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Detroit – Unprecedented Challenges and Opportunities Benjamin Erulkar Vice President Economic Development May 15, 2014. Challenges and O pportunities. “Paris of the Midwest” in 1950 1.8 million population Now: Detroit as the prototype of urban ills Bankruptcy (Chapter 9) in July 2013
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Detroit – Unprecedented Challenges and Opportunities Benjamin Erulkar Vice President Economic Development May 15, 2014
Challenges and Opportunities • “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
History • 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
Current and Future Considerations • 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
Bankruptcy and Beyond • 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
Policy Priorities • 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
Lessons for Other Cities • 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