Jul 18, 2023 - News

Revisiting Detroit's bankruptcy: "It must never happen again"

Photo illustration of the back of a Detroit firefighter with a ledger, a Detroit bus, and "2013" within geometric shapes.

Photo illustration: Lindsey Bailey/Axios. Photos: Andrew Burton/Getty Images

Detroit hit rock bottom 10 years ago today as the largest city to file bankruptcy in U.S. history.

Why it matters: The culmination of a yearslong financial crisis forced Detroit to confront decades of decline that left it fundamentally dysfunctional, awash in debt and unable to provide basic services.

Flashback: With debts climbing over $18 billion, the city could no longer pay its bills.

  • Police response times approached an hour and abandoned buildings blanketed neighborhoods. Maxed-out tax rates left officials with a lack of practical options.
  • Elected officials lost power when then-Gov. Rick Snyder, a Republican, appointed Jones Day attorney and U of M grad Kevyn Orr to run the city as emergency manager.

The impact: U.S. Judge Steven Rhodes implored Detroiters to remember this anniversary when approving the city's exit strategy in 2014.

  • "Your enduring and collective memory of what happened here, and your memory of your anger about it, will be exactly what will prevent this from ever happening again," he said in court. "It must never happen again."

Zoom out: A decade later, a review of some city services and trends shows:

Police: Data showing police response times before the bankruptcy is inconsistent, but estimates ranged from 20 minutes to nearly an hour.

  • This year, the police department says it's 12 minutes, 35 seconds.

Blighted property: The city tracks progress tackling blight through the Detroit Land Bank Authority's inventory, which falls when abandoned houses are demolished or rehabbed.

  • About 78,000 vacant and abandoned structures — about 20% of the city's housing stock — surrounded the city in 2013.
  • The Land Bank's 40,000 vacant residential structures total in 2014 is now down to about 6,500.

City finances: Debts totaled $18 billion. The general fund deficit was $327 million.

  • The bankruptcy wiped about $7 billion of those debts and brought other financial relief, like pausing city pension payments for a decade.
  • Annual budgets have been balanced every year since 2014 and the city now has a $150 million rainy-day fund.
  • Income tax revenues climbed from $254 million in 2014 to $402 million last year.

Population: The decline entering bankruptcy was unprecedented, falling from a postwar height of 1.85 million people to about 685,000 at the end of 2012.

Technology: Antiquated systems were pervasive and sometimes shocking — a fire station had to improvise with an empty pop can and printer to receive emergency alerts.

  • Tech investment is stronger — rising from $14 million in 2012 to $57 million in the current fiscal year, per the Detroit News.

The bottom line: Significant improvements are clear, but many longtime residents continue to cope with poverty, crime and blight.

Go deeper: Check out our stories on former emergency manager Kevyn Orr, the city's financial health and how locals view the bankruptcy 10 years later.

avatar

Get more local stories in your inbox with Axios Detroit.

🌱

Support local journalism by becoming a member.

Learn more

More Detroit stories

No stories could be found

Detroitpostcard

Get a free daily digest of the most important news in your backyard with Axios Detroit.

🌱

Support local journalism by becoming a member.

Learn more