Howes: Now comes the hard part for Detroit

Daniel Howes
The Detroit News

Detroit – — The hammers will be gone soon.

U.S. Bankruptcy Judge Steven Rhodes' approval of Detroit's 1,165-page restructuring plan, delivered Friday, is a historic milestone for the largest city in American history to file Chapter 9. But it's just the beginning.

Come later this month, there will be no emergency manager to pre-empt Mayor Mike Duggan and City Council. Nor a federal mediator to pull creditors into line. Nor a tight court schedule to push reluctant adversaries to negotiate or risk a forced settlement that could prove more Draconian.

"Judge Rhodes' decision has given new life to the city we all love, Detroit," Council President Brenda Jones said after the judge read his ruling from the bench. "Now our true work begins."

She's got that right. The mayor and the council she leads will be expected to implement and execute a restructuring plan they did not conceive nor draft — but will be judged by, nonetheless. They should be, however individual Detroiters feel about a bankruptcy that needed to happen.

The governor who authorized the historic bankruptcy, Rick Snyder, will be expected to make good on his claim to be a partner with Detroit, lending credence to the "fresh start" rhetoric recycled repeatedly by the state and local leaders celebrating the city's speedy turn through Chapter 9.

"We need to recognize that all of us came together," Snyder said, referencing the "60 years of decline" preceding the city's financial collapse. "As we celebrate this, we have much work that needs to be done."

True. Still, there should be no denying the astonishing accomplishments wrought by Snyder and Duggan, Emergency Manager Kevyn Orr and his legal team, federal mediators led by Chief District Judge Gerald Rosen and charitable foundations, negotiators for the city's unions and its two pension funds.

Nor can it be overstated how critical the formation of the "grand bargain," an $816 million fund to bolster city pensions and protect the Detroit Institute of Arts' collection, is to the plan Rhodes approved. Without the funders, he said, "it is unimaginable what the results of this case would look like."

No one, save secured creditors, survives bankruptcy unscathed, and Detroit's was no different. The outcome approved by Rhodes in what experts consider record time is truly remarkable for a city like this one, with its deep culture of confrontation, denial, mistrust and racial antagonism.

"People 30 years from now will remember this day as one that shaped the Detroit they know," Daniel J. Loepp, CEO of Blue Cross Blue Shield of Michigan, said in a statement. "This day was made possible by people determined to make tough decisions, people willing to make hard sacrifices and people willing to work together to build a better tomorrow for Detroit."

He's right. Rhodes' ruling caps an arduous journey for the city that put the world on wheels, served as the Arsenal of Democracy in the Allied victory in World War II, and spent the better part of four decades tracing inexorable decline.

But it's more. Beyond representing a fresh start, Rhodes' ruling strikes an unmistakable note of humanity too seldom heard amid the complaint, blame and suspicion that became so common around here it was scarcely noticeable anymore.

He called the city services "inhumane" and "intolerable." Pension cuts, mitigated by the grand bargain, "must never happen again. This must never be repeated anywhere in the state."

If Rhodes issued anything approaching a political call to arms from the bench, that was it: never again. Never again should elected officials beggar employee pension obligations to service debt held by banks and insurers. Never again should citizens tolerate awful services allegedly financed with their tax dollars.

He's right, too. Republican or Democrat, union or management, a simple human fact is that making promises and proving little intention of keeping them ranks among the worst kind of government deception — and avoiding such behavior should be a top priority for Snyder and the Republican-controlled Legislature.

Still, it bears reminding that many of the dire predictions offered at Detroit's Chapter 9 filing never materialized. Snyder's bankruptcy call would "destroy the financial underpinnings of the state," as one New York bond attorney lectured him; didn't happen.

"Those were tough calls," Snyder told The Detroit News in an interview. "They were the right calls. I had a lot of people telling me this would not work."

The city traded assets with creditors, but sold none. The DIA's collection, leveraged to raise cash from private donors and the state, remains intact. Pensions that could have been cut by as much as 34 percent will be reduced by considerably less.

And more: As much hardship as the case demanded of creditors and pensioners, unions and management, it also made the broader community willing participants in a Detroit restructuring that would have less chance of success without them.

From residents outstate whose legislators backed $195 million contribution to the grand bargain, to suburban residents whose representatives agreed to create the Great Lakes Water Authority, from foundations to DIA donors, Detroit's bankruptcy and the leadership of it began to unify this community in ways seldom seen here.

Yes, this opportunity is just the beginning — a fresh start too important, and too rare, to blow.

(313) 222-2106

Daniel Howes' column runs Tuesdays, Thursdays and Fridays and can be found at http:\\\staff\27151.