Detroit files for bankruptcy

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KCMax
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Detroit files for bankruptcy

Post by KCMax »

Billions in Debt, Detroit Tumbles Into Insolvency

What lessons can be learned from this? What is the future for Detroit?
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Re: Detroit files for bankruptcy

Post by FangKC »

Don't Let Bankruptcy Fool You: Detroit's Not Dead

http://www.theatlanticcities.com/jobs-a ... dead/6261/
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Re: Detroit files for bankruptcy

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Detroit’s bankruptcy and the absence of urban policy

http://www.washingtonpost.com/politics/ ... story.html
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Re: Detroit files for bankruptcy

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http://dc.streetsblog.org/2013/07/22/ho ... this-mess/
How Sprawl Got Detroit Into This Mess

A study released by the Brookings Institution this year found that Detroit has the worst job sprawl in the country. Now, many regions are sprawling, but Detroit is unusual, because it sprawled while the region wasn’t growing. The Detroit metro region, including its suburbs, has shrunk in population by 1.2 percent since 1970.

When the Detroit region sprawled, it wasn’t adding new people, the way Houston sprawled. It was drawing existing residents from the center to the periphery. Homes in the central city were abandoned — and the tax revenues that came from those households evaporated. Detroit, unlike some of its wealthy suburbs in Oakland County, only saw one side of this migration — the losing side. And it was poorly equipped to deal with the fallout.
A failing central city leads to a poor national reputation for a metro, in spite of the gleaming suburbs built at the expense of that city--sounds like an instructive tale.
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Re: Detroit files for bankruptcy

Post by brewcrew1000 »

This doesn't help either, I think Detroit should De-Annex about half the city
An estimated 47 percent of Detroit’s property owners pay no taxes, according to recent report from The Detroit News.

“Nearly half of the owners of Detroit’s 305,000 properties failed to pay their tax bills last year, exacerbating a punishing cycle of declining revenues and diminished services for a city in a financial crisis,” the report notes, citing more than 200,000 pages of tax documents.

“Some $246.5 million in taxes and fees went uncollected, about half of which was due Detroit and the rest to other entities, including Wayne County, Detroit Public Schools and the library,” the report adds.

In fact, according to The News, delinquency in the shattered city is so bad that that 77 blocks had only one owner who paid taxes in 2012.

Yes, one person paid taxes in an area covering 77 blocks.
http://www.theblaze.com/stories/2013/02 ... -no-taxes/
http://www.detroitnews.com/article/2013 ... /302210375
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Re: Detroit files for bankruptcy

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KCMO would have been in the same boat as Detroit if it hadn't annexed I the 50's and on. Just look at the population decline in the city that is within the border's that existed before the annexation.
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Re: Detroit files for bankruptcy

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Yup, KC has benefited from the Ponzi Scheme in the Northland for the last few decades. Now it's up to the city to ensure that all new growth up there is sustainable--both economically and environmentally--and to densify what is already built so as to not further handicap the resurgent urban core in future decades.
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Re: Detroit files for bankruptcy

Post by DaveKCMO »

was in downtown/midtown detroit on saturday and sunday. couldn't tell, although it always came up with people we talked to (surprisingly, everyone was really friendly!). downtown was swarming with visitors (jimmy buffett concert plus a few smaller events). also walked their streetcar route, which starts construction later this summer.
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Re: Detroit files for bankruptcy

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aknowledgeableperson wrote:KCMO would have been in the same boat as Detroit if it hadn't annexed I the 50's and on. Just look at the population decline in the city that is within the border's that existed before the annexation.
In the short-term.

http://www.strongtowns.org/the-growth-ponzi-scheme/
In each of these mechanisms, the local unit of government benefits from the enhanced revenues associated with new growth. But it also typically assumes the long-term liability for maintaining the new infrastructure. This exchange — a near-term cash advantage for a long-term financial obligation — is one element of a Ponzi scheme.

The other is the realization that the revenue collected does not come near to covering the costs of maintaining the infrastructure. In America, we have a ticking time bomb of unfunded liability for infrastructure maintenance. The American Society of Civil Engineers (ASCE) estimates the cost at $5 trillion — but that's just for major infrastructure, not the minor streets, curbs, walks, and pipes that serve our homes.

