Detroit calls in administrator to put it on the road to recovery

 

Washington

Kevyn Orr helped organise the successful restructuring of Chrysler, when the venerable car maker was considered all but dead. Now the top bankruptcy lawyer has an even tougher task: to lead Detroit – the city that rose and fell with America’s car industry – back from the brink of ruin.

Mr Orr’s appointment as Detroit’s emergency manager, supplanting the mayor and other elected officials, comes after decades during which a city that 50 years ago was America’s fifth-largest has turned into a monument of depopulation and decay.

“This is the Olympics of restructuring,” he told a news conference a fortnight before he formally embarks on his new job, that gives him powers to slash spending, alter public employee contracts, sell off city assets and privatise services.

The move by Michigan’s Republican Governor Rick Snyder represents perhaps the last chance to stave off bankruptcy in overwhelmingly black and Democratic Detroit, which has a budget deficit of $327m (£216m), and accumulated debt of over $14bn.

Since 1960, the city’s population has shrunk from nearly 1.7 million to barely 700,000, amid the long decline of the industry that earned it the moniker “Motown”. Vast swathes of former residential areas have been abandoned, crime is rampant, and some basic urban services are so underfunded they barely operate.

Now Mr Orr, a Michigan native, has perhaps 18 months to put Detroit on a road to recovery. Although cities and towns in various US states have been placed under emergency financial supervision in the past, none has been as large as Detroit, or beset by problems that are as deep-rooted.

 The task, he admitted, would be “very challenging”. But Mr Orr pointed to the renaissance of the US car industry since the controversial bailout of GM and Chrysler in 2009. “We can rise from the ashes,” he vowed.

“This is a beautiful city and a wonderful state that gave me my start.”

The arrival of Mr Orr caps years of controversy, corruption and scandal in Detroit City Hall, culminating in the conviction and imprisonment of the former mayor Kwame Kilpatrick. Earlier this week Mr Kilpatrick was convicted on separate corruption charges that, according to federal prosecutors, showed a “pattern of extortion, bribery and fraud” by some leading municipal officials.

Contrary to some fears, news that an outsider will take charge does not appear to have generated tensions. The mood instead has been of resignation to the inevitable.  “I don’t think people care at this point who the mayor is or who the city council is,” Mayor Dave Bing said. “They want things fixed.”

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