Detroit is broke; could bankruptcy lie ahead?

[Julius Skrrvin]

News from The Associated Press

DETROIT (AP) -- The first report by Detroit's emergency manager declares that the city is broke and at risk of running completely out of money - a financial meltdown that could mean employees don't get paid, retirees lose their pensions and residents endure even deeper cuts in municipal services.

If Detroit cannot avert disaster by reducing its debt payments, the only remaining option appears to be bankruptcy, a threat that looms large over Kevyn Orr's urgent efforts to make deals with creditors and debt holders. Orr says he will have to seek concessions from those groups to keep the Motor City afloat.

"On a cash-flow basis, we don't have it. We're broke," Orr said Monday at a news conference. He said the city can make payroll through the rest of the year, but that some other bills and obligations are not being paid or are being deferred.

"We can't continue to do what we've been doing," he said. "It's probably a little worse than I expected. It's severe. I mean it's dire."

In March 2012, Detroit borrowed $80 million from Bank of America to avoid running out of money. But the outlook has not improved in the last year.

Orr's "first attention has got to be turned to making sure he has enough money to pay the bills he has coming in," said James McTevia, president of McTevia and Associates, a Detroit-area turnaround firm. "If I'm a creditor getting paid for my current goods and services, I'm going to be more apt to work out on something I'm owed."

Orr, a Washington-based turnaround expert and bankruptcy attorney, was selected by Gov. Rick Snyder to oversee Detroit's finances. In his report, Orr described the city's operations as "dysfunctional and wasteful after years of budgetary restrictions, mismanagement, crippling operational practices and, in some cases, indifference or corruption."

"Outdated policies, work practices, procedures and systems must be improved consistent with best practices of 21st century government," Orr wrote. "A well-run city will promote cost savings and better customer service and will encourage private investment and a return of residents."

Detroit's net cash position - the amount of money in the bank after bills are paid - was a negative $162 million as of April 26. The budget deficit that a few months ago was believed to be about $327 million could reach $386 million before July 1.

The city also owes more than $400 million, including $124 million for public improvement projects. Its long-term debt tops $14 billion.

Orr avoids using the word "bankruptcy" in the 41-page report to the state treasurer and said Monday that he believes it won't be necessary. He expects to have a clearer picture about the path ahead in six to eight weeks.

"I think we can avoid bankruptcy if people move forward in good faith," Orr said. "It's going to be hard. I don't expect anybody to say OK. I expect there to be some give and take. If we can't, we have to look at everything."

Snyder agreed that bankruptcy wasn't inevitable.

"There's a whole process you go through, and the process includes trying to work with people to not have that happen," the governor said.

City officials in Stockton, Calif., sought Chapter 9 bankruptcy protection after tentative agreements with some of the city's unions failed to provide enough financial relief. The community was still unable to pay its bills or make payroll, and City Manager Bob Deis said further cuts required court intervention.

"Bankruptcy is not a desirable option unless it's the absolute last option you have," Deis said. "Bankruptcy is not the disease. Bankruptcy is the chemotherapy for the disease."

Bankruptcy protection allowed Stockton to wipe out $8 million to $9 million in annual retiree health care costs and freeze $13 million in yearly debt payments for later renegotiation.

Orr may choose to go before a bankruptcy judge "when he gets his back against the wall and he can't meet payroll," McTevia said.

"He can default on payments to pension funds. He will try to sit down and negotiate with the pension funds: `We can do this out of court or we can do this in court.' The same thing with bond holders. It will take years for Detroit to ever pay its bonds, and they need to be negotiated," McTevia said.

The bulk of the city's revenue comes from property and business taxes. But Detroit's population dropped by 250,000 between 2000 and 2010. And outside of downtown and a few other areas, business growth virtually is nil.

"My gut feeling is that taxes are going to have to be raised at some time," possibly a temporary surcharge on businesses to keep the city afloat, McTevia added.

A Chapter 9 bankruptcy filing would also mean even more spending cuts, according to Wayne State Law School professor Peter Henning.

Bing says his administration has cut about $350 million in wages and benefits. Dozens of jobs have been cut or left unfilled.

"Services never improve after a bankruptcy," Henning said. "I read through Orr's report. The emphasis is really on the cost-cutting and the restructuring. Rarely does that improve services in the short run. In the short run, city services are going to suffer."

 

[Yapdatfool]

Save Detroit, OCP!!

