Community Analysis of Detroit: Part 2 1

Community Analysis of Detroit: Part 2

Darice Collier
Wayne State University







Community Analysis of Detroit: Part 2 2

A problem that my community is currently experiencing is bankruptcy that will affect
many members in my city. Detroit is in debt of eighteen billion dollars and there is more than
likely a chance of nobody paying the city back (Woods, 2013). The etiology of the problem is
that Detroit has roughly about 100,000 thousand creditors and this has an impact on the
residents (Woods, 2013). The creditors include the bondholders, banks, and more than 20,000
retirees whose pensions will be severely reduced. Many major municipal bond funds has also
loaned Detroit money. After Michigan Governor Rick Snyder found Detroit to be in a financial
crisis, Kevyn Orr was appointed as emergency manager. Mr. Orr submitted his
recommendation that the city file for bankruptcy on July 16, 2013 and Snyder approved the
recommendation and submitted the bankruptcy filing on July 18, 2013 (Woods, 2013).
The type of bankruptcy that the city is dealing with is called Chapter Nine, which refers
to the section of the bankruptcy code that deals with municipalities that file for bankruptcy
(Woods, 2013). Congress established the Municipal Bankruptcy Act in 1937, after many
attempts to address cities' finances during the Great Depression (Woods, 2013). There are
fewer than 500 municipalities that have qualified for bankruptcy under Chapter Nine since.
Once the city is done with bankruptcy, it will still have to abide by a budget and pay off any
debts a judge forces it to pay.
Detroit currently spends 38 cents of every dollar on legacy debt or retiree health care,
pensions and other costs (Woods, 2013). That is money that cannot be spent on services
desperately needed by businesses and residents like firefighters, police officers, park upkeep,
garbage pickup, and streetlights (Woods, 2013).
Community Analysis of Detroit: Part 2 3

There are a plethora of issues that will happen due to the bankruptcy. The problems of
the bankruptcy will leave the community vulnerable with issues due to the bankruptcy. There
is a plan of ten years worth of improvements, which will affect residents, businesses,
neighborhoods, and visitors. It is really heartbreaking that Detroit had to file for bankruptcy
and the consequences that come along with it.
One of the concerns is how retired workers and pension plans will be affected by the
bankruptcy. Kevyn Orr, the Detroit Emergency Manager has said, The city can no longer afford
the pensions it promised retirees (Davey & Vlasic, 2013). If people lose their pension plan, then
this can create problems, including the issue of more elder homeless people. According to the
Detroit Emergency Manager, If we dont do something in the next 10 or 12 years, there wont
be pensions for the 30-, 40- and 50-year olds. Is that fair? (Davey & Vlasic, 2013).
There is a possibility that the Detroit Institute of Arts valuables will have to be sold to
help the city get out of some of the debt and due to pensions for retirees being unaffordable.
Three billion dollars is what all the collection of assets in the Detroit Institute of Arts is worth
and is owned by the city. The DIA remains hopeful that the Emergency Manager will recognize
the City's fiduciary duty to protect the museum art collection for future generations and that he
will abide by the Michigan Attorney General's opinion that the City holds the art collection in
trust and cannot use it to satisfy City obligations (Woods, 2013). Mr. Orr refused to promise
that valuables at the Detroit Institute of Arts will go untouched in bankruptcy. He says city
pensions for retirees are unaffordable as they are now, despite state constitutional
protections (Davey & Vlasic, 2013).
Community Analysis of Detroit: Part 2 4

The neighborhood street lights are not as vibrant as they were. Some of the street lights
located on busy roads are not in commission and this leave the roads looking dark throughout
the community. If we dont do something to address the unfunded liability that we have, the
700,000 residents some of them schoolchildren, some of them sort of skinny, dorky kids like I
was, who got beaten up every day at the bus stop by the toughs, who have to walk home in the
dark dont they deserve better services? said Mr. Orr, who grew up in Florida and visited
Detroit as a youth (Davey & Vlasic). The city cannot afford to get the street lights fixed due to
bankruptcy. As many as 40% of the citys 88,000 street and alley lights are estimated to be
out (Reindl, 2013). Street lights are important and are a safety hazard for people that are out
once it become dark. Many tragic events have occurred due to the lack of working street
lights. Tens of thousands of people are still living in the dark and with all the problems that
brings more crime and traffic accidents and a heightened sense of vulnerability that forces
many to plan their lives around the setting sun for fear of getting mugged on their own streets
(Reindl, 2013). The issue with the street lights is a big concern for the residents in the
community.
Population is important and will affect the community due to the bankruptcy. The crime
rate has risen up and people are not satisfied with it. The more people that flee to other cities,
the more abandoned house units exist. There are only a little over 700,000 people that
populate Detroit now (Linebaugh, 2011). Detroit population has continued to decrease since
the bankruptcy and as the population has decreased, so has the economy. The population of
Detroit has declined dramatically and the bankruptcy will have an effect on it. There are many
abandoned houses that were once occupied by people. Families are moving to other
Community Analysis of Detroit: Part 2 5