The reason we have this gap is because the public yield from the suburban development pattern — the amount of tax revenue obtained per increment of liability assumed — is ridiculously low. Over a life cycle, a city frequently receives just a dime or two of revenue for each dollar of liability. The engineering profession will argue, as ASCE does, that we're simply not making the investments necessary to maintain this infrastructure. This is nonsense. We've simply built in a way that is not financially productive.
Because of the low-density nature of the suburbs, large lots with sprawling houses, and huge parking lots around retail stores, the suburbs will become even more expensive to maintain in the future as they age.

If you compare suburban density to older neighborhoods in the central city, you will see that there are a lot more households built on the same physical area of land. In some cases, you could place three or four houses on some suburban-sized lots, and still have room for a yard and separate garage building.

The burden is more troubling when you have blocks with 10 houses on them versus 20-30 house in the central city. Fewer people paying taxes to cover the same amount of ground.

Keep in mind that property taxes do not cover the cost of infrastructure to service these residents. All infrastructure cost have to be augmented by sales taxes, city earnings taxes, and other fees.

It also has implications when you consider sales taxes. Obviously, the more people you have living in a denser area, versus a less dense area, contributes more money for infrastructure maintenance. A square mile neighborhood with 1000 people contributes more sales taxes than one with only 200 people to pay for basically the same amount of streets, sewers, fire and police protection, etc.

This is why density is so important. You need a lot of people paying sales taxes, earnings taxes, and other fees. The more you have per sq. mile, the better because denser areas subsidize less dense areas over time.

This is why downtowns and central business districts are so important, and need to be healthy, because of their significant sources of revenue. Even in its' present state, greater downtown Kansas City creates more revenue for the City per square block than any other part of town.

People can still enjoy having a yard and outdoor area in much denser areas. In fact, a lot of residents simply have too much yard to maintain. They spend their weekend days off mowing a big yard, and many people really don't use all of their yard anyway. This becomes especially burdensome as people retire and age.

My 80-year-old aunt is constantly complaining what a burden her yard is. Cutting limbs off trees, finding someone to mow the yard. Getting someone to shovel her sidewalks and driveway, etc. She lives in a subdivision that was built in the 70s. All of the homeowners there now are mostly elderly. There are hardly any kids or teenagers in the neighborhood that could be hired to do these tasks.

Suburban development patterns also make in incredibly hard, and expensive, to provide any kind of mass transit to service those who cannot drive (teenagers and seniors). Even if service is provided to artery streets, the winding, cul-de-sac nature of subdivision design causes residents to have to walk even greater distances to the artery streets than they should have to travel.

Traditional street grids are preferable for many reasons. They cut walking distances, and even car travel times. They are also more efficient in creating proper density levels to sustain infrastructure and transit.

The other problem with many suburban neighborhoods is that all the houses have big yards. Not everyone needs or desires a big yard, or lot. In older areas of the city, you have a mix. Some houses are on bigger lots and next door might be two smaller houses on smaller lots.

Europeans figured out good city planning a long time ago. Their cities are healthy and vibrant. We in America have had this experiment in city planning, and it has mostly failed. We should consider adopting more typically European urban designs.

The other thing I will mention on this particular topic is that Europeans tend to be much happier than Americans. If you look at most polls on this, you will find the happiest people live in European countries, and they consider themselves to have a high quality of life.

You also will see that Europeans tend to be less likely to end up in nursing homes because there is so much familial shared housing options there. Their zoning patterns allow mother-in-law type dwellings on city lots, so parents often live on-site with family members in shared houses, or separate houses on the property. Many people don't need to be in a nursing home if they have someone checking on them each day.

This has implications for our society with growing Medicare and Medicaid spending because those programs pay for people living in nursing homes, which is more expensive than most independent living situations would be.

For many of our seniors, living in suburban developments become like prisons once they can no longer drive, or get around well.
Last edited by FangKC on Wed Jul 24, 2013 5:53 am, edited 1 time in total.
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Re: Detroit files for bankruptcy

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The Simple Math That Can Save Cities From Bankruptcy

http://www.theatlanticcities.com/jobs-a ... ptcy/1629/
We tend to think that broke cities have two options: raise taxes, or cut services. Minicozzi, though, is trying to point to the basic but long-buried math of our tax system that cities should be exploiting instead: Per-acre, our downtowns have the potential to generate so much more public wealth than low-density subdivisions or massive malls by the highway. And for all that revenue they bring in, downtowns cost considerably less to maintain in public services and infrastructure.

