Update on Detroit
— Dianne Feeley
DETROIT’S EMERGENCY MANAGER Kevyn Orr promises to complete the city’s bankruptcy by the time he leaves this fall. His plan of adjustment includes selling off the city’s assets and reducing its liabilities. The New York Times described the draconian plan as “unimaginative.” Walter Turbeville, senior fellow at the public policy organization Demos, disputes the need for bankruptcy altogether, pointing out that Detroit was hard hit in the 2008 recession. Between 2000-2012 the number of employed city residents declined by 53% — half of that in 2008 alone.
Foreclosures and evictions continue to plague the city. This year the city is planning on evicting 49,000 homeowners because of back taxes, even though everyone agrees tax assessments on homes are inflated. Along with continued foreclosures and evictions that Fannie Mae and banks pursue, this process will leave more homes vacant, vulnerable to being stripped. While Orr and mayor Mike Duggan talk about the need to dedicate huge sums to tear down abandoned housing, in fact government officials and banks are creating “blight.”
Kevin Orr planned to cut city pensions by 26% for city retirees and 6% for the police and fire retirees (who do not receive Social Security). Negotiations resulted in a smaller 4.5% cut in city retiree pensions and eliminating any cost-of-living adjustment. Uniformed retiree pensions will remain intact and will receive 1% yearly COLA. This will decrease their earnings by nearly 10% over their lives.
Health benefits are taking a bigger hit, perhaps as much as 85%. General retirees under 65 are now receiving $125-$175 monthly stipends to buy their own private plans. After several wage cuts, current non-uniformed workers receive a 401K-type plan and pay 20% of their health insurance.
Orr had asked federal bankruptcy judge Stephen Rhodes to approve a $280 million deal to get out of a swap agreement city officials signed with Bank of America and UBS AG in 2005, but the judge found that too sweet a deal for the banksters. Orr then negotiated a $165 million settlement; again the judge declined — perhaps indirectly reflecting the angry public mood — suggesting instead that Detroit sue the two banks.
Orr declined and came back with a third settlement, this time for $85 million, which the judge approved.
At the same time, the city just gave 39 properties with an assessed value of $2.9 million to Mike Ilitch’s Olympia Development Corporation for one dollar so they could build a new downtown hockey arena. Sixty percent of the $650 million complex will be underwritten by city and state funds, yet the corporation will pay no rent or Detroit property taxes — the city will not even collect a portion of the parking fees or concession sales!
There are elements of resistance, including frequent demonstrations against the Emergency Manager and some successes in stopping evictions, but not on the scale needed to block the steamroller. A portion of the 139-mile city will be gentrified while some neighborhoods will continue to decay. The pattern is clear: generosity toward banks and corporations, with an iron fist for working people.
A tragic debate occurred over selling works from the Detroit Institute of Arts to stave off the deepest cuts. Sad to say, some union officials joined bond insurance giants in calling for looting the DIA.
We need jobs, pensions, an end to evictions and our parks and art museum, which is free to those in the tri-county area. We want bread and roses too!
May/June 2014, ATC 170