The HKS in Detroit Leadership Seminar, generously supported by the Center for Public Leadership and the Dean of Students, took 10 students and one staff member on a week-long journey across the city to meet with government officials, nonprofit leaders, entrepreneurs, and organizers. The group also rode the People Mover, checked out the Detroit Institute of Arts, enjoyed Middle Eastern food in Dearborn, witnessed a one-hitter Tigers’ game, and much more.
As an urbanist deeply interested in American cities, I had a fascinating experience. Detroit’s challenges are well-known, as are some of the other interesting developments occurring in the city. But the confluence of these challenges and trends makes Detroit unique. I’d like to highlight three realities in Detroit that will define the city for years to come.
As an urbanist deeply interested in American cities, I had a fascinating experience. Detroit’s challenges are well-known, as are some of the other interesting developments occurring in the city. But the confluence of these challenges and trends makes Detroit unique. I’d like to highlight three realities in Detroit that will define the city for years to come.
1) The Automobile, Land-Use, and Population Decline
As Harvard Professor Edward Glaeser and others have noted, many of the struggles of Detroit can be traced to the struggles of the automobile industry. More specifically, the transformation of Detroit from an industry town with lots of little firms to one with just a few giant ones was a very bad thing in the long-run. There’s less of an awareness that being the “motor city” influenced a land-use pattern that is also highly problematic. It’s nearly impossible to get around without a car. Buildings are spaced very far apart and the city itself is huge. Surface parking lots are the norm, with both street level and below-ground garages downtown.
Having these types of urban structures isn’t necessarily a bad thing (see Houston, Texas), but couple these effects with the massive population decline (2 million to 700,000) due to decades of disinvestment and white flight and you get a very bad result. On some blocks, a majority of the houses are vacant. Not only is this type of thing terrible for social cohesion, it’s economically unsustainable for the city government, which is expected to deliver services (police, garbage collection, street lighting) to the entire city.
So—thinking about the long-term built environment, what can you do? You can start by trying to shrink the physical city, make it more manageable by clustering folks together in relatively healthy neighborhoods. This idea has been proposed, but telling people they need to move when they do not want to is much easier said than done. You can try to reverse the trend of automobile reliance. Local leaders are doing just that by building a 3.3-mile light rail in the center of the city with investor, foundation, and federal dollars. But it’s unclear what the impact will be; the roads are uncongested, and the rail is too hyperlocal to have much of a regional effect. As I asked in several of our meetings: who’s going to ride it? And you can try to encourage growth, which is probably critical in the long-run but very difficult to achieve when the regional economy is so bad. I think State Representative Rashida Tlaib has the right idea: immigration is key.
2) Emergency Management and Fiscal Insolvency
Detroit is currently under the control of a state-appointed Emergency Manager, but the Mayor and Council were instructed to continue their day-to-day activities. We met with City Council president Charles Pugh and sat in an Executive Session while the Council debated its following year’s budget. It was both inspiring and depressing to see the group take their jobs so seriously when their fiscal responsibilities have largely been outsourced to the EM. They debated the merits of $10,000 appropriations, fully aware that Detroit’s problems are in the billions.
There is a very prominent sentiment within many formal and informal Detroit structures that the Emergency Manager is wholly undemocratic, and partially unfair. And they’re right. It’s true that some unfunded promises were made by previous administrations. But much of the city’s financial problem can be traced to the vastly shrunk tax base created by population decline. It was not the fault of former city employees—but like everyone else, they will suffer.
Many cities forget except in times like these that they are fully creatures of their states; chartered by states and ultimately beholden to them. Though we didn’t meet with the EM or his staff, it does appear that he is fully aware of the divisive politics at hand. My guess is that he will put all of his energies into restructuring the city’s finances and then leave it as soon as possible to allow the elected leaders to govern.
