Lydia DePillis: So, this wasn't unexpected, but still, were you surprised yesterday? Could it have been avoided?
Jennifer Bradley: Those are very different questions. Did you see this coming? The emergency manager, Kevyn Orr, he set a date around August as to whether to file for bankruptcy. Orr had put the odds of going into bankruptcy at about 50-50. Basically, the bankruptcy filing forestalled some of the legal action that was getting started around pensions. So in some ways, the timing of the bankruptcy is a strategic move on the part of Orr.
But the substance of the bankruptcy filing, which is that Detroit cannot pay for everything it needs to pay for, including terms of debt and services, is not something that was a surprise to anybody who has been following Detroit. There had been a lot of challenges. Orr put out a report months ago that laid out a lot of bad facts about Detroit, and also noted that they had really run out of the ability to cut to save money to pay creditors. Orr was going to take some of the banks to which Detroit owes money on a tour of some of the most distressed neighborhoods, to say, 'Guys, see what's going on here? This is why you and I are going to have to sit down at the negotiating table, and you're not going to get back all that you thought.'
LD: Did he take them on that tour?
JB: He was going to, and it was canceled at the last minute. It was my understanding that the bankers didn't take him up on the tour, and there were concerns about security.
It's interesting, because there are other parts of Detroit that I feel are not going to be mentioned at all in this story, and that's the downtown/midtown area, along the Woodward corridor spine, where there's a lot of good stuff happening. There's new small businesses, there's business incubators, there's a rental occupancy of 97 percent. There's Dan Gilbert investing a billion dollars in buying up these great old properties in the downtown, and repurposing them for small businesses and start-ups. That's also true. The bankruptcy of the Detroit government doesn't erase all the good things that are still happening in Detroit with private money and philanthropic money and some state and federal money. Bankruptcy is such a big scary word, but on the ground, we've gotten assurances from Orr, and some really great language from Snyder — he just finished a press conference where he said Detroit is really central to the state. In the filing, Detroit says the way to get better is not to spend less money on services, but more money on services. So on the ground day to day, the way it was before the word bankruptcy and after the word bankruptcy is not very different.
LD: You're right, the story and all the pictures are about those outlying, empty neighborhoods. I know Detroit has been taking steps towards condensing its footprint to a more rational size, so it doesn't have to spend money serving people far outside the core. Do you think the bankruptcy will add momentum toward that?
JB: To rationalize a city looks really easy on a map. It's very challenging to do when there are still people living in areas where other people have chosen not to live. So I think that the bankruptcy can maybe force some more hard decisions, but Kevyn Orr has said there's not going to be forced relocations, that eminent domain is off the table here. So I think it's going to force them to be more creative about the kinds of services they'll be offering. For Orr's team, the focus will be the incredible legal machinations and gymnastics in the court. In the meantime, in the plan, he talks about investing a billion dollars in restoring services to Detroit — police, fire, street lights. That's going to have to be done with respect to where people are actually living, but I don't think it'll make it easier to wipe out neighborhoods where only two or three people live, because I think that there's a commitment to respect the rights and concerns of those two or three people.
LD: Even if it means having less money for places where more people live?
JB: I don't think it's going to be put that starkly. I think that there are going to be service adjustments so that people in different areas will have different types of services. But they are not talking about completely wiping certain areas off the grid.
LD: Is there any city that comes close to Detroit's dire straights?
JB: I think that in many ways, Detroit is sui generis. I think that the combination of past local mismanagement, coupled with big industrial global economy shifts, coupled with decades of disinvestment that was in some ways facilitated by state and city policies that made it easy and cheap to build outside city cores, and a little harder to build inside them, Detroit in many ways is a perfect storm of mistakes on every level. So in that, I do think it's unique. But I also think that Detroit has some powerful assets that a lot of cities would be happy to have. It's that concentration of design talent, concentration of institutions in the midtown area, Henry Ford Medical, Detroit Medical Center, the College for Creative Studies — all of which are making hundreds of millions of dollars of investment in their physical plant. They've got the Tech Town incubator that's creating jobs. Companies have brought thousands of employees out from the suburbs and back into Detroit, into that downtown midtown corridor. Those are powerful assets.
We think that there are cultural trends, right — the reevaluation of density, that great piece you did for The New Republic, Dinosaur Makeover, where you talked about how Research Triangle Park looked around and said, 'Oh my God, we're sprawlville, we've got to put in streets, create density, create transit, connect work and life.' Detroit has that, they did that a century ago, and it was called a city. So in some ways, Detroit is really bad, but there's a lot that's really good. And that is in danger of getting lost in the discussion. This is the reset. We've seen cities in Europe come back, we've seen Cleveland and cities in northeast Ohio turn it around, it can be done, and I have every confidence that Detroit can do it. Because I go there, and I talk to people who are committed to it, and people really care, and that's what Detroit has going for it.
LD: What about the auto industry? Should they just give up on the idea of the big three as a significant part of its economy and depend entirely on this new stuff?
LB: The big three are always going to play some role in Detroit. The issue is, what are businesses in Detroit doing to create other kinds of businesses that are based on the skills that the auto industry has brought there. There's a lot of design talent in the Detroit region, because people know about industrial design, they know about graphic design, because they work in ad agencies that used to do car campaigns. What are other ways to use that talent? There's a watch company called Shinola that's taken a lot of people who don't know much about watches per se, but they know how to work on an assembly line, and they're doing small-batch manufacturing. So auto companies gave Detroit a group of specialties, some of which will be deployed back into the auto industry, and a lot of which can be deployed in new and imaginative ways. So that's how people need to build on and embrace our auto heritage, not by doing what they've always done.
LD: To what degree does Michigan depend on Detroit? And would it be in the state's interest to help it out of this bankruptcy?
JB: I cannot say anything about whether the state will or will not support Detroit financially. But the Detroit region, not just the city, is about 47 percent of the state's GDP. And it's also the brand, the brand around the world. You say you're from Michigan, and people say oh, Detroit! To have Detroit go would be a huge blow to the state's economy. The region is still making a huge contribution to what makes Michigan strong.
LD: Obviously, out-of-control pensions had a lot to do with this, and maybe bankruptcy's the only way to get them under control. Are you seeing them take steps to avoid that?
JB: I think that everyone will be watching the Detroit processes very closely. And I think it will show them that they want to negotiate and avoid bankruptcy at all costs. If you can resolve things without going to court, really, you need to do that. Because this is going to be a lengthy process, an expensive process, and I don't see everybody say we'll just go into bankruptcy and let somebody else work it out. That doesn't seem to be a sustainable solution for any place. I think that places are going to work a lot harder on how to crack the code on their pension obligations. And the way to do that is look not at their debts but their potential for growth. They need a growth strategy. This is what Detroit still needs. If you have a growing economy, that makes everything a little easier.
LD: Are they going to be able to marry that financial wrangling with a smart on-the-ground planning and reinvestment strategy?
JB: You have to, you absolutely have to. They have to operate on these two tracks. They've got the Detroit Future City Plan, they've got Detroit Economic Growth Corporation that's taken over a lot of the real estate functions, they've got a bunch of philanthropic and private groups that are working on this plan while the city is moving towards a fiscal plan. You cannot expect that the fiscal workout will solve all the problems, because if you do that, you will not have changed the circumstances that got you to that place.
LD: And what's the biggest thing the city needs to do to foster that in the meantime?
JB: I think the city itself needs to continue to focus on service and service provision. because those things will help support continued private investment. If they get their emergency response time down to the state average, that is the most important thing they could do for the city and the people that are there now.