Hope is a traffic jam as Detroit shakes off record bankruptcy

A pedestrian crosses an intersection in downtown Detroit

Progress in Detroit is a bumper-to-bumper jumble of cars and buses inching through downtown. Ten months after emerging from a record USD18 billion municipal bankruptcy, Detroit is functioning in ways unseen for months and even years – street lights are on, parks get mowed, municipal debt is sold on the public market and the police are training civilians to manage traffic at clogged intersections.
“It’s a madhouse,” said Joshua Elling, a community development executive whose usual 20-minute commute can sometimes take an hour.
This is the contrast of the remade Detroit. A vibrant downtown attracts young people, and a new streetcar line and arena complex rejuvenate a city accustomed to resignation. Yet the vast expanse of residential streets, where four of 10 live in poverty, map the long-term challenge. Surrounding neighborhoods represent 95 percent of Detroit’s land mass, roughly the size of Boston and Baltimore combined, and await revival amid 70,000 vacant buildings.
“Everybody likes a good comeback story, a good underdog story, and that’s what Detroit is,” said Luther Keith, executive director of Arise Detroit, a coalition of neighborhood groups headquartered on the sprawling east side. “Where it goes, I don’t know.”
The Census Bureau deems the city the nation’s poorest. After losing more than half of its population and 90 percent of its manufacturing jobs since 1950, Detroit became the nation’s first major city to file for bankruptcy protection, in July 2013. There is no template for a recovery of this magnitude. Despite indicators of increased housing sales, the city continues to lose population, dropping to 680,000 last year. The child poverty rate is 59 percent. For most of the city’s 360 square kilometers little has changed.
Downtown Detroit, however, thrives. Quicken Loans Inc. and Blue Cross Blue Shield of Michigan are responsible for more than 15,000 jobs there. In downtown and midtown, 77 restaurants have opened since 2013, a 26 percent increase, according to 7.2 SQ MI, a data project that tracks economic changes in the city. Over the same period, the number of retail establishments grew 13 percent, to 352.
Reminders of reality are never far away. A billboard promoting a homicide tip service features the picture of a man next to the inscription, “You know who killed me.”
“People understand it took us 50 years to get to this point – you can’t turn it around on a dime,” said Jed Howbert, who directs the jobs and economic development team for Mayor Mike Duggan. “There’s no hiding the fact that there are areas of the city that are so vacant that you’re rebuilding a neighborhood from whole cloth.”
Duggan’s office has created programs to stimulate economic growth, including zero-­interest home improvement loans and workforce training. The city has demolished about 6,800 homes since May 2014 and is averaging about 100 tear-downs per week. The Detroit Public Lighting Authority said it plans to re-light all neighborhoods by year-end.
In its first return to the bond market since emerging from bankruptcy, the city sold $245 million in debt in August to repay loans and support projects, including fire department upgrades.
Almost 100 new police cars were given to the city by corporate donors led by Roger Penske, the auto-racing magnate and chief executive officer of Penske Corp., a transportation services company in the suburb of Bloomfield Hills.  Adding to anecdotal evidence that life in the city is improving, Detroit was surpassed by St. Louis as the nation’s murder capital last year.
The top priority, Howbert said, is population growth. The white population in this 80 percent black city grew by almost 8,000 people last year, the biggest increase since 1950, according to a Detroit News analysis of Census data. While that influx helped slow the population decline, it underscored the reality that growth and opportunity are downtown, where many jobs require college educations and professional credentials that poor Detroiters lack.
For many longtime residents, downtown’s success is a mirage and post-bankruptcy is a test of patience.
“We’re waiting for it to trickle down to us,” said Vanessa Standifer, 61, a retired pharmacy technician who lives in northeast Detroit. “Mayors try to make a showplace of their downtowns so people will come and spend money, but they’ve got to realize there are everyday people in the neighborhoods.”
For newcomers, Detroit represents opportunity as well as challenge. Victoria Olivier, deputy director of neighborhoods for Detroit Future City, a nonprofit organization that develops recovery strategies for the city, said she moved to Detroit from New Orleans because she “wanted to make a difference.”
“Detroit draws a lot of people who want to be part of this story,” said Olivier, 32. “This isn’t a five-year turnaround – it’s 50 years.”
Michigan Governor Rick Snyder, a Republican who cleared the way for the bankruptcy filing, counseled patience.
“Services have improved,” Snyder said in an interview. “I think you’re going to see Detroit growing again. We still have challenges, particularly in the neighborhoods, but the mayor and the city council are doing a good job of running the city.”
Elling, the executive director of Jefferson East Inc., a nonprofit spearheading development on the east side, said the return of street lighting and improvements in bus service have been “incredibly important.”
“Detroit’s never going to be what it was, but as I look ahead 20 years, I’m hopeful,” Elling said. “I see 15 to 20 neighborhoods doing pretty well.”
Although Moody’s Investors Service on July 30 upgraded Detroit’s credit rating by one level to B2, five steps below investment grade, the city continues to be scarred by bankruptcy. For its bond sale, the city paid almost 2 percentage points more than top-rated debt.
Dennis Derby, an analyst and portfolio manager at Wells Fargo Asset Management, said investors want to see population growth and signs of sustainable recovery.
“It’s downtown and midtown that look like they’re showing revival, but we don’t know yet if that will result in positive growth across the city,” Derby said.
Others are doubtful that the downtown recovery can spread across such an expanse.
“The vast part of the city is still in the doldrums, and I don’t see much chance of it coming out,” said Peter Eisinger, a retired professor of public policy and urban affairs who has written extensively about Detroit.
Eisinger, who retired from the New School of Social Research in New York and formerly taught at Detroit’s Wayne State University, said Detroit relies too much on financial support from investors and foundations.
“Private money coming into public functions is not sustainable, it’s not predictable,” Eisinger said. “The city remains insecure.”
Detroit’s revenue will be generally flat through the budget year 2023, according to city estimates.
For now, though, traffic continues to build downtown, and the police department has trained eight civilians, who wear light-blue uniforms and bright-green vests, to manage it. As many as 50 will eventually be hired for duty at about a dozen intersections, said Sergeant Michael Woody, a spokesman.
“We’ve got a lot of outsiders coming in to work, and we’ve got a need to handle all the congestion,” Woody said. By Tim Jones, Bloomberg