It seems highly likely that the City is heading to municipal bankruptcy. One reason that most cities avoid bankruptcy is that their elected leaders do not want to be responsible for putting their cities in that situation. Obviously, that is not a concern in this case. Another is that it might damage credit ratings, raising borrowing costs in the future. But in this case Detroit already has junk ratings, and bankruptcy proceedings are more likely to raise them. Finally, retirees with public pensions and health plans usually want to avoid bankruptcy. But the EM can (and will) alter their plans anyway, which will have to be less generous. On the other hand, entering bankruptcy will allow the EM to give creditors a haircut and more flexibility on restructuring. So it is in most everyone’s interest that bankruptcy proceeds.
3) Dan Gilbert and Downtown Development
One of the more controversial points, both in Detroit circles as well as within our group, was the strikingly large and new downtown and midtown development occurring, largely at the hands of billionaire Dan Gilbert and his suite of companies, most notably Quicken Loans. Gilbert has bought 17 buildings downtown, moved his workforce downtown, started a tech incubator and venture capital firm, and is investing in retail, transportation, public space, and gaming. He and his team are unapologetic boosters for this project, and many are glad to see new investment in the struggling city.
But many others we met with are deeply concerned about the future of their city and a perceived lack of focus on their neighborhoods—with corresponding issues around race, class, status, and gentrification. It was truly sad to see some who believed that there may not be a place for them in their future city. Ultimately, as students of public policy and urban development I believe this one of our most critical questions: how can we improve cities as places to live, work, play, visit, and raise a family while ensuring that people can afford to live there? Very few cities have been successful in this effort.
On the direct subject of Gilbert and his plans for Downtown, I reached some conclusions that may have differed from the overall sentiment of the group. But I was heartened to see the honesty and open mind with which everyone approached the issues. Here are my takeaways:
First, there is nothing economically healthy about such an outsized prominence for one developer and his group of companies. Modern portfolio theory teaches us that a diversified set of stocks is better than betting on one, and the same is true for cities. Second, this reality is not only potentially problematic economically; it is bad on a host of issues related to governance and political economy. We witnessed this during a tour of Quicken’s surveillance facility, which some in our group thought was inappropriate for a private company to have. Third, Gilbert and his companies have not been adequately respectful or engaging neighbors. It would not be difficult for them to engage more with Detroit’s communities, higher more of their workforce locally, or recognize that the long-term future of Detroit will be determined by more than the vacancy rate of downtown commercial buildings. Finally, you must note that Gilbert is a profit-maximizer and not a philanthropist: he is making a bet that, though very risky, will pay off if successful.
With all of that said, however, I remain principally a supporter of Gilbert’s bet and the downtown development efforts. It is worth making the comparison with Detroit’s other prominent billionaire, Matty Moroun. Moroun, the monopolizing owner of Detroit’s bridge with Canada, is well-known for buying buildings and leaving them vacant. His fleet of trucks and related facilities pollute the air. He has let the Michigan Central Station (America’s “ruin porn”) decay for over a decade. He fights with the local representatives, challenges the government and fights dearly to protect his bridge monopoly, and sues those who stand in his way.
Gilbert is filling buildings. His revitalization strategy—density, retail, transit, public spaces—is right out of a best practices in local economic development playbook, with the concerning exception of his focus on casinos. To the criticism that his development won’t reach all communities, I’m sympathetic—he can be doing much more than he is to make sure that it does. But I’m also unconvinced. New restaurants and bars need workers. Local businesses will benefit from new shoppers. New tax dollars will support important public programs.
One of the greatest tragedies of the past century was the disinvestment and white flight that occurred out of center cities years ago, from which cities like Detroit are still hurting. I cannot come to the conclusion that people coming back into the city is likewise a bad thing, either economically or socially.
It is true that there will be some “gentrification.” But Wayne State VP for Economic Development Ned Staebler noted that on a spectrum of poverty to gentrification, Detroit still has unacceptable crime levels and 20% unemployment. Unlike cities like New York, Washington D.C., or San Francisco, housing costs and overall cost of living in Detroit are quite low. It remains to be seen whether Detroit—unlike these other cities—will be able to help all of its citizens afford to stay in their communities and thrive, but my sense is that Detroit is not at that point yet.
