Perhaps no major city in the United States has faced more difficult economic challenges in recent years than Detroit. On Oct. 15, the USC Price School of Public Policy’s Bedrosian Center on Governance and the Athenian Society featured a conversation with Kevyn Orr, the man who led the revival of Michigan’s embattled city.
The event was part of the “Leading from the West” speaker series.
As emergency manager of the City of Detroit from March 2013 to December of 2014, Orr oversaw the largest and most complicated municipal bankruptcy proceeding in the nation’s history. He helped the city restructure $18 billion in debt, reduce overall debt by $7 billion, as well as implement a $1.7 billion revitalization plan for city services.
Raphael Bostic, director of the USC Bedrosian Center who led the discussion with Orr, noted that many cities – including Los Angeles – should heed the warning and example set by Detroit.
“The problems that Detroit faces are problems that exist in many places,” Bostic said. “Maybe not be as acutely as Detroit is facing, but there’s a tsunami that is building, and we need to think hard about how we address those things and hopefully avoid some of the challenges that Detroit faced.”
As Assistant Secretary for Policy Development and Research at the U.S. Department of Housing and Urban Development for three years in the Obama Administration, Bostic saw firsthand the issues of housing in Detroit and wasn’t sure how the city would be able to recover. Twenty percent of Detroit’s housing stock was considered abandoned or damaged beyond reasonable repair.
“To me, looking at Detroit there was the potential for us to feel a bit of hopelessness, to think that Detroit may be lost to us,” Bostic said. “But then we found someone who said, ‘I’m not accepting that and we’re going to take Detroit to a different place.’ Kevyn Orr is that person. He took a job that I don’t think many would have taken. There were real challenges that would scare off other people. But fortunately he took it, rolled up his sleeves and made a big difference.”
Taking emergency action
Michigan Gov. Rick Snyder had appointed Orr as emergency manager after signing legislation that called for the position and provided extraordinary control over Detroit’s financial matters, temporarily taking power away from the Mayor and City Council. Orr had a reputation as one of the best bankruptcy attorneys in the world, most notably handling Chrysler’s bankruptcy and restructuring in 2009.
“I asked them to give me a chance,” Orr said. “If I blow it, there will be more than enough time to…banish me to the desert. Do what you want to do, but give me an opportunity.”
Orr took over a city that was bleeding people, losing about 25,000 in population every year between 2000 and 2010. The murder rate was more than one per day, and the city was bouncing payroll checks. Days before he assumed control, former Detroit Mayor Kwame Kilpatrick was convicted on 24 federal counts – including mail fraud, wire fraud and racketeering – for corruption during his time in office.
“My job was to prioritize what we were going to try to do in three buckets, which was delivery of city services, try to restructure the budget so that the city could afford to pay go as it went forward… The third thing we wanted to do was exit strategy — how do we make this sustainable so that people are going to be here when I return authority back to elected officials.”
In addition to the financial stabilization provided by Orr, Detroit is seeing a revival with the development of light rail and fiber optic technology, a new arena for the Red Wings that will bring with it the construction of five neighborhoods, and a bridge being built by Canada with a multibillion welcoming center courtesy of the U.S. government.
“Most important to me is that I’m thankful to the people of Detroit who, despite a number of people coming in trying to agitate them and encourage them to behave in an uncivil manner, didn’t take the bait,” Orr said. “You come in realizing that the city is on tenterhooks. The people had been disappointed for three years. They are frustrated, they are angry, they are highly cynical — and you want to tamp that down.”
Building trust and hope
Upon first assuming the role, Orr took a hands-on approach, holding staff meetings twice a day, requiring all decisions to go through him and reviewing every City Council agenda before it went out. Once he felt comfortable with the people doing the job, he adopted more of a CEO model at the governor’s request.
To get Detroit through bankruptcy in an impressive 16 months, Orr indicated that his biggest challenges were preventing civil unrest and getting the City Council to buy in to trusting him with control.
He also noted the value of getting buy-in from the citizens of Detroit, and having them “feel that things have changed.”
“We did little things,” Orr said. “We privatized garbage so that people could see the city getting cleaner; started doing lights; hired a new police chief. We wanted to have [straightforward] deliverables so they could actually see some positive change within the first quarter or two and then move on from there.
These changes, Orr explained, help to keep the city focused on its long-term goal.
“We’re not going to turn this around in six months,” he said. “What we will do is have demonstrations of what it will look like in the coming two to three years, so that gives you an expectation. And if you manage that level of hope, then the people at least have something they can hold on to and believe in.”