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Rochester Hills Official Asks: What is the Solution for Detroit?

Governor Snyder should put the city into a structured bankruptcy, Ravi Yalamanchi says.

The following guest opinion article was submitted by Ravi Yalamanchi, a Rochester Hills City Council member and resident of the city.

Detroit is in the news everyday for crime, Kwame Kilpatrick or financial challenges. Ironically all three are connected in some respect.

Detroit financial challenges started in early 70’s as more people and businesses started to move out into the suburbs. In the past four decades there has never been responsible management of the schools or the city. One thing that stayed constant in the past four decades is poor, failed and corrupt leadership at the Council, School Board and Mayor’s office. Both Detroit Public Schools and City government have been bloated for decades with high costs to the taxpayer. While revenue continued to drop the expenses continued to increase and there was never a business approach to the financial operations of either the School District or the city. It is a shame that more elected leaders abused and were part of the corrupt system and only a few really cared about the city, such as Mayor Bing. The Unions contributed to the failed status as much as the politicians.

Detroit every year receives about $300 million in federal funds for Housing, Transportation, Head Start, Work Force Investment, community policing, weatherization and other programs. Between fiscal years 2008 - 2011 Detroit received over $1.2 billion in federal funds. Businesses and foundations have invested $100’s of millions in Detroit with more commitments for the future. With so much funding coming into the city besides to its own revenue from property taxes and income taxes why does the city continue to fail year after year?

If you take a drive through Detroit in part of the city you see deteriorated neighborhoods, abandoned buildings, crumpling roads and infrastructure. Home ownership has dropped to historic lows of 53.8% with more properties under rental. A high percent of landlords live outside of Detroit. Detroit has high property tax rates of $68.19 for every $1,000. For a home assessed at $50,000 taxes will be $3,410 and for a similar home in Rochester Hills taxes are $1,667.

According to the Detroit Financial Review Team, Detroit faces more than $14 billion in liability. How much would the residents have to be taxed to cover the deficit and how much more to stay afloat? The Economic Characteristics of Detroit, per the American Community Survey of the U.S. Census Bureau:

  • The labor force is 54.2% and 45.7% are not in labor force;
  • 45.5% of the households have income below $25,000;
  • 31.5% receive social security;
  • 34.5% depend on food stamps;
  • Mean Social Security Income is $14,096 and mean retirement income is $18.535;
  • Per capita income is $15,261;
  • 31.1% of the families live below the poverty level.

With low house values, low income households, low employment labor force and high property taxes, such staggering data clearly indicate the economic challenges of the city.

No Emergency Manager or Emergency Financial Manager can fix Detroit without making radical changes to every part and function of the City Government. The audit reports have consistently reported significant deficiencies in internal control and material weaknesses. Year after year the city ran huge deficits. The cleanup of the city should not be just at the periphery but an overhaul of the entire city government. The financial review by the Governor’s team has been dragged on for more than two years. It is politics that keeps dragging the issue and making it much worse every month. Detroit should stop and the Governor should not allow more borrowing.

It is imperative Detroit become a viable city. Detroit has a lot of community assets, such as nonprofits, health and educational institutions, foundations, businesses that are committed, and residents who believe in their city.

But none of this will matter if the city’s financial condition is not cleaned up.

Because every decision by the Emergency Manager will be blocked and dragged on by the city council the Governor should put the city into a structured bankruptcy. Bankruptcy will help to re-structure and re-organize the city government, eliminate waste, close out departments that are not of value, privatize management of grants through nonprofits, and re-structure the pensions and health liabilities. The bankruptcy should not be forced for a short duration. It should be given at least three to five years or until Detroit can be financially viable for the long duration.

Along with Detroit, Flint, Pontiac, Benton Harbor and any city or school district that has created an unmanageable financial condition should be subjected to bankruptcy. This is the only option if we want to see these cities become viable and preserve the urban fabric.