“We really are kind of preachy, because we know it works,” says Minicozzi, who has performed similar tax studies in 15 cities across the country. “And the reason we know it works is because cities have been here forever. That’s all we’re saying: think urban. When I talk with people about urbanism, we as hairless apes have lived in these things called cities for thousands of years. Now over these last 40 years, we think we don’t need them any more?”

So, broke cities: Need money? If you’ve got underutilized buildings in your downtown, do anything you can to fix them up, because that’s where your wealth comes from. This is Minicozzi’s first lesson.
Having buildings sitting empty and underutilized in downtowns is a huge waste of potential revenue. Having surface parking lots taking up huge amounts of space that could be developed is also a huge waste of potential revenue.

This is why it's unwise in the long run for cities to subsidize low-density suburban developments instead of investing in high density city centers.
The really interesting math, though, comes not when we compare derelict buildings to their refurbished selves, but when we look at unsung half-block offices alongside what we think are our big municipal money-makers: vast hotels, malls, big-box stores.

Asheville has a Super Walmart about two-and-a-half miles east of downtown. Its tax value is a whopping $20 million. But it sits on 34 acres of land. This means that the Super Walmart yields about $6,500 an acre in property taxes, while that remodeled JCPenney downtown is worth $634,000 in tax revenue per acre. (Add sales tax revenue, and the downtown property is still worth more than six times as much as the Walmart per acre.)

This concept is true everywhere. In Raleigh, for instance, it would take 600 single-family homes on a 150-acre subdivision to equal the tax base of the 30-story Wells Fargo Capitol Center downtown. And it sits on 1.2 acres of land.

Minicozzi made some of these calculations in a study of Sarasota, Florida. A downtown 357-unit multi-family complex on a 3.4-acre site there, he found, pays off its infrastructure in three years. A suburban subdivision on a 30-acre site will take 42 years to pay off. After two decades, that downtown multi-family complex will have made the city $33 million in net revenue. The suburban subdivision will still be $5 million in the hole.
City leaders and residents have to start looking at costs and revenue per-square-acre.

AKP, you have to also realize that the cost of your suburban lifestyle doesn't pay for itself over time. If you want to continue to enjoy it, the cost has to be subsidized by denser development of downtown and other high-density zones.

Not only that, as suburban subdivisions age, the property values can begin to plummet -- like Hickman Mills and Ruskin Heights. This become even more a problem when they are so low-density to start with, and didn't provide the revenue to cover long-term infrastructure maintenance liability.

Annexing land is not a long-term solution. The revenues from new growth model expanding outward is based on the premise that a city can expand forever. Most cannot. The history of American cities shows that there is a spike in population, then a contraction over time. This will become even more obvious now than in the past because of lower birth rates among Americans. Many cities will have problems maintaining their populations.
The whole idea is pretty simple. But it’s sort of baffling that we haven’t been looking at our land this way for years. Cities, Minicozzi laments, are woefully ignorant about exactly which types of neighborhoods and development put the most financial strain on public coffers and which kick in the most money. This is why Minicozzi has been deploying every metaphor he can think of – cash crops, gas tanks, french fries! – to beat home the math.
The only old city that has continued to add population (with our lower birth rate) is New York City. A great deal of that growth comes from immigration and being a world-class city with many amenities.

New York City is projected to add 1.2 million additional people by 2025-2030 without expanding its' city limits.

http://www.nytimes.com/2006/02/19/nyreg ... d=all&_r=0

http://www.nyc.gov/html/planyc2030/html ... sing.shtml
Last edited by FangKC on Wed Jul 24, 2013 5:55 am, edited 1 time in total.
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Re: Detroit files for bankruptcy

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Priorities!
Brian Holdwick, an executive vice president for the Detroit Economic Growth Corporation, says there’s no reason officials can’t still move forward with a $650 million plan for a new hockey arena.
http://www.salon.com/2013/07/19/detroit ... singleton/
...the DEGC, for which Holdwick is vice-president, is the parent organization to the Downtown Development Authority, which is the agency that’s proposing to provide the Red Wings arena with $283 million in property tax funds.
http://www.fieldofschemes.com/2013/07/2 ... ankruptcy/
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Re: Detroit files for bankruptcy

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Don't forget about $4 billion for highway expansion. (Though to be completely fair, the regional planning organization [think MARC] and the State DOT are culpable here, but it's still symptoms of the same problem.)

http://dc.streetsblog.org/2013/06/19/de ... way-habit/
On the agenda Thursday for the regional planning commission, the Southeast Michigan Council of Governments, are two highway expansion plans that will cost an astounding $4 billion combined.

