Detroit – Unprecedented Challenges and Opportunities

Benjamin ErulkarVice President

Economic Development

May 15, 2014

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• “Paris of the Midwest” in 1950• 1.8 million population

• Now: Detroit as the prototype of urban ills• Bankruptcy (Chapter 9) in July 2013• Under 700,000 population

• A more complex reality:• $10 billion in direct investment since 2008• Place-based redevelopment• Beginnings of sectoral diversification

Challenges and Opportunities

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• Deindustrialization• 300,000 manufacturing jobs lost since 1947

• Population• Great Migration leads to mass exodus

• Taxation, debt financing weigh more heavily on a shrinking tax base• Leads to a decline in services

• Great Recession hit Detroit especially hard

History

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• Short Term: Make the City work again• Fiscal Solvency• Provision of essential services

• Medium Term: Redefine the City’s footprint• 142 sq. miles (227.2 sq. km.) is not sustainable

• Long Term: Education and population• Make Detroit a destination of choice

Current and Future Considerations

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• Goals: Restructure $18 billion in debt, and• Minimize reductions to pensioners• Preserve the City’s art collection• Leave the City with a sustainable fiscal base

• The Grand Bargain: $816 million• Coalition of government, philanthropies and City

institutions (DIA)

• Union approval is threshold indicator of voluntary or court-ordered resolution

Bankruptcy and Beyond

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• Essential City services• Security and first response• Lighting and sanitation• Regional transportation

• Remaking the City• Detroit Future City

• Education• From a school system to a system of schools

Policy Priorities

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• Industrial Policy• Focus on autos? Diversify? Or both?

• Legacy costs• How to manage public pensions

• Planning• Benchmark from best-in-class

• Accountability• Demand more from the leadership

Lessons for Other Cities