Infrastructure work, such as a sinkhole at Woodward and Randolph, has added financial stress. (Daniel Mears / The Detroit News)
Detroit plans to spend $1.5 billion on capital improvements such as infrastructure repair and clearing blighted buildings during the next decade while looking to sell or lease some of its assets to generate cash, the city’s plan of adjustment revealed Friday.
The plan and a related disclosure statement filed in U.S. Bankruptcy Court detail a 10-year effort to invest in the city and improve essential services and public safety for its roughly 680,000 residents. The capital spending is up about 20 percent from what Emergency Manager Kevyn Orr proposed in an initial plan to creditors in June.
The city is “sorely in need of some reinvestment and reinvention,” Orr said Friday, calling the plan “a start to get at many of the services.” He defended the increased capital spending from attacks by creditors as necessary in a city with a rash of infrastructure needs — including the cascade of water main breaks caused by single-digit temperatures and a huge hole outside City Hall.
In a joint statement, Mayor Mike Duggan and City Council President Brenda Jones said the plan “provides us a framework for how we can move forward in delivering our most vital services with limited resources.” Duggan oversees most day-to-day city operations, except for the Police and Water and Sewerage departments, while Orr has veto power on many city decisions.
Duggan and Jones said they are working to identify new ways to generate more revenue and cut costs.
One of the Orr plan’s biggest revelations was about how much money Detroit plans to spend tearing down blighted structures. A federally appointed task force has been mapping abandoned and deteriorating homes and buildings around the city as Duggan and others work on a demolition plan.
About $520 million will be dedicated to blight removal during the next five years, according to the disclosure statement. The city is spending $7.3 million this year and intends to spend $113 million in fiscal year 2015 and $100 million in the following four years through 2019.
The infusion of money would ramp up demolitions to 400 to 450 a week from the current pace of 114 a week, the city estimates.
“The city intends to focus its initial demolition efforts around schools and other areas identified by the Detroit Works Project and the Detroit Future City project,” according to the disclosure statement.
The city also plans to use $52 million in redirected federal aid to demolish 4,000 to 6,000 publicly owned residential structures during a 15-month period.
To improve public safety, the plan targets more money for the Police Department, $114.2 million, and the Fire Department, $82.1 million, in the next five years.
The city also is looking to sell or lease assets — measures recommended by policy experts gathered by the libertarian Reason Foundation at a Thursday panel discussion in Detroit.
Under Orr’s direction, the city has been exploring how to make money from its parking lots, structures and meters by possibly soliciting bids. The transaction may be completed in the 2015 fiscal year, the disclosure statement says.
City officials contend the Municipal Parking Department has been limited in recent years because of budget cuts, headcount reductions and unfavorable work rules.
“Meter rates and parking violation fines are underpriced in comparison with those of other large cities and frequently are considerably lower than parking rates charged by neighboring privately operated garages and lots,” the disclosure statement says.
The city is also exploring whether to lease or sell the Coleman A. Young Municipal Airport. Until a new strategy is decided, the city will continue to subsidize and operate the airport because it doesn’t want to trigger a requirement to repay prior Federal Aviation Administration grant money, Orr’s office said.
In another cost-saving move, the city is considering contracting out more services to private firms, as it is doing with garbage collection and recycling. Unions would be allowed to bid on any service contracts, and the city would “work with labor representatives to minimize the effects of any headcount reductions ...,” the disclosure document says.
Orr’s office also indicated it will work with city unions to change work rules and boost efficiency.
Technology gets boost
Equipment and technology upgrades are other areas that will get attention. The city plans to spend $447 million on vehicles and facilities, up 38 percent from Orr’s June proposal. Technology spending would be raised 85 percent to $148 million.
The plan proposes continued efforts to revamp grants management and tax collection processes. The state-created Public Lighting Authority recently accelerated repair efforts, submitting a revision to its three-year lighting plan that aims to relight all city neighborhoods within 18 months.
Despite Orr’s spending plan and Duggan’s commitment to make a visible change by the end of June, Detroit’s former state-appointed program manager William “Kriss” Andrews said it will take more time to repair a “dysfunctional” city.
“It’s going to take all of four years and probably eight years to get the machinery fixed,” Andrews said Friday. “It’s not going to happen in six months — it’s too broken.”