Peter Adair February 26, 2013 at 01:09 PM
I am a proponent of bankruptcy for any failing organization, which Detroit shows the signs of a failing organization. I don't like the word "structured". It reminds me of what happened with the auto companies. To many suppliers and debtors were skipped in favor of other stakeholders. I do not think that bankruptcy is a necessary step and the first of many.
Terry R. Gonser February 26, 2013 at 07:35 PM
Councilman Yalamanchi, you hit the nail on the head. This situation did not happen yesterday, last year or even last decade. It's been ongoing since I was young in this area. Unfortunately, no one has ever been held accountable in the government. I remember in 1965 when then President Johnson announced that Detroit was to become a model city with millions of dollars "invested" in the city. Of course, that millions turned into billions and look at the result. Hardly a model of which anyone could be proud. Indeed, this is the absolute result of Socialism - redistributing money from those who worked for it to those who did not. Watch out USA!! Not too many years down the road our beloved America will end up just like Detroit, New Orleans and cities too numerous to mention in California, Illinois, New York and so on. For all the rhetoric the current administration spews about wanting to protect the middle class, remember, Socialism has no middle class - just the ruling elite and the proletariat.
Peter Adair February 26, 2013 at 09:34 PM
I thought I fixed that last sentence! Not - "I do not think that bankruptcy is a necessary step and the first of many." but; I do think that bankruptcy is a necessary step but the first of many.
Reg Thomas February 27, 2013 at 05:43 AM
How to fix Detroit 1. Issue a sound currency of gold and silver to be used within the city limits. 2. Get rid of all federal, state and local laws written in the last 100 years and return to the original state and federal constitutions. 3. Statute law is null and void and common law is reestablished. 4. An import export tax is established to pay for infrastructure and minimum city government and services. Detroit could become a test city. We have seen what modern liberalism and socialist, centralized big government has done to the city of Detroit and is doing to the rest of this county. Take a good look at Detroit. It is the future of every city and town in this land unless we turn things around right now. The same people that brought down Detroit are the same people that want to disarm us.
Scot Beaton February 27, 2013 at 08:42 AM
Ravi Yalamanchi ... Thanks for your 'opinion' -- these kind of opinions are written all the time by 'suburbanites' that don't have a clue about Detroit -- or what has gone on in Detroit for the past 50 years. Ravi... let me put this in a nutshell even 'you people' north of 8 mile can understand. White business owners moved to the suburbs -- land of cheap taxes, cheap building codes, and cheap land. White suburban slumlords still own most of the cap buildings in Detroit. White people built I-75 to get them out of town... through the most upscale Black neighborhood in Detroit. Ravi... before you write an opinion about Detroit -- why don't you enlighten yourself and read up on the story of Hastings Street. http://www.thedetroiter.com/JUN03/DIGGINGMAY.html -- Ravi... sorry to be so harsh -- but I'm in the advertising business and I have plenty of great Black advertising clients south of 8 mile -- and the horror stories I hear from them are endless! Maybe just maybe all those White (live in the suburbs) slumlords need to go back into the city and clean their mess up! Ravi... By the sound of your 'opinion' you have not read this -- It's only 184 pages and It's all about Detroit's future. Lots of graphs and pictures so It's a fast read even for a councilman like yourself. Then write an 'opinion' about Detroit. http://dev.detroitworksproject.com/ to be continued...
Scot Beaton February 27, 2013 at 08:44 AM
Ravi Yalamanchi ... P.S. If your such a genius when it comes to fiscal management why did you vote yes $40 Grand to study water tanks in Rochester Hills and a few years later vote yes again for the same $40 Grand water tank study? I'd be more than happy to pull the public record for you.
Reg Thomas February 27, 2013 at 04:37 PM
Mr Beaton Thanks for the link, yes Detroit was once a great city. I spent much of my youth in and around the city. It's sad to see what it has become. People left Detroit because of the criminals inside government and petty thugs on the street, the two go hand in hand. Street criminals have been bread by years of government welfare programs. Add to that the deliberate dumbing down of America through the public education system and its easy to see why the entire country will soon look like Detroit. It's not a black/white race issue, that just divides people and keeps the focus off the real cause of why the city is in such dire straits. We need to work together to fix things!
David Gifford February 27, 2013 at 05:06 PM
With incomes so low the first thing that needs to happen is improved public transit. Let's face it, the cost of a used car + insurance + gas + maintenance + tags would eat up half of someone's income. You can hardly get by without a car these days, especially when work, groceries and shopping are so far away. Here's a great resource for plans for Detroit. http://detroitworksproject.com/?ref=dfc
Scot Beaton February 28, 2013 at 06:45 PM