 

[Chris.B]

when cacs start moving out of a place you know something is up

 

[Blackking]

Detroit will be completely turned around within the next 5 years... Everyone is being cleaned out and replaced. The way the city is ran is changing. The types of people in the city is changing.
These people who get paid all this money to waste resources will be removed, we probably won't go into bankruptcy.

 

[Blackking]

when cacs start moving out of a place you know something is up

Your confused. When CACs start moving into a place.. you know something up. That's what happening... they are laying down the infrastructure now. Detroit is going to be painted as violent in all areas... and broke as hell... and post gentrification it will be Downtown Detroit Partnership Will start with downtown (that's almost complete) Then go east.

I live in midtown, I see nothing but CACs all day every day... it's just disturbing.

 

[Chris.B]

Your confused. When CACs start moving into a place.. you know something up. That's what happening... they are laying down the infrastructure now. Detroit is going to be painted as violent in all areas... and broke as hell... and post gentrification it will be Downtown Detroit Partnership Will start with downtown (that's almost complete) Then go east.

I live in midtown, I see nothing but CACs all day every day... it's just disturbing.

Are you really going to argue about the declining white population in Detroit?

Why do people argue over here argue over something which is a FACT.

whites have fled Detroit en mass

http://quickfacts.census.gov/qfd/states/26/2622000.html

 

[Blackking]

Are you really going to argue about the declining white population in Detroit?

Why do people argue over here argue over something which is a FACT.

whites have fled Detroit en mass

Detroit (city) QuickFacts from the US Census Bureau

I sometimes feel like we are adults and I shouldn't have to waste keystrokes educating ignorant n1ggas.

Anyway.. this sh1t has happened soooooooooooooooooooo many times in America I feel like we lost as a people that i have to explain it. Flight happens when black people start to become middle class.. black people move into white neighborhoods and move into the areas that have good property value. White business and white people fly away... they create dumb ass suburbs. When the business have a plan, and cacierism wants to go back into full effect... they take away city services.. they create a misleading crime impression in the media, they encourage the destruction of the most valuable and attractive areas....aka core city. It gets to a point where every n1gga stays strapped, strip clubs are the #1 business, every girl you met is a Rat, Churches are all crooks - and you can't even blame anyone because everyone is fighting over the same resources.
The State send in a superman... this person is sometimes black so that it wont look racist as fukk. We just happen to have a black one as well... This c00n does a really good job of firing people and moving people. NTM, these suburbs become affordable as sh1t ... 500 a month. nikkas feel really good about moving to places like Roseville all of a sudden. Meanwhile, these abandoned buildings within a matter of 3 years become 1500/month lofts and apartments. Then all of a sudden the core city is attracting fortune 100 companies .... aka someone the largest most recognizable corporations. In Detroit some of these CEOS have purchased within the last 4 years up to 15 buildings and properties at a time.

In neighborhoods like mine... you can't leave our our fukking house with some CAC salivating at the mouth asking you essentially " Excuse me sir, are you one of these dumb ass nikkas that don't see what's happening and are willing to sell your home for the low so that us white folk can gentrify you with no lubrication" . You say "no" ... they just go to the other dumb nikkas who only listen to their Pastor and Jesus when it comes to money... aka @Chris.B . Then once this is all in place you have the return flight The Return Flight? - The Detroit Blog - TIME.com

 

[Julius Skrrvin]

I sometimes feel like we are adults and I shouldn't have to waste keystrokes educating ignorant n1ggas.

Anyway.. this sh1t has happened soooooooooooooooooooo many times in America I feel like we lost as a people that i have to explain it. Flight happens when black people start to become middle class.. black people move into white neighborhoods and move into the areas that have good property value. White business and white people fly away... they create dumb ass suburbs. When the business have a plan, and cacierism wants to go back into full effect... they take away city services.. they create a misleading crime impression in the media, they encourage the destruction of the most valuable and attractive areas....aka core city. It gets to a point where every n1gga stays strapped, strip clubs are the #1 business, every girl you met is a Rat, Churches are all crooks - and you can't even blame anyone because everyone is fighting over the same resources.
The State send in a superman... this person is sometimes black so that it wont look racist as fukk. We just happen to have a black one as well... This c00n does a really good job of firing people and moving people. NTM, these suburbs become affordable as sh1t ... 500 a month. nikkas feel really good about moving to places like Roseville all of a sudden. Meanwhile, these abandoned buildings within a matter of 3 years become 1500/month lofts and apartments. Then all of a sudden the core city is attracting fortune 100 companies .... aka someone the largest most recognizable corporations. In Detroit some of these CEOS have purchased within the last 4 years up to 15 buildings and properties at a time.