...

But amid the signs of progress are two highway projects that threaten to undermine the region’s recovery. The worst of the two, perhaps, is the $2.7 billion plan to widen I-94 through Midtown. SEMCOG and the political leaders who appoint its members apparently believe that ramming more than half a dozen new highway lanes through one of the city’s most promising neighborhoods will help stabilize Detroit.
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Re: Detroit files for bankruptcy

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If they want to help Detroit, the state and city leaders there need to take those large amounts of money mentioned above, and invest it in seed money to help finance private development of higher density residential apartments and condos on vacant lots near downtown Detroit, Wayne State University, and along the Woodward Avenue corridor. Or use it to fix up older buildings that are empty, but viable. Expanding a highway isn't going to solve Detroit's problem, and neither will a hockey arena.

They need to do everything possible to get new housing built around the perimeter of downtown where those islands of vacant land are, and slowly work outward so that land is producing property and sales tax revenue again.
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Re: Detroit files for bankruptcy

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This is a topic for a new thread, but at what point do teams making typical demands (public funds for private investment, etc) shift from being an asset to a liability?
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Re: Detroit files for bankruptcy

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Pittsburgh mayor offers advice to Detroit

http://www.bizjournals.com/bizjournals/ ... 1374748964
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Re: Detroit files for bankruptcy

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AKP, you have to also realize that the cost of your suburban lifestyle doesn't pay for itself over time. If you want to continue to enjoy it, the cost has to be subsidized by denser development of downtown and other high-density zones.

Not only that, as suburban subdivisions age, the property values can begin to plummet -- like Hickman Mills and Ruskin Heights. This become even more a problem when they are so low-density to start with, and didn't provide the revenue to cover long-term infrastructure maintenance liability.

Annexing land is not a long-term solution. The revenues from new growth model expanding outward is based on the premise that a city can expand forever. Most cannot. The history of American cities shows that there is a spike in population, then a contraction over time. This will become even more obvious now than in the past because of lower birth rates among Americans. Many cities will have problems maintaining their populations.
Yes, there are a few suburbs that have some financial problems but there are many more that are not. But for cities/towns that are either big or small the continuing financial problems are mainly the result of a decreasing population and/or poor long-term spending decisions made by government leaders. Yes density helps in finances but even density doesn't cure all. If it did then why did one of the leading cities in density at the time have financial problems - New York City in the 60's and 70's?

Hickman Mills and Ruskin Heights? Don't forget they are part of KCMO and revenue/expense problems are reflected citywide. Is the area along Ward Parkway south of the Plaza looking so nice it generates more revenue? Given the size of those lots along the parkway I would imagine it is less dense than HM or RH. The decreased property values in the HM/RH areas has less to do with age and more to do with the changing population of the area.

Annexation? Good/Bad. Right/Wrong. It doesn't matter, Kansas City has already annexed the areas and has to live with those past decisions and make the best of it. But without those past annexations KCMO would be a far different city than it is now and different in a bad way. That city population of 456,000 in 1950 would be around 200,000 give/take now. It might have had a tax base to build Bartle Hall in the 70's but probably none of the expansions of later years. Build Kemper in the 70's - yes, Sprint Center - no. For BH expansions and the SC much of the tax base for them come from the annexed areas. Kansas City would not have had the E-tax revenues of the 15,000 or so jobs in the 60's through the 90's that were at the Bannister Complex at 85th and Troost. It's peer cities would be Cleveland, Buffalo, St. Louis, Detroit, and other old NE industrial cities.
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Re: Detroit files for bankruptcy

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Detroit's renaissance on the wings of startups

http://upstart.bizjournals.com/companie ... 9&page=all
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Re: Detroit files for bankruptcy

Post by KCMax »

chaglang wrote:This is a topic for a new thread, but at what point do teams making typical demands (public funds for private investment, etc) shift from being an asset to a liability?
Assuming they're not already?
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Re: Detroit files for bankruptcy

Post by aknowledgeableperson »

Much like any other economic incentive there are different ways to measure it. But in any case when the cost exceeds the benefit then a team becomes a liability.
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