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The Detroit bankruptcy is news of huge concern to all our members—creating statewide questions regarding what it could mean for other Michigan communities. A panel of the state’s top municipal finance experts came to the closing session of the League’s 2013 Convention to discuss what the bankruptcy means not just for Detroit but for communities across the state. “I don’t see a successful Michigan without a successful Detroit,” said moderator Dayne Walling, who is currently serving his second term as mayor of the city of Flint. “With Michigan the reality is we’ve been in a public sector recession for many straight years and there’s no end in sight when you look at revenue pressures and rising costs. We’re playing a serious game of Press Your Luck with our cities’ futures,” said Walling. “Unless there’s serious reform we’re all going to continue to experience very difficult challenges…Not too many enterprises can succeed with less and less and less every year.” Here is a brief look at the panelists and what they had to say:
Is Detroit contagious? That was the question asked by Frank Shafroth, director of the Center for State and Local Leadership within the Center for Public Governance at George Mason University. There hasn’t been a harder time in the history of the US for municipal leaders. They are facing the greatest fiscal challenge in at least a century, he said. Investor perceptions and apprehensions can indeed impact the bond market for cities, he said. But cities also have the potential to collaborate and work together to face those challenges. Talking about the larger issues of fiscal stress was Dr. Eric Scorsone, a nationally recognized expert in municipal finance and administration who currently serves as an advisor to Detroit Emergency Manager Kevyn Orr. His area of expertise is related to financial emergencies and assessing financial health among public and nonprofit organizations.This is not just Detroit, Scorsone said: all our cities are facing the stress of stagnant or decreasing revenues and the rising fiscal pressures of unfunded liabilities such as employee health care and pensions. The bankruptcy is an unfortunate necessity, he said, and only the beginning of a very long process. He is optimistic, however, that there will be a brighter future ahead. One thing he would propose for Michigan communities is basing future revenues more on a lower but expanded sales tax that covers services (exempting some services like medical), rather than relying on city income taxes that are problematic with today’s highly mobile workforce.The shared fate of Michigan communities was again emphasized by Detroit City Council President Saunteel Jenkins. “We are all tied at the hip with this. It’s no longer cities competing against each other. We’re working together to compete on a world stage now,” said Jenkins. The main thing that inspires her for the future: the city’s people. Detroit has added close to 30,000 new jobs in the last 4-5 years, she said.
“A tale of two cities” was a core message from Gary A. Brown, Chief Operations Officer to the City of Detroit by Emergency Manager Kevyn Orr. His duties and responsibilities include the oversight, management and restructuring of multiple city agencies. Brown said when the bankruptcy became imminent, he didn’t know what to expect but he quickly saw that “Detroit didn’t fall off into the river.” It’s really municipal government that’s broken, he said: the business and corporate community are doing just fine. Detroit will indeed balance the sheet and resolve its legacy costs, he said. The larger fear is the city government won’t be restructured enough to adequately deliver services to avoid falling back into this same trap in another few years.No matter what, the credit implications can linger for some time and the Detroit bankruptcy itself will be a long process, said Jane Ridley, analytic manager and team leader for the State and Local Government Department’s Great Lakes group at Standard & Poor’s Ratings Service. Ridley talked about what the bankruptcy means from a market perspective on a national basis, and advised patience for the time ahead.
The best take-away lesson for other municipalities is to take steps to resolve similar issues before they reach this crisis point, said attorney Douglas C. Bernstein of Plunkett Cooney, who works in the areas of commercial litigation, commercial loan restructuring and documentation, creditors’ rights, commercial and municipal bankruptcy, receiverships and other banking-related litigation and appeals on behalf of national and regional lenders and special servicers. Bernstein said municipal leaders must bear in mind that there have only been 43 municipal bankruptcies since 1980 so there is not a lot of guidance and experience to rely on. If you’re facing a potential bankruptcy, he said, try to do everything you can outside of court because it is a long, uncertain process that is very, very expensive…and once you enter a court room, “all bets are off.”The session was a great opportunity for League members to ask questions and hear directly from the experts and some key players about a complex and lengthy process that should matter to all of us here in Michigan.
