Michigan moving to settle unemployment false fraud lawsuit, setting aside $20M

Kevyn Orr was the right man for Detroit

The Detroit News

A plan is no better than its execution. Gov. Rick Snyder won the lottery when he found Kevyn Orr to carry out his restructuring blueprint for Detroit.

Orr met all of the resume requirements: He's an experienced turnaround expert with a deep background in complicated bankruptcy cases, including that of Chrysler Corp.

And he's African-American, one of only a handful in the country with his sort of high-level restructuring experience. Plus, he is a graduate of the University of Michigan Law School.

Then there are the characteristics that don't show up on paper. Orr has the right mix of brains, charm, compassion and persistence to deftly pull off the imposing task of working the many levers of a complicated bankruptcy.

His savvy at the bargaining table helped settle all of the claims against the city outside the courtroom, sparing Detroit from the possibility of lengthy and costly appeals. And his eye for innovative solutions helped push past longstanding obstacles and address the chronic issues of blight, public safety and an ineffective government.

Snyder could not have picked a better captain.

"I knew the first time I met Kevyn, when I went down to Washington to interview him, that this was the right guy for the job," says Dennis Muchmore, the governor's chief of staff.

A quick learner

Orr had no political experience prior to arriving in Detroit, but he learned quickly how to navigate the city's indescribable political minefields.

From the time of his appointment in March 2013, Orr faced an angry backlash from both elected officials and residents.

Detroit was not an easy city to help. But Orr took time to get to know the town and its people.

And he showed a remarkable adaptability that kept him from bogging down in distractions.

"He's never afraid to say, 'I made a mistake, I'm going to go back and fix it,' " Muchmore says. "He's willing to change on the fly."

For instance, a few months into his job, Orr did an interview with The Wall Street Journal in which he said, "For a long time the city was dumb, lazy, happy and rich."

Residents took the remark personally and demanded Orr's head.

Instead of bunkering down, Orr reacted by launching a community outreach campaign, a charm offensive if you will.

Part of Orr's task was to help Detroiters appreciate the stark reality of the city's finances.

Decades of denial and neglect contributed to Detroit's decline, and Orr had to make residents understand how dire was the situation.

Laying out the numbers and what they meant helped brace stakeholders for the changes to come.

Iron fist, velvet glove

There was never any doubt Orr had the ultimate authority to enact his agenda without bothering with the city's elected leaders. He used his dictatorial powers sparingly, choosing instead to collaborate with the political leadership whenever possible.

He kept paychecks coming to City Councilmembers and their staffs, and went through the motions of seeking their approval before enacting major changes. That gave him the leverage he needed to get their sign-off on difficult pieces of the restructuring.

Even though he had no obligation to do so, Orr eventually turned over much of the day-to-day operations of the city to Mayor Mike Duggan, after the two built a strong relationship. That ended the public friction between the political leadership and the emergency manager's team, and helped ease the way to settlement.

"This could have come off track with a different emergency manager, or a different mayor," says Ken Whipple, vice chair of the Detroit Financial Advisory Board. "Orr did a very good job of handing off responsibility to Duggan."

That's a credit to both men. Duggan understood what was possible under Michigan's emergency manager law, and decided cooperation was better than confrontation.

"These were two guys with big egos who decided there was too much testosterone in the room," says Muchmore. "They both know they're formidable. They didn't need to prove anything."

Yet when necessary, Orr bypassed obstacles at City Hall and used his powers to act in the best interest of the city. That was the case when he approved the state takeover of Belle Isle, and privatized garbage collection over Duggan's objections.

A concern for Detroit

Orr viewed his assignment as well beyond cleaning up a balance sheet. He placed a higher priority on fixing Detroit, and providing residents with the services he felt they deserved.

Orr arrived with an historic appreciation for Detroit, stemming in part from his years at the University of Michigan and relatives in the city. Though his work had made him wealthy, he sympathized with residents living in abysmal neighborhoods.

"Kevyn grew up poor, as a person of color. He has never forgotten those experiences," says attorney and Detroit resident Reginald Turner.

One of Orr's first decisions was to stop paying creditors to free money for city operations, services and payroll. That was a key signal that he intended to put residents first, that he wasn't going to favor banks over people. Nor was he going to strip away services or pack up the city's assets and put them on the auction block.

Personal sacrifice

Kevyn Orr didn't need this job, nor the hassles and personal sacrifice that came with it. Other candidates weren't exactly beating down the doors to rescue a collapsing city with a populace stubbornly resistant to change.

"My understanding was there wasn't a huge line of people waiting to step into this position," says Douglas Bernstein, managing partner of Plunkett Cooney and a bankruptcy expert. "It was a tremendous sacrifice on his part."

While coming to Detroit was also an opportunity for Orr, he has spent nearly two years living out of hotels and airplanes, frequently away from his wife and children in suburban Washington, D.C.

Perhaps he did it for his own ego, to prove he could do something this big. Or maybe he felt a sense of mission to make this piece of the world a better place.

Whatever the reason he agreed to come here, Kevyn Orr's masterful handling of Detroit's restructuring leaves the city in its best position since its long and merciless decline began 60 years ago.

The third in a five-part series. Read previous installments at detroitnews.com/opinion.

Public Act 436 worked

Perhaps the most essential piece of infrastructure in Detroit's bankruptcy was Public Act 436, Michigan's latest emergency manager law, and its third attempt to get it right.

The bill was pushed through a Republican-controlled Legislature in late 2012 after voters overturned the previous law, Public Act 4, a tougher version that gave emergency managers much more control. That act, in turn, replaced the original and much weaker emergency manager legislation.

Having the new law in place allowed Gov. Rick Snyder to appoint an emergency manager in March 2013, when it had become clear the city's consent agreement with the state wasn't going to work.

The emergency manager law provided the legal structure for Kevyn Orr to guide the city through the process. Eric Scorsone, a Michigan State University professor and economist who helped write the EM law, says P.A. 436 is a "good compromise" between the first law and the second.

It sets a finite 18-month term for the emergency manager, while also providing ongoing state oversight once the term ends.

The law was controversial because it seemingly went against voters' will. But it was essential in establishing a route to bankruptcy for Detroit, as well as for enabling future rescues of troubled communities.