---
For these three realities and more, it was an incredible time to visit Detroit and witness all of the work occurring on the ground. I learned more than I thought I could. I’d like to thank the Center for Public Leadership and the Dean of Students for sponsoring the experience. Our trip leaders, Art and Michael, did a phenomenal job planning and executing the trip, which featured prominently voices from all sides of each major debate. And my colleagues were fantastic; asking terrific questions and contributing to thought-provoking discussion throughout.
For any questions, shoot me an email at daveullman [AT] gmail.com and I’ll be happy to discuss more!
DU
As Harvard Professor Edward Glaeser and others have noted, many of the struggles of Detroit can be traced to the struggles of the automobile industry. More specifically, the transformation of Detroit from an industry town with lots of little firms to one with just a few giant ones was a very bad thing in the long-run. There’s less of an awareness that being the “motor city” influenced a land-use pattern that is also highly problematic. It’s nearly impossible to get around without a car. Buildings are spaced very far apart and the city itself is huge. Surface parking lots are the norm, with both street level and below-ground garages downtown.
Having these types of urban structures isn’t necessarily a bad thing (see Houston, Texas), but couple these effects with the massive population decline (2 million to 700,000) due to decades of disinvestment and white flight and you get a very bad result. On some blocks, a majority of the houses are vacant. Not only is this type of thing terrible for social cohesion, it’s economically unsustainable for the city government, which is expected to deliver services (police, garbage collection, street lighting) to the entire city.
So—thinking about the long-term built environment, what can you do? You can start by trying to shrink the physical city, make it more manageable by clustering folks together in relatively healthy neighborhoods. This idea has been proposed, but telling people they need to move when they do not want to is much easier said than done. You can try to reverse the trend of automobile reliance. Local leaders are doing just that by building a 3.3-mile light rail in the center of the city with investor, foundation, and federal dollars. But it’s unclear what the impact will be; the roads are uncongested, and the rail is too hyperlocal to have much of a regional effect. As I asked in several of our meetings: who’s going to ride it? And you can try to encourage growth, which is probably critical in the long-run but very difficult to achieve when the regional economy is so bad. I think State Representative Rashida Tlaib has the right idea: immigration is key.
2) Emergency Management and Fiscal Insolvency
Detroit is currently under the control of a state-appointed Emergency Manager, but the Mayor and Council were instructed to continue their day-to-day activities. We met with City Council president Charles Pugh and sat in an Executive Session while the Council debated its following year’s budget. It was both inspiring and depressing to see the group take their jobs so seriously when their fiscal responsibilities have largely been outsourced to the EM. They debated the merits of $10,000 appropriations, fully aware that Detroit’s problems are in the billions.
There is a very prominent sentiment within many formal and informal Detroit structures that the Emergency Manager is wholly undemocratic, and partially unfair. And they’re right. It’s true that some unfunded promises were made by previous administrations. But much of the city’s financial problem can be traced to the vastly shrunk tax base created by population decline. It was not the fault of former city employees—but like everyone else, they will suffer.
Many cities forget except in times like these that they are fully creatures of their states; chartered by states and ultimately beholden to them. Though we didn’t meet with the EM or his staff, it does appear that he is fully aware of the divisive politics at hand. My guess is that he will put all of his energies into restructuring the city’s finances and then leave it as soon as possible to allow the elected leaders to govern.
It seems highly likely that the City is heading to municipal bankruptcy. One reason that most cities avoid bankruptcy is that their elected leaders do not want to be responsible for putting their cities in that situation. Obviously, that is not a concern in this case. Another is that it might damage credit ratings, raising borrowing costs in the future. But in this case Detroit already has junk ratings, and bankruptcy proceedings are more likely to raise them. Finally, retirees with public pensions and health plans usually want to avoid bankruptcy. But the EM can (and will) alter their plans anyway, which will have to be less generous. On the other hand, entering bankruptcy will allow the EM to give creditors a haircut and more flexibility on restructuring. So it is in most everyone’s interest that bankruptcy proceeds.