communities because they are not satisfied with the citys conditions. The crime activity has
been getting worst and people are not feeling safe in their home. Today, police solve less than
10 percent of the crimes that are committed in Detroit and when you call the police in Detroit,
it takes them an average 58 minutes to respond (Durden, 2013).
The casinos are the attraction site that is contributing to the community ability to
address the bankruptcy. The city of Detroit is now very heavily dependent on the tax revenue
it pulls in from the casinos in the city (Durden, 2013). Detroit is bringing in about 11 million
dollars a month in tax revenue from the casinos (Durden, 2013). The strength of the
community will allow residents to be able to get through a time like this due to the leaders
being dedicated to improve the horrific conditions. Kevyn Orr stated after the ruling of the
bankruptcy, "We plan to submit a Plan of Adjustment, file a Disclosure Statement early next
year, and work to exit Chapter 9 protection by the end of September, 2014. (Woods, 2013).
During the bankruptcy Kevyn Orr plans on having solutions that will help the community and
give the city resilience and potential for overcoming this issue. Mike Duggan, who is Mayor-
Elect will take office in 2014 stated, "I'm going to do everything I can to advocate on behalf of
Detroit's future in this process," he said, "We need to make sure the retirees are treated fairly
on the pensions they earned and we need to make certain we come out of bankruptcy in a way
we can afford to provide the quality of city services the people of Detroit deserve."
The people that are mostly affected by the bankruptcy are the 22, 000 retirees that will
have their pensions cut. Detroit maintains 13,000 government workers, but has 22,000
government retirees burrowed into the body politic (Howerton, 2013). The retirees health
Community Analysis of Detroit: Part 2 6

care subsidies alone account for nearly 200 million dollars of the citys budget. A quarter of the
citys spending is on pensions and in three years it will be half of the citys spending (Howerton,
2013). The city voted to allocate 28.1 million dollars from departments across the city to pay
for pension costs that are still due from last year (Howerton, 2013). The average annual
pension payment for Detroit municipal retirees is about 19,000 dollars (Karoub, 2013). Retired
police officers and firefighters receive an average of 30,500 dollars (Karoub, 2013). Top
executives and chiefs can receive 100,000 dollars (Karoub, 2013).
An example of a citizen affected by the bankruptcy is David Allen, a 50-year old retired
Detroit firefighter who lost the use of his legs during a spinal injury sustained on the job in
Detroit (Woods, 2013). He was quoted in a statement objecting to any possible cut of his
pension, which is horrible. Another example of a retiree that will be suffering from the
bankruptcy is K.D. Bullock, a 70 year-old retired Detroit police officer. Bullock says, He is
worried he will have to sell his home in Detroit's historic Indian Village neighborhood, and
others are wondering if they can afford a house at all (Karoub, 2013). A police retiree, Warren
Coleman, 76, wonders if his other investments will be enough to support him. In his 27 years
on the job before he retired as an executive lieutenant and moved to Ocala, Fla., he said he
"Put a whole lot of effort into getting promoted with the rising retirement benefit in mind
(Karoub, 2013).
There are too many citizens who worked dedicated years to serve the city, but the city
cannot afford to repay them back for their hard work that they earned. Some of the retirees
may have to move with other relatives due to them not being able to have their pension to be
Community Analysis of Detroit: Part 2 7