Reg... Hope your right -- my thoughts it will take a few more generations to erase the pane caused by the 'white' abandonment of Detroit -- thanks for your comment and thanks for taking the time to read the links.
Scot Beaton March 07, 2013 at 06:44 AM
Bob... I'm sorry to say... but I think you missed my point... but that's OK; thanks for making a comment in the Patch. I'm very proud to be a Detroit area resident... but I will continue to throw pointless opinions under the bus. As a member of the Rochester Hills City Council I never voted for the same study (water tanks) the residents did not want twice. I never voted yes for a municipal budget in which both the building department and the planning department ran in the RED! Ravi has voted yes many times. I did not flush away $27 million in water & sewer fund balance because I did not have the guts to tell our community what Detroit charges for water.* And just last Monday night Ravi voted yes for $414,252.57 in engineering for a 50 mph road the residents don't want. Bob... I could go on and on. Ravi at the local level is fiscally irresponsible... so he does not have the right to tell Detroit how to manage its current financial crisis... my opinion. Big Yellow Taxi Posted on March 5, 2013 at 1:50 am http://rochester.patch.com/blog_posts/big-yellow-taxi What is Hamlin Road... Livernois to Rochester Rd.? *Replace officials to stop water fund leak Published: Sunday, February 27, 2011 http://www.theoaklandpress.com/articles/2011/02/27/opinion/doc4d67018ce9351599362197.txt
Cheryl Junker March 07, 2013 at 01:07 PM
Dave, Great link! Twenty some years ago, I considered moving into Detroit. The architecture is gorgeous, downtown was coming back and there was hope that our generation would be 'the one' to make it happen. However, without public transportation, I found the city to be isolating and alienating. Just out of college, I had no desire to drive. I wanted to 'walk'. Chicago was too expensive but Detroit was just edgy enough to satisfy that youthful urge to be 'different'. I remember one incident in which I was driving around taking pictures of old homes (taking great pains to avoid people), when I was stopped by an undercover white, female cop who said I had 'upset' some folks. I guess they were nervous that I had captured illegal activity on film....who knows. Anyways, after that I no longer felt the same complacency or excitement that I once did. A little bit of hope drained out of me that day. To truly reintegrate the city, public transportation is a must. Otherwise, there is no way to connect the thriving/safe communities together and bring money back into the city. Imagine if a commuter train had been built in the early 90s along the three main spikes (Gratiot,Gd. River, and Woodward). Royal Oak and Ferndale became bustling hubs in that time frame. Think about what 696 did for connecting east to west. We cant give up on Detroit. I am reading 'Arc Of Justice' by Kevin Boyle......interesting Detroit history. Off to get baby #2 up. Have a great day!
David Gifford March 07, 2013 at 01:22 PM
http://www.fwrail.org/overview.htm - here's a great link for you. These guys have put up a site that shows what a regional transit system could look like in Detroit. We had a great transit system at one time but cars changed all that. I have friends who live downtown and don't have cars but are still dependent on others with cars to get around more than a few blocks. You're right, it does often feel like outsiders are not wanted there. It is clear by the city council's rejection of the EFM. Right now I am reading Downtown: Its rise and fall, 1880-1950, to figure out where it all went wrong for it was not strictly a Detroit problem only. Detroit is merely one of the last big cities yet to recover from the urban sprawl problem. Tonight at the library is a free lecture from a young Detroit author who writes about the pre-automotive history of Detroit. You should attend!
David Gifford March 07, 2013 at 02:00 PM
This subject is an interesting one as we get to watch so much history unfold right before our very eyes. Despite the best or worst efforts of the city government, things are moving forward in Detroit. The Police and Fire are getting a new headquarters (http://detroit.curbed.com/tags/new-police-headquarters), once struggling buildings are receiving new life under Dan Gilbert's Detroit 2.0 initiative (Since January 2011, Rock Ventures has purchased 10 buildings totaling nearly 2.5 million square feet of office space, plus two parking garages with 3,500 parking spaces. Last month, the company broke ground on a 33,000-square-foot specialty 10-story parking garage in with ground floor retail in downtown Detroit), the formation of the Regional Transit Authority and approval of the M1-Light Rail, test runs of a commuter train between Jackson and Pontiac (http://www.rtands.com/index.php/passenger/commuter-regional/michigan-commuter-line-begins-test-run.html), reopening of the Michigan Science Center, remodel of the Detroit Historical Museum, planning of a new hockey stadium, revival of the riverfront, the opening of Whole Foods this summer, redevelopment of a theater on Woodward (http://detroit.curbed.com/tags/garden-theater-detroit), new apartment buildings and renovations of dozens of old ones and now this: (http://metrotimes.com/news/stir-it-up/targeting-violent-crime-1.1454610) a plan to target violence in Detroit that may actually work. Negative comments will get us nowhere.

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