3) Dan Gilbert and Downtown Development
One of the more controversial points, both in Detroit circles as well as within our group, was the strikingly large and new downtown and midtown development occurring, largely at the hands of billionaire Dan Gilbert and his suite of companies, most notably Quicken Loans. Gilbert has bought 17 buildings downtown, moved his workforce downtown, started a tech incubator and venture capital firm, and is investing in retail, transportation, public space, and gaming. He and his team are unapologetic boosters for this project, and many are glad to see new investment in the struggling city.
But many others we met with are deeply concerned about the future of their city and a perceived lack of focus on their neighborhoods—with corresponding issues around race, class, status, and gentrification. It was truly sad to see some who believed that there may not be a place for them in their future city. Ultimately, as students of public policy and urban development I believe this one of our most critical questions: how can we improve cities as places to live, work, play, visit, and raise a family while ensuring that people can afford to live there? Very few cities have been successful in this effort.
On the direct subject of Gilbert and his plans for Downtown, I reached some conclusions that may have differed from the overall sentiment of the group. But I was heartened to see the honesty and open mind with which everyone approached the issues. Here are my takeaways:
First, there is nothing economically healthy about such an outsized prominence for one developer and his group of companies. Modern portfolio theory teaches us that a diversified set of stocks is better than betting on one, and the same is true for cities. Second, this reality is not only potentially problematic economically; it is bad on a host of issues related to governance and political economy. We witnessed this during a tour of Quicken’s surveillance facility, which some in our group thought was inappropriate for a private company to have. Third, Gilbert and his companies have not been adequately respectful or engaging neighbors. It would not be difficult for them to engage more with Detroit’s communities, higher more of their workforce locally, or recognize that the long-term future of Detroit will be determined by more than the vacancy rate of downtown commercial buildings. Finally, you must note that Gilbert is a profit-maximizer and not a philanthropist: he is making a bet that, though very risky, will pay off if successful.
With all of that said, however, I remain principally a supporter of Gilbert’s bet and the downtown development efforts. It is worth making the comparison with Detroit’s other prominent billionaire, Matty Moroun. Moroun, the monopolizing owner of Detroit’s bridge with Canada, is well-known for buying buildings and leaving them vacant. His fleet of trucks and related facilities pollute the air. He has let the Michigan Central Station (America’s “ruin porn”) decay for over a decade. He fights with the local representatives, challenges the government and fights dearly to protect his bridge monopoly, and sues those who stand in his way.
Gilbert is filling buildings. His revitalization strategy—density, retail, transit, public spaces—is right out of a best practices in local economic development playbook, with the concerning exception of his focus on casinos. To the criticism that his development won’t reach all communities, I’m sympathetic—he can be doing much more than he is to make sure that it does. But I’m also unconvinced. New restaurants and bars need workers. Local businesses will benefit from new shoppers. New tax dollars will support important public programs.
One of the greatest tragedies of the past century was the disinvestment and white flight that occurred out of center cities years ago, from which cities like Detroit are still hurting. I cannot come to the conclusion that people coming back into the city is likewise a bad thing, either economically or socially.
It is true that there will be some “gentrification.” But Wayne State VP for Economic Development Ned Staebler noted that on a spectrum of poverty to gentrification, Detroit still has unacceptable crime levels and 20% unemployment. Unlike cities like New York, Washington D.C., or San Francisco, housing costs and overall cost of living in Detroit are quite low. It remains to be seen whether Detroit—unlike these other cities—will be able to help all of its citizens afford to stay in their communities and thrive, but my sense is that Detroit is not at that point yet.
---
For these three realities and more, it was an incredible time to visit Detroit and witness all of the work occurring on the ground. I learned more than I thought I could. I’d like to thank the Center for Public Leadership and the Dean of Students for sponsoring the experience. Our trip leaders, Art and Michael, did a phenomenal job planning and executing the trip, which featured prominently voices from all sides of each major debate. And my colleagues were fantastic; asking terrific questions and contributing to thought-provoking discussion throughout.
For any questions, shoot me an email at daveullman [AT] gmail.com and I’ll be happy to discuss more!
DU
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