Congratulations to Grand Rapids Deputy City Manager Eric DeLong who was honored with the MLGMA Patriarch Award at the Colloquium.The session topic was Lean Urbanism for Local Government featuring Andrés Duany, co-founder of the Congress for New Urbanism (CNU) and a pioneer in urban planning for the 21st century. Here are some of the highlights of his speech:Duany on his 5.5 hour tour of Detroit, his fourth over a series of years starting in the late 1990s: “It’s absolutely eating my brain and blowing my mind.” The prior three tours displayed the “misery of Detroit” he said. Woodward Avenue is now “full of wonder and good potential,” he said. It’s bigger and cooler than Atlanta or Raleigh, he said, and those are champions of success.So why is our perception so negative? Here’s what Duany says: If you only look at the numbers, the picture is dismal. But when you look at the restaurants and shops and people moving in, it’s tremendously successful. So maybe we are measuring the wrong things.Other highlights from Duany’s presentation:When it comes to planning for the future, be clear on what you can’t do. We need to be realistic in our goals, he said. The more realistic you are, the more credible you get. What happened to our cities: 1. Interstate system made it easy for people to live in the suburbs and come into the city to use the amenities. 2. The VA/FHA post-war loans were only for new housing. 3. Racism, redlining, blockbusting isolated the poor. Poverty has always been with us. That’s not the problem, he said. What harmed cities were concentrations of poverty. The car permitted that segregation. 4. Planners of the 1960s attempted to compete with the suburbs by suburbanizing the cities – making them for cars not people, destroying street life and ruining what made cities worth living in. Too many downtown codes are tailored for suburbs, making it difficult if not impossible to do what is good for an urban setting. That’s why form-based codes make sense.In today’s world, cities aren’t competing against each other. Cities are competing against their own suburbs (in Michigan's case, typically that means the townships). Look at your city from the outside and see what can be done to equalize the choice for developers.It’s not enough to not have crime. You have to have the perception of not having crime. Broken windows, lack of maintenance, chain-link fences, abandoned buildings all “tell” people a place is unsafe.On why “the world is vibrating with excitement for Detroit”: Every revitalization of a decayed place, from the Left Bank of Paris forward, is led by the urban pioneers who have made it “cool” – they are the risk-oblivious: the young, the artists, and the gays. The risk-aware follow – the developers. Then the risk-averse – “the dentist from New Jersey” comes in and drives out the cool. It’s inevitable, he said. So wind back the bureaucracy, he said, to avoid exterminating the pioneer and the small developer, and to allow the young and creative to act. That's what tactical and lean urbanism are all about.
George Jackson of DEGC
League CEO and Executive Director Dan Gilmartin started out the morning general session talking about some of the initiatives the League is involved in on behalf of Michigan’s communities, reaching out to entities around the state, nation and world to help lead the conversation on placemaking as an economic development strategy. It’s why the League is involved in working with MSHDA on programs like PlacePlans, and a new aggressive legislative agenda called Partnership for Place. Government has gotten too involved in the economic decline of our state, he said. It’s also important to light a path out toward the future. The panel discussion on Detroit Redux is a case in point. More than 80 companies have located in Rock Ventures-owned buildings in downtown Detroit since August 2010. In 2012, Blue Cross Blue Shield of Michigan moved nearly 4,000 workers into the landmark RenCen towers overlooking the historic Detroit River. At this morning’s general session we heard from several key figures in this exciting rebirth. The panel was moderated by George W. Jackson, Jr. of the Detroit Economic Growth Corporation. The DEGC has led or played a key role in dozens of landmark projects including the Lower Woodward Improvement Program for Superbowl XL, and the transformation of the Detroit Riverfront from industrial to multi-use recreational, residential and commercial.Jackson said with so much economic development happening in Detroit, the bigger challenge is to get people to come to the city and see everything that’s being done, counter to the negative image perpetuated in the popular media. The bankruptcy is the gorilla, he said, but it is a long-overdue step that will put the city’s financial house in order and restructure the city’s ability to provide services.BCBSM President and CEO Dan Loepp joined in via video message talking about how the company is consolidating its workforce in downtowns across the state. Real estate broker Austin Black II of City Living Detroit specializes in properties located in Detroit with a focus on downtown, the growing riverfront, the cultural center, and the city's historic neighborhoods. Black, a Detroit native, said 8 years ago most of his clients were young professionals; that has now evolved to include empty nesters and families with kids who want to stay in the city. Occupancy rates in Detroit are now upwards of 97%.David Carroll of Quicken Loans is involved with all of Quicken Loans Detroit initiatives, including real estate acquisition and use, space planning, incentive programs, community affairs and government relations. Carroll said the company chose to come to Detroit because it was the best way to draw young talent, who want a vibrant urban lifestyle. Tax incentives were important, he said, but it wasn’t the big motivator for the move – if it had been just about the numbers, he said, the company would not have come.Andy Hetzel of Blue Cross Blue Shield of Michigan said BCBSM has purposefully worked to consolidate the workforce in key urban centers because it’s a human benefit that’s good for their people. It’s created a lot of energy on their campus, he said, and that’s good for business.Gordon Krater of Plante Moran, which is now moving into Detroit’s Compuware building, said the decision to come to downtown Detroit was a confluence of factors. We are committed to Michigan, he said, and our clients and employees want to be part of an exciting urban environment like Detroit. In fact, they’ve had more employees volunteer to transfer to the new downtown Detroit office than they have space for. We know there are still many problems, he said, but we want to be part of the solution.
