Post-Bankruptcy, A Booming Detroit Is Still Fragile It's been one year since the city of Detroit exited the largest municipal bankruptcy in U.S. history. New development is erupting downtown, but the city is still walking a financial tightrope.
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Post-Bankruptcy, A Booming Detroit Is Still Fragile

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Post-Bankruptcy, A Booming Detroit Is Still Fragile

Post-Bankruptcy, A Booming Detroit Is Still Fragile

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MICHEL MARTIN, HOST:

Now we head to Detroit. A year ago this week, the city emerged from a historic bankruptcy. That allowed the city to shed some $11 billion in debt. Construction is starting to boom in parts of downtown, one sign of an economic recovery. But as WDET's Quinn Klinefelter tells us, residents have mixed feelings about whether the city is really better off.

QUINN KLINEFELTER, BYLINE: At a news conference in Detroit City Hall, the head of one of the city's police unions, Mark Young, is facing something that he hasn't in almost 30 years on the job. The city, now unencumbered by the billions of dollars of debt erased through bankruptcy, is offering the woefully underpaid police force a raise before their contract is up.

MARK YOUNG: I want to get the bankruptcy behind us. We have to move this forward. It's no longer the Motor City like it used to be, it's no longer Motown, but we can write a new history.

KLINEFELTER: Detroit emerged from bankruptcy with a razor-thin financial cushion, where even being a few million dollars off in its billion-dollar general fund budget could trigger another fiscal collapse. But Detroit Mayor Mike Duggan says, even with the state having final say, the city is still making substantial progress.

MIKE DUGGAN: You know, we have almost 90 percent of the lights in this city replaced. We have a full contingent of buses and the ambulances are arriving within eight or nine minutes, which is the national standards.

KLINEFELTER: But some financial analysts say Detroit's bankruptcy has made the national bond markets leery of loaning money to any municipality. Stephen Spencer represented Detroit's major bondholders. He testified at a recent U.S. Senate hearing that the bankruptcy court allowed Detroit to pay far more of what it owed to city retirees than to bondholders.

(SOUNDBITE OF ARCHIVED RECORDING)

STEPHEN SPENCER: Detroit wasn't a bankruptcy. It was a stick up.

KLINEFELTER: Yet even those who Spencer claims received preferential treatment say they don't feel favored at all.

UNIDENTIFIED WOMAN: In Jesus name we pray, hallelujah.

UNIDENTIFIED PEOPLE: Hallelujah.

KLINEFELTER: A group of Detroit city retirees is gathering at a church today. The retirees here lost a portion of their monthly pension payments, all the savings the city had invested for them and their health care benefits. Now retirees like Sheila Baker say they're paying five times more for health insurance while the city's downtown is booming with new construction.

SHEILA BAKER: All of a sudden you've got money in your pocket? They knew what they were doing. You know, it's just all a racket, literally, and waited till we got older to do this to us.

(SOUNDBITE OF CONSTRUCTION)

KLINEFELTER: New development is erupting downtown - a new hockey arena complex, a new light rail line. Detroiters like Paul Garrison, picking his way through ongoing construction at a downtown park, called the efforts a godsend.

PAUL GARRISON: Bankruptcy, in my perspective and opinion, was 10 years overdue. But fortunately, it did finally take place and so the money that the city will be bringing in will not have to all go to debt.

KLINEFELTER: But only a few blocks away at Detroit's major transit center, bus rider James Jordan says he's yet to see the new development touch the city's outer-lying neighborhoods.

JAMES JORDAN: OK, they're opening a Nike shop, but you never hear about a new housing development or a new grocery store being built in the heart of the neighborhood.

KLINEFELTER: For their part, business leaders say Detroit cannot survive by becoming, in essence, two cities - one of haves and one of have-nots. Detroit-based businessman and auto-racing legend Roger Penske is helping redevelop the city's downtown. He says Detroit's success depends on making it a city people want to live in.

ROGER PENSKE: To me, I'm going to be sure it's not two cities.

KLINEFELTER: City officials are tearing down tens of thousands of blighted buildings and offering cut-rate prices to those who will move in and fix up salvageable homes. But Detroit still needs more jobs and a better school system. If efforts to make those improvements fail, Detroit's fragile financial forecast could again falter. For NPR News, I'm Quinn Klinefelter in Detroit.

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