Howes: National business leaders bullish on Detroit
Evidence of Detroit 2.0, a city on the backside of game-changing bankruptcy, is cropping up everywhere.
There’s the Ilitch-led entertainment district on the west side of Woodward and soaring demand for housing from downtown to Midtown. There’s the continuing clamor for office space, the profusion of restaurants, the yen to deliver yet one more hotel in a place that not too long ago had very few worthy of a major American city.
There’s the realization deals that never “penciled” well enough to make business sense are now compelling money-makers. There’s the QLine streetcar project, largely financed with private-sector dollars, nearing completion. There’s a functioning City Hall whose leaders are doing their jobs as intended, hewing to their post-bankruptcy restructuring plan, making progress improving basic city services for residents and seeing the results in improved credit ratings.
The Troy-based Kresge Foundation, determined to build on what it calls the “unprecedented opportunity” of post-bankruptcy momentum, last fall set out with FTI Consulting to understand just how compelling that evidence of a reinvigorating Detroit is — or is not — to outside business leaders who make investment decisions.
On Tuesday, the foundation will use the Brookings Institution in Washington to release the results of its first “Detroit Reinvestment Index,” a survey of 307 national business leaders that reflects strong optimism that the city given up for dead not too long ago is in recovery and is a good place to invest.
“The belief in Detroit’s future among the national investor community is extraordinarily encouraging,” Kresge CEO Rip Rapson said in an interview. “There is a deep appetite for understanding what are the parts in the toolbox that helped us here. There is a flywheel that gets going ... when you identify what your challenges are.”
It’s uniquely Detroit, these public, private and nonprofit leaders who recognized historic opportunity and coalesced around the idea of turning the city’s epic Chapter 9 into a fresh start. Their “grand bargain” to rescue the Detroit Institute of Arts from creditors and to bolster city pensions helped fund a consensual restructuring plan that is renewing confidence in Detroit and its attractiveness as a place to do business again.
The results are changing minds: 71 percent of the business leaders surveyed said Detroit would be a smart investment for their businesses, and 84 percent are confident Detroit “can become a great city” again. Most business leaders, especially those with ties to Detroit, said they maintain a bullish outlook and positive perceptions of the city, its local government and its diversity.
But in other meaningful ways, perception lags reality. Just 16 percent of those surveyed know that Detroit emerged from bankruptcy in December 2014, more than 16 months ago. And the need for a comparatively low crime rate to foster increased business investment is belied by a series of recent child shootings that prompted Detroit Police Chief James Craig to introduce Monday what he called a “robust” new approach to fighting crime.
Detroit’s revival is an evolving process, not a destination to be reached at a specific time. It is more 21st-century reinvention than nostalgic comeback; it can be complicated by politics, personalities, economic cycles, the kind of crime that has been too widespread for too long. And all of it can influence business perceptions of Detroit.
“A year from now, six months from now, is that index “going up, going down,” Rapson said, adding that the sense of teamwork that helped the city through bankruptcy remains intact. “Is it just business as usual and everyone’s returned to normal? Or is it something different? I think it’s something different.”
So do I. Early next month, Kresge is partnering with the University of Southern California’s Center on Philanthropy and Public Policy for a two-day symposium called “Drawing on Detroit.” The decline and collapse into bankruptcy of the city that put America on wheels reshaped the roles of government, business and philanthropy in the age of austerity and taxpayer fatigue.
It also bought Detroit a second chance, just as the Chapter 11 bankruptcies did for General Motors Corp. and Chrysler Group LLC. The simple lesson here is that no city in the country has lived bankruptcy, its challenges, its discipline and its tough choices more comprehensively than has Detroit, its leaders and its people — from poor city neighborhoods to glitzy suburban enclaves.
What happens when the private sector leaders return to their daily business? When philanthropies such as Kresge and the Ford Foundation, the W.K. Kellogg Foundation and the John S. and James L. Knight Foundation, among others, turn to other needs? When the pressures of a court-ordered restructuring plan ease, oversight ends and elected officials call all the shots once again?
Will the bad old habits return, or will the scars that enabled the second chance exert the necessary discipline? So far, discipline is controlling the bad habits, thanks to comparatively robust macro-economic conditions, stable leadership and fresh memories of the pain and expense of collapse.
Detroit’s tale of reckoning and redemption is a cautionary one. The city that once led the nation in per capita income squandered its affluence; tolerated bad management and grasping union leadership; ignored and belittled its competition; made pension promises and issued debt as if none of it would need to be paid back.
But it did. Learning those lessons is vital, even if it happens in the hardest way.
Daniel Howes’ column runs Tuesdays, Thursdays and Fridays. Follow him on Twitter @DanielHowes_TDN, or catch him 3 and 10 p.m. Thursdays on Michigan Radio’s “Stateside,” 91.7 FM.