In neighborhoods like mine... you can't leave our our fukking house with some CAC salivating at the mouth asking you essentially " Excuse me sir, are you one of these dumb ass nikkas that don't see what's happening and are willing to sell your home for the low so that us white folk can gentrify you with no lubrication" . You say "no" ... they just go to the other dumb nikkas who only listen to their Pastor and Jesus when it comes to money... aka @Chris.B . Then once this is all in place you have the return flight The Return Flight? - The Detroit Blog - TIME.com

 

[Gotright]

Detroit will be completely turned around within the next 5 years... Everyone is being cleaned out and replaced. The way the city is ran is changing. The types of people in the city is changing.
These people who get paid all this money to waste resources will be removed, we probably won't go into bankruptcy.

where you be seeing white people at.where you stay?

 

[Blackking]

where you be seeing white people at.where you stay?

well def not on the Eastside, lol. Midtown, close to downtown. They even have lil white events and festivals that I just don't get. I even see madd white people with I 'heart' Cass corridor' bumper stickers. I didn't even know they made those. Same white people that would have been scared to come around a few years ago.

 

[Gotright]

well def not on the Eastside, lol. Midtown, close to downtown. They even have lil white events and festivals that I just don't get. I even see madd white people with I 'heart' Cass corridor' bumper stickers. I didn't even know they made those. Same white people that would have been scared to come around a few years ago.

yea downtown I be seeing of type of white people I be thinking like I wonder where they stay.but yea Detroit got to get it together

 

[The Message]

Your confused. When CACs start moving into a place.. you know something up. That's what happening... they are laying down the infrastructure now. Detroit is going to be painted as violent in all areas... and broke as hell... and post gentrification it will be Downtown Detroit Partnership Will start with downtown (that's almost complete) Then go east.

I live in midtown, I see nothing but CACs all day every day... it's just disturbing.

Yup. It's literally unfolding right before our eyes. All you have to do is look at the moves Dan Gilbert is making. It's sad.

 

[Prodigital]

I sometimes feel like we are adults and I shouldn't have to waste keystrokes educating ignorant n1ggas.

Anyway.. this sh1t has happened soooooooooooooooooooo many times in America I feel like we lost as a people that i have to explain it. Flight happens when black people start to become middle class.. black people move into white neighborhoods and move into the areas that have good property value. White business and white people fly away... they create dumb ass suburbs. When the business have a plan, and cacierism wants to go back into full effect... they take away city services.. they create a misleading crime impression in the media, they encourage the destruction of the most valuable and attractive areas....aka core city. It gets to a point where every n1gga stays strapped, strip clubs are the #1 business, every girl you met is a Rat, Churches are all crooks - and you can't even blame anyone because everyone is fighting over the same resources.
The State send in a superman... this person is sometimes black so that it wont look racist as fukk. We just happen to have a black one as well... This c00n does a really good job of firing people and moving people. NTM, these suburbs become affordable as sh1t ... 500 a month. nikkas feel really good about moving to places like Roseville all of a sudden. Meanwhile, these abandoned buildings within a matter of 3 years become 1500/month lofts and apartments. Then all of a sudden the core city is attracting fortune 100 companies .... aka someone the largest most recognizable corporations. In Detroit some of these CEOS have purchased within the last 4 years up to 15 buildings and properties at a time.

In neighborhoods like mine... you can't leave our our fukking house with some CAC salivating at the mouth asking you essentially " Excuse me sir, are you one of these dumb ass nikkas that don't see what's happening and are willing to sell your home for the low so that us white folk can gentrify you with no lubrication" . You say "no" ... they just go to the other dumb nikkas who only listen to their Pastor and Jesus when it comes to money... aka @Chris.B . Then once this is all in place you have the return flight The Return Flight? - The Detroit Blog - TIME.com

Breh, you can see it clearly too

I don't even have anything new to add to what you said, just wanted to repost this truth

 

[Captain Crunch]

All my Detroit heads, any black folks copping property?

 

[Blackking]

yea downtown I be seeing of type of white people I be thinking like I wonder where they stay.but yea Detroit got to get it together

They don't just stay in midtown.. they love it .. I guess it's a young business person/ hipster / weird white person area now.

you live on the Eastside? I hope you know that's is the trash dump, it's not getting better. downtown, mid town, down grand river in that order... idk about southfield... The Eastside (where I'm originally from) will keep getting sh1t on.. I mean, my old street has only 3 livable houses on it.