Officials in Michigan and Washington, D.C., have agreed that there will be no bailout for the bankrupt city of Detroit. But on Friday the Obama administration will roll out a $300 million plan combining federal, state, and private funds to tear down blighted real estate and repair city infrastructure.
The demolition funds were the only form of federal help that Gov. Rick Snyder endorsed when asked about the possibility of a bailout shortly after Detroit filed for bankruptcy. The city reportedly has about 78,000 vacant structures, and the plan announced Friday would be the second wave of blight abatement funds the city has gotten. A $52 million program agreed to in late August was set to tear down 4,000 empty buildings.
Treasury Department officials ruled out a major federal aid package for the city over the summer, though neither Snyder nor emergency manager Kevyn Orr had requested one. There would have been precedent for such a bailout of the iconic Rust Belt metropolis, however. The federal government rescued New York City from bankruptcy in the 1970s. After the bankruptcy filing experts on urban development and the upper-midwest region told ThinkProgress that some form of federal help would be necessary for the city’s recovery. The $300 million plan rolled out Friday “is a good sign,” Rolf Pendall of the Urban Institute said in an email. “$300 million is not small change these days. It’s also a sign of partnership and furthering the ongoing conversation about how to turn the city around.”
Those experts also stressed that the city needs to diversify its local economy and contract its urban planning rather than trying to regain past levels of population and sprawl that it can no longer sustain. The shape of the plan rolled out Friday does not reflect that sort of long-term plan, and is more focused on addressing blight and providing bridge funding to keep the city’s public safety and transportation services from eroding any further during the bankruptcy. Sen. Debbie Stabenow (D-MI) told the New York Times that the plan “is not a one-time announcement” but “the first step” of several the state and federal governments will take to help the city rebuild.
$300 million is at best a medium-sized drop in Detroit’s multi-billion-dollar bankruptcy bucket, but the Motor City could use any and all help at present. The city’s finances have been so thin in recent months that it briefly had to stop issuing death certificates – just one example of the dysfunction wrought by bankruptcy.