Welcome to the Michigan Municipal League 2013 Convention in Detroit!The first day officially began with the Welcome General Session on Wednesday morning, featuring the ever-popular Parade of Flags and the welcoming words of League President David Lossing and Detroit City Council President Saunteel Jenkins, who described the Convention as “an opportunity to learn from each other, exchange ideas and build resources” that will hopefully continue on long after the Convention as we all work together for a better Michigan. The week is also a great chance to “see Detroit as it is, not as it’s reported to be,” said Jenkins.Today’s food truck lunch at Milliken Park on the riverfront was a perfect example, as municipal officials from around the state got to sample the wares of this exciting new entrepreneurial placemaking trend that is sweeping the nation.And of course, the best part of the Welcome General Session every year is the long-awaited presentations of the Community Excellence Award nominees. You would have to have been here to get the full impact of these incredible showstoppers but here’s what they were about:Region 1Fenton, Holly, & Linden—Shiawassee River Heritage Water TrailThe Shiawassee River Heritage Water has seen increased recreational activity on the Shiawassee River over the last decade through intergovernmental and public partnership efforts including promotional signs in Holly, Fenton, Linden, and Argentine and Holly Townships; mile markers along the river to inform paddlers of their location, promotional brochures, annual cleanups, canoe and kayak races from Holly to Fenton, and moonlight paddle events.Region 2St. Joseph—Silver Beach DevelopmentFor many decades vacant property and antiquated industrial buildings dotted the city's lakefront. In 2006, the Silver Beach Committee was formed to acquire the property. After seven years of planning and over $8,200,000 in fundraising, the community christened Silver Beach in 2010, which includes the Silver Beach Carousel, the Curious Kids' Discovery Zone, and Michigan's largest interactive water fountain. Region 3 Belding—Community GardenThe Community Garden Group, in affiliation with Belding Area Schools and the city of Belding, built the Belding Community Garden in the spring of 2012. The garden is accessible to all residents of Belding and surrounding areas. It provides social, educational, and nutritional opportunities to those who may not otherwise have accessRegion 4DeWitt—Community ShowcaseThe 1st Annual 2012 DeWitt Community Showcase was held in April of 2012 at the DeWitt High School, a collaboration of the city of DeWitt, DeWitt Township, and DeWitt Public Schools. The free event included a “Taste of DeWitt,” student art pieces, student performances, and exhibits by over 100 area businesses and civic groups. The event was attended by well over 2,000 residents.Region 5Imlay City—SEED Economic GardeningIn 2010, Imlay City began developing a strategy to foster economic development. The city came up with the SEED Group to foster economic gardening a plan focused on small businesses, entrepreneurs, and overall economic development. Imlay City supports business growth and entrepreneurship through continuous networking events, entrepreneur meet ups, educational workshops, and more. Region 6Rogers City—Placemaking: Dancin’ DowntownIn 2012, Rogers City upgraded its streetscape with sophisticated new LED lighting, new ADA ramps, new flower baskets, way-finding signage, and other amenities including a new Museum Annex, new recreational trails and pocket parks, several new library programs, and two new public art projects. As many as 100 new jobs in a city of 2,782 people are being created via new cooperative economic development efforts between city and county governments and private businesses. Region 7Ironwood—Depot Park RevitalizationThe city of Ironwood’s placemaking effort is centered on the revitalization of a railroad depot into a park. The plan is to merge city blocks, add a pavilion, playground equipment, landscaping, volleyball courts, and other amenities in an effort to promote health, history, and recreation. The park will also serve as a trail head for non-motorized trails crossing the region.
A message to League members from League CEO and Executive Director Dan Gilmartin:
The Detroit bankruptcy is news of huge concern to all our members—creating statewide questions regarding what it could mean for other Michigan communities. In light of the importance of this matter, we are scheduling a special panel discussion on the topic during the Sept. 20th closing session of the League’s 2013 Convention in Detroit.A panel of the state’s top municipal finance experts will discuss what the bankruptcy means not just for Detroit but for communities across the state. They will also discuss the impact on the state itself, any long-term financial and governmental ramifications that might result, and if this could be the start of a serious discussion to fix a broken municipal finance system. I strongly urge every one of you to attend this panel discussion on what is, without a doubt, an unprecedented event in Michigan’s municipal history. Information on the Convention itself and registration is available here.
Daniel P. GilmartinExecutive Director & CEO
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