In what is being considered the largest municipal
bankruptcy filing in U.S. history the city of Detroit seeks Chapter 9 protection.
While the move was anticipated for some time by financial analysts, the
city has seen a significant decline in a number of ways over the last
several decades. The filing is being seen as the best option for the city
to help them rebuild, restructure, and regain control of its finances.
The filing was initiated by Emergency Manager Kevyn Orr who was appointed
to help the city sort out financial problems. The filing was approved
by Michigan Gov. Rick Snyder this week. Orr sees the filing as a way to
stop the city from going on a continuous decline, which many feel has
been happening for more than 60 years. There are various aspects that
experts feel contributed to the city’s problems.
In general, many feel there has been a lack of control or guidance when
it came to the city’s finances. Some feel there was money being spent
when it should not have been touched or used for certain purposes. When
cuts occurred or when money got tight, it would leave a negative impact
on surrounding communities. For instance, it takes police almost an hour
in some areas to respond to a 911 call. 11 minutes is the national average.
40 percent of the streetlights in the city are turned off.
The city has a large number of vacant lots, abandoned homes, and empty
buildings. The city had to halt on making payments toward debt last month
to try and save or preserve their cash supply that is dwindling. The city
allegedly owes between $18 and $20 billion to its creditors. Orr is hoping
to reorganize the debt down to roughly $2 billion.
Reference:
http://money.cnn.com/2013/07/18/news/economy/detroit-bankruptcy/index.html?hpt=hp_t2