What would be the impact of a possible Detroit bankruptcy on southeast Michigan?
If the city of Detroit goes into bankruptcy, how might that affect southeast Michigan?
Dave LewAllen went looking for answers to the impact of bankruptcy.
It’s a dividing line.
Between city–and suburb.
Eight Mile has been immortalized in film.
While division and divisiveness have long characterized the relationship between the city of Detroit and its suburban neighbors—attorney Tim Wittebort says the potential of bankruptcy for the state’s largest city—could potentially impact everyone in southeast Michigan.
“I suspect Detroit has to go into bankruptcy–I think that’s the cleanest way out.” said Royal Oak attorney Tim Wittbort.
Oakland County Executive L. Brooks Patterson has directed more than a few verbal shots at Detroit over the years. But he’s rooting against bankruptcy.
“Because Moody’s and Standard and Poors, the nation’s two largest bond rating agencies have already told me, both of them, that if Detroit goes bankrupt we’re going to have to lower your triple A down a notch or two,” Patterson said.
A downgrade in bond ratings would increase Oakland County’s cost of borrowing money.
“I’m going to go to New York and fight because even if Detroit goes bankrupt, which I hope they do not, for not all altruistic reasons there’s some selfish reasons here, I want them to survive and do well, I’ll go to New York and say ‘hey look, we’re a standalone economy. You’re not tie barring me to Detroit,” Patterson said.
Currently—Moody’s says Oakland County has a “stable outlook.”
It’s the same for Macomb County—and its Standard and Poors , triple A rating.
The agency gives Washtenaw County—a double A plus rating.
On the other hand—Wayne County—home to Detroit—suffered a downgrade to triple B, stable, from Standard and Poors, just last month.
Executive Mark Hackel says Macomb County is in good shape financially and should not be hurt by a potential Detroit bankruptcy filing.
“I think it would only happen if we had a problem with what was going on in Macomb County with our finances, not because of what happens in the city of Detroit. Not to say that it can’t, or that it won’t, but I just don’t foresee that nor do our finance people here in the county,” Hackel said.
Attorney Wittebort — disagrees. “It’s definitely going to have an impact. But it may be one of those necessary evils because in the long run it may benefit the entire southeast Michigan when it’s over and done,” he said.
That’s an opinion shared by Sandy Baruah, Detroit Regional Chamber President.
“I’m not playing the traditional chamber of commerce rah-rah role, I’m just saying let’s fix our problems as quickly as we can,” Baruah said.
Because–Baruah says–there’s a lot at stake. “There is no such thing as a growing, thriving, economic region without a vibrant downtown core, or central city.”
Wittebort shares the belief that our success as a region is linked to our largest city. “I think it is. I think it can be a benefit. I also have heard there are elected officials in the suburbs who are willing also to separate if they have to, to carve out Detroit if you will, and rely upon themselves, but I think it benefits the whole area if Detroit is a thriving, vibrant, exciting city,” he told Detroit 2020.
The man driving change in Detroit—is Kevyn Orr—the city’s Emergency Manager. He’s called together creditors for what amounts to a take it or leave it offer on debt obligations—and Orr is also demanding cuts to pension benefits for 30,000 workers and retirees. His success will determine whether bankruptcy becomes the city’s only option.
“I want Orr to do well, I want Detroit to do well because, frankly, I do have a dog in this hunt,” Patterson said.
“I think it’s going to be good and healthy for the city of Detroit because now they’re going to start seeing something happening and they’re going to start to see the day where eventually the city of Detroit is going to be that tremendous value to the region once again as it always has been,” Hackel said.
“We will get through this, I mean the city will not die. We will entertain our worst thoughts and fears probably over the next 12 months because we’re going to have some difficult days but the city is going to survive,” Baruah added. “I’ve never been any place, I’ve never seen anyplace with the leadership, especially the corporate leadership that will just not let the city die.”
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