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Bankrupt Detroit: From motown to ghost town

Saturday, 20 July 2013 - 10:36am IST Updated: Saturday, 20 July 2013 - 10:40am IST | Place: Detroit | Agency: Daily Telegraph

As Motor City files for bankruptcy on a scale never seen before, the future fills its residents with fear.
  • AFP

Even by the desolate standards of Detroit's inner city wastelands, the maze of potholed streets around the Obedient Missionary Baptist Church are a desperate sight.

This is Ground Zero in the collapse of a city that has just declared the largest municipal bankruptcy in history, buried beneath up to $20 billion (pounds 13 billion) in debts and liabilities.

Detroit was the cradle of the automobile industry in the early decades of the last century and the "arsenal of democracy" during the Second World War when the production lines churned out planes and tanks instead of cars.

It put the world on wheels and even found time to give birth to the Motown music phenomenon. But the wheels have been coming off Motor City for decades and Thursday's declaration of bankruptcy only confirmed what has long been glaringly obvious to any visitor, certainly any resident.

Murders are at a 40-year high and nearly 80,000 abandoned buildings blight the landscape. Michigan's governor, Rick Snyder, has admitted that the city cannot even provide the most basic services to its 700,000 residents, a figure that has shrunk from nearly two million in the 1950s.

That is only too clear at the junction of West Chicago and Livernois avenues; a railway crossing where trains have long since stopped running. When it gets dark each night, it really gets dark: only the occasional street light works.

Discarded furniture is strewn outside boarded up homes; empty lots are turning back to prairie, overgrown by wild grass, inhabited now by feral cats and rabbits.

The district earned the unenviable distinction this year of being named the most dangerous in America, according to FBI statistics. There are 150 violent crimes committed here for every 1,000 residents, meaning there is a one in seven chance of being a victim.

But locals note wearily that they would be better off calling a hearse than an ambulance or police car. Across Detroit, the average police response time to a call-out is 58 minutes, while just one-third of its ambulance service is in use.

"It's a good day around here if the cops respond in 58 minutes," said Joyce Copley, 65, a lifelong resident. "More like an hour and 58 minutes. "We're at breaking point here. We don't even have the most basic services. Will bankruptcy help us? I don't know, but I'm not sure it can get much worse." It was this plight that Kevyn Orr addressed as he stood alongside Mr Snyder yesterday (Friday).

Mr Orr, 54, a Washington lawyer who steered Chrysler through bankruptcy in 2009, is the emergency manager appointed by the governor who on Thursday declared the city officially bust. He is seeking refuge from the city's creditors - most notably union pension funds - so that he could focus on the "health, safety and welfare" of Detroit's citizens.

"Does anybody think its OK to have 40-year-old trees growing through the roof of dilapidated houses?" he asked. "Does anyone think our children should walk home from the school in the dark of night in October?"

The city is a case study in municipal failure, industrial decay, corruption and incompetence. The economic meltdown and housing crisis of 2008 dispatched Detroit into the abyss.

Thousands more homes were abandoned; businesses closed their doors for good. The city was not raising the money to keep even the most basic services going. "This has been a long period of decline," Mr Snyder said yesterday.

"It's time to do something about it. The 700,000 people in Detroit deserve a better answer." Mr Orr calculated that at least $9?billion of Detroit's liabilities are underfunded pensions and unfunded health costs for retirees. It is money, he said, that the city simply does not have.

His decision has infuriated unions and will mean that former city workers, many of them already struggling to get by, will face drastic cuts to pensions and health care.

"It's fine for him to come in here with his Washington fees and spout these figures, but we are the ones who are losing our pensions for our retirement after working for this city for all our lives," said a fireman at a station on Livernois Avenue.

A native of Florida but a graduate of the University of Michigan, Mr Orr was appointed by Mr Snyder to run Detroit in March, effectively replacing the mayor and city council.

He insisted yesterday that he had sought deals with creditors, the public service unions and retiree groups but that they had refused to accept reductions. The figures he has encountered are startling. The city is spending on average $100 million more than it is taking each year.

The unsecured debt includes $6?billion in health and other retirement benefits and $3 billion in retiree pensions for 20,000 city pensioners. Those people may receive less than 10 per cent of what they were promised.

Bankruptcy has plunged Detroit into uncharted terrain. No major city has sunk into insolvency with such large debts and there is no road map back to recovery. The city's prized art collection - including works by Van Gogh, Matisse, Brueghel and Diego Rivera - may have to be sold under deals struck with the judge overseeing the bankruptcy.

At a press conference Mr Orr and Mr Snyder sought to assured the city's residents that the court filing was the chance for a fresh start. It is perhaps no surprise that many locals are as yet unconvinced.

"I don't know if bankruptcy will help us or drop us to our knees," said Jodie Holmes, 55, as he waited for a bus outside an abandoned restaurant. For life in the city that once epitomised the American dream is now about surviving another day.

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