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Howes: Bankruptcy reveals true leaders

Daniel Howes
The Detroit News

As the city moves closer to emerging from its historic Chapter 9 bankruptcy, one thing is clear: it wouldn't have happened without key people in the right place at the right time.

Would a Gov. Jennifer Granholm defy her union backers, approve filing the largest municipal bankruptcy in American history and rally a bipartisan majority of the Legislature to fund the "grand bargain?"

Would Dave Bing, much less Kwame Kilpatrick, forge a working partnership with an emergency manager appointed by Lansing and then become a key player in court-supervised mediation over downtown real estate and regionalizing the city's water and sewerage department?

Would a bankruptcy judge with fewer long-term attachments to Detroit than U.S. Bankruptcy Judge Steven Rhodes pursue a different mediation strategy, leaving Chief U.S. District Judge Gerald Rosen to monitor the proceedings from his seventh-floor chambers?

Would the city's union leaders and pension funds settle their claims against the city — grounded in the state constitution's explicit protection for vested pensions — if Rosen, the state, the heads of a dozen foundations and donors to the Detroit Institute of Arts missed the chance to assemble the $816 million grand bargain?

Doubtful, all of it, for three reasons: first, past actions in public policy generally prove accurate predictors of future behavior. Second, the power of federal bankruptcy produced compromise in a town biased to confrontation.

Third, coincidence matters in history; the story of Detroit's bankruptcy is no different. Here a remarkable confluence of individuals and their talents, many unlike those who preceded them, helped to shape the result in ways few predicted at the outset.

"The real story is the incredible sequence of, I'll say, luck to have people in place who were capable of managing this," Robert Taubman, chairman of Taubman Centers Inc., said in an interview. "If any one of those guys weren't in the positions they were, I don't think this would have happened."

He's right. But it did, arguably one of the most propitious accidents of history here since Henry Ford's Detroit put the world on wheels and then used its industrial might to forge the Arsenal of Democracy in defense of liberty.

The question now is how effectively the "fresh start" hailed by Gov. Rick Snyder and Mayor Mike Duggan, among many others, will be used because the window of opportunity is wide open — for now.

Suburban leaders won meaningful governing influence on the regional water authority they sought. Unions bargained five-year contracts for the first time in a long time. The city shed responsibility for assets it could not afford and gained real estate investors it otherwise wouldn't attract.

Bankruptcy gives the city a balance sheet shorn of $7 billion in debt; nearly $1.5 billion over the next decade to fund service improvements, starting with new public-safety equipment; a court-ordered mandate to restructure city operations.

It should sharpen expectations among residents and businesses that improvements will continue under the Duggan administration and the oversight by the Financial Review Commission. And it will bolster confidence of the business and philanthropic communities to continue investing in the city.

The hometown auto industry will help, too. As much as the employment footprints of General Motors Co., Ford Motor Co. and Fiat Chrysler Automobile NV are dramatically smaller than five years ago, their fortunes still influence the economic health and outlook of the city, region and the state.

Nationally, the industry is on track to sell roughly 16.5 million cars and trucks this year, the fifth consecutive year of sales expansion. Sales growth next year would make the first time since 1960 that sales expanded for six consecutive years.

Still, the run of the eponymous auto industry, now booking the bulk of its profits from its home market, would be a boon to Detroit and its effort to distance itself from the most damaging stigmas of bankruptcy.

To a point. Leadership and maturity will matter as much going forward as they did in the city's difficult walk through bankruptcy — and so will the actions of individuals now in a position to lead.

(313) 222-2106

Daniel Howes' column runs Tuesdays, Thursdays and Fridays and can be found at