capable of supporting their self without an income. And there may be other retirees that may
have to be homeless due to the bankruptcy.
After administering the surveys to 20 people in my community, I found interesting
findings. There were 100 percent of the people that thought the Detroit Chapter Nine
Bankruptcy is a problem for the community. There were 90 percent of the people that thought
that the cut of the retirement pensions was a problem and 10 percent of people thought that
the cut of retirement pensions was not a problem. 25 percent of the people thought that they
were not affected by the Detroit Chapter Nine Bankruptcy and 75 percent of the people
thought that they would be affected by the bankruptcy. 50 percent of the people thought that
the residents of Detroit should try to help with the problem and 50 percent thought that the
residents should not. The three possible actions that could be taken to address the problem is
to protest for the pensions to not be cut, try to have fundraisers that will support the city that
can help with the bankruptcy, and try to develop a program that will assist retirees that receive
cut pensions. The best possible action is to have fundraisers that will help contribute towards
the Chapter Nine Bankruptcy. A good way to plan fundraisers for the citys bankruptcy is to set
a date, time, and place that will be convenient for people to attend. Make flyers about the
event and have a special gift to the person that donates the most money. Have a celebrity
support the event to attract people to want to support the event. The community factors that
would support the action plan are people who will be affected by the bankruptcy and know
people who will be affected by the bankruptcy. The Mayor and Government will probably also
support the event. The community factors that would not support the action plan are people
who will not be affected by the bankruptcy and people who do not know anyone who will be
Community Analysis of Detroit: Part 2 8

affected by the bankruptcy. Some people will contribute just because they want to and some
people will not contribute because they do not care about the issue.

















Community Analysis of Detroit: Part 2 9

References

Davey, M., & Vlasic, B. (2013, December 8). In Shepherding Detroit Bankruptcy, Lawyer Tackles
A Job He Didnt Ask For. New York Times. Retrieved December 8, 2013, from
http://www.nytimes.com/2013/12/09/us/in-shepherding-detroit-bankruptcy-lawyer-
tackles-a-job-he-didnt-ask-for.html?_r=0

Durden, T., (2013, July 21). 25 Facts about the Fall of Detroit That Will Leave You Shaking Your
Head. Retrieved December 1, 2013 from, http://www.zerohedge.com/news/2013-07-
21/25-facts-about-fall-detroit-will-leave-you-shaking-your-head

Howerton, J. (2013, July 19). The Blaze. Retrieved December 2, 2013, from
http://www.theblaze.com/stories/2013/07/19/melissa-harris-perrys-delusional-
analysis-of-bankrupt-detroit/
Karoub, J., (2013, July 23). Detroit Pensions Possible Cuts Worry City Retirees as Bankruptcy
Debt Estimates Hit 20 Billion. Retrieved December 1, 2013, from
http://www.huffingtonpo. com/2013/07/23/detroit-pensions-cuts-retirees-bankruptcy-
debt-20-billion_n_3642303.html?ref=topbar
Linebaugh, K., (2011, March 23). Detroits Population Crashes. Wall Street Journal. Retrieved
November 10, 2013, from http://online.wsj.com/news/articles/SB10001424052748704461
304576216850733151470
Netting, E., Kettner, P. & McMurtry, S. (2012). Social Work Macro Practice (5
th
ed.) Allyn/Bacon
Reindl, J. C., (2013, November 17). Why Detroit Lights Went Out and How the City Plans to get
Community Analysis of Detroit: Part 2 10

them Back on. Detroit Free Press. Retrieved November 18, 2013, from
http://www.freep.com /article /20131117/NEWS0 1/311170087
Woods, A., (2013, July 24). A Guide to Detroit's Chapter 9 Default and How Bankruptcy Could
Change the City. Retrieved November 11, 2013, from http://bankruptcy-chapter-
9_n_3640734.html
Woods, A., (2013, December 3). Detroit Bankruptcy Ruling by Judge Steven Rhodes Gives City
Chapter 9 Protection. Retrieved December 5, 2013, from
http://www.huffingtonpost.com/2013/12/03/detroit-bankruptcy-decision-ruling-
rhodes_n_4376775.html?ir=Business













Community Analysis of Detroit: Part 2 11

Survey about the Community of Detroit

Please circle the best answer.


1. Do you think the Detroit Chapter Nine Bankruptcy is a problem for the community?
Yes No

2. Do you think the Detroit Chapter Nine Bankruptcy will affect you? Yes No

3. Do you think the cut of the retirement pensions is a problem? Yes No

4. Do you think the residents of the community should try to help with the issue of the
Chapter Nine Bankruptcy? Yes No








Thank You for taking my survey! Have a nice day!