Detroit’s Comeback

Stacy L. Fox Former Deputy EM City of Detroit

April 28, 2015

Over the past several decades, the City’s population has declined over 60%

JUN-50 JUN-60 JUN-70 JUN-80 JUN-90 JUN-00 JUN-10 DEC-12 -

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

1,850

1,670

1,511

1,203

1,028 951

714 685

(Pop

ulat

ion

in 0

00's

)

2

Detroit has more revenue sources, but less revenue

State-shared Revenue

Revenue from taxes

Fee and Service Revenue

1960 Total Revenue: $2 Billion (in 2013 dollars)

State-shared revenue16%

Property taxes49%

Fees, sale of servicesand other revenue35%

2012 Total Revenue: $1.1 Billion (in 2013 dollars)

State-shared Revenue16%

PropertyTaxes13%

IncomeTaxes21%

Fees, sale of services and other revenue30 %

Wagering Taxes16%

Utility Taxes4%

3

4

State of the City Pre-Bankruptcy

• High unemployment• High crime rates• Crumbling infrastructure• Inadequate city services• Inability to compete with

suburbs

5

Financial Condition Detroit’s deteriorating financial condition continued

to grow as legacy expenditures absorbed additional resources

2007 A 2008 A 2009 A 2010 A 2011 A 2012 A 2013 P$0

$100

$200

$300

$400

$500

$600

$700

$800

$91$142

$267

$91$197

$327$245

$75

$75

$75

$75

$75

$75$250

$250

$250

$250

$130

Accumulated Deficit LTGO Series 2008A LTGO Series 2010 LTGO Series 2012C

($ in millions)

6

Chapter 9 Case – Key Events

• Resolution through Mediation

• Mayoral Election• Ruling on Pensions• Grand Bargain• Pensioner Vote

General Fund Pro Forma Capitalization

7

Pre-Petition Pro Forma$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

OPEB $4,303

Pension $3,129

Pension $1,447

COPS $1,473

$543

$1,100

UTGO $488

UTGO $388

$290

$275

Other $280

Other $90

LTGO

Exit Financing

Total: $10,506b

Total: $3,300b

LTGO

COPS Swap

General Fund 10 Year Pro Forma Revenues and Expenditures

8

(6)

(4)

(2)

-

2

4

6

8

10

12

14

Revenues$10.46b

Revenues $10.4b

Legacy exp. $6.9b

Legacy exp. $2.1b

Operating expenditures

$7.5b

Operatingexpenditures

$7.5b

Revenues $0.8b

Reinvestmentexp.

$1.7b

Expenditures $14.3b

Expenditures $11.2b

$3.9b deficit

Revenues $11.2b

(in

$b

illi

on

s)

Without Restructuring With Restructuring

Financial Summary of Reinvestment Initiatives – Ten-Year Total

-$1,000M

-$500M

$0M

$500M

$1,000M

$1,500M

$2,000M

$1,717.8M

-$841.1M

$876.7M

Additional Operating Expenditures

Fleet Reinvestment

Technology Infrastructure Reinvestment

Capital Expenditure Reinvestment

Reorganization Implementation Costs

Department Cost Savings Initiatives

Department Revenue Initiatives

$715.7M

$167.4M

$151.7M

$225.3M

$37.7M

-$358.2M

-$482.9M

Blight$420.0M

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10

Done:• Restructured balance sheet• Certain outsourcing• Public Lighting Authority• Great Lakes Water Authority

In Progress with good results:

• City service improvements

• Operating Land Bank• Blight demolition on-

going

Challenges:• Further outsourcing• Organizational restructuring• Continued population decline due

to structural and service disadvantages

• Ensuring the City stays on track

State of the City – Post-bankruptcy

Questions?

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