other hazards). Unfortunately, it costs more to renovate many homes than their market values so anyone buying a 'cheap' home would have to expect that they're going to lose money on it.

The other issue is that the homes are too cheap to qualify for mortgages even if the buyers qualify. Most banks don't deal with homes under certain appraisal values which means that a would-be home buyer would have to renovate a home completely out of pocket. $1 or $10,000 those are some pretty hard obstacles to overcome either way.

However, the city does buy homes (or seize them from negligent landlords) to rehab them and sell them on the market, but for quite many, they might only sell for 60% of the investment cost.

Building Detroit - Neighbors Wanted

The good thing is that once homes are renovated and move-in ready, they go pretty quick. So what the city tries to do is rehab homes within or near already stable neighborhoods. That way, at least the loss the city takes in selling lower-valued homes is made up by the fact that there's new (hopefully long-term) taxpayers moving into these homes. It also helps stabilize real estate values because now there's more comps to get an accurate sense of a neighborhood's market value whereas before homes would be sold every few months at wildly different prices.

-----

And actually, taxes aren't so much of an issue in Detroit. Yea they're high, most definitely higher than anyone would pay in the suburbs for the same appraised value, but since homes are so cheap, they're not literally high. For example, two homes; one in trendy Royal Oak and one in Detroit, assessed at $50,000 each would be $2100 in Royal Oak and $3400 in Detroit. But the catch is that Royal Oak tends to have higher market values for the same type of houses. A 1920s home assessed at 50K in Detroit might be 90K in Royal Oak. That means that Royal Oak house actually pays $3800 in taxes. So at that point, taxes becomes a non-issue and a would-be homebuyer would have to look at other factors on deciding which place to live in.

Unfortunately, most people would pick Royal Oak because you have an area that's safer, has better city services, and although not perfect schools, a lot better than Detroit's. A better phrase is Detroit has too high taxes for what condition of city services you're paying for (at least in the very recent past). Very rarely do you even find properties in Detroit assessed near or over 100K ($7,000 in taxes). That's usually a very historic mansion (or large McMansion) or a brand new condo downtown which of course are a small percentage of all residential properties a homeowner could buy and are obviously going to be expensive anyway because of location and age.
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Old 05-11-2017, 07:21 PM
 
Location: Michigan
4,571 posts, read 7,273,108 times
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Quote:
Originally Posted by WILWRadio View Post
Was that the former Piston Dave Bing? Or was he the Mayor for a while?

Yeah, I was wondering how the city was rebuilding in the aftermath of the bloodbath. It sounds like Detroit has really benefited from this and is starting to see a slow but steady rebuild of its infrastructure and also its image. Hopefully the tax base will expand which is the only way to sustain city services of course especially if the Pension costs cannot be addressed.
I think he's referring to Emergency Manager Kevyn Orr (whose birthday is today btw, interesting tidbit).

He was put in place by the state of Michigan to analyze and oversee Detroit's fiscal situation. He's the one that recommended to the governor that Detroit should file for bankruptcy. During Kevyn Orr's time as Emergency Manager, Detroit's elected officials had no say in any financial decisions.

Dave Bing was the mayor when Detroit went into bankruptcy and he really didn't do much because he mostly won for being known as a former Piston's player and having some business experience. Though Detroit's situation was way too big and too little too late to prevent what was to come. The mayor before Bing, Kwame Kilpatrick, was involved in a massive corruption scandal that sealed the deal for Detroit's descent into financial distress.

Detroit actually had elections during bankruptcy and the mayor that replaced Bing is our current Mayor Mike Duggan. He's the first white mayor Detroit has had since the 1970s and had experience turning around Detroit's Medical Center which had financial troubles.

Anyway, here's the issue that Mike Duggan wants to sue Kevyn Orr over.

Mayor Duggan: Kevyn Orr hid pension plan details; city may sue firm

Quote:
Had he known then about Orr's methodology, Duggan said more prudent plans could have been made during the bankruptcy rather than having to set aside money now for future pension payments. Even if the city sues, it still has to prepare because a lawsuit against Jones Day would take years, the mayor said.
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