DETROIT — A bankruptcy expert who represented automaker Chrysler LLC during its successful restructuring has been chosen to steer Detroit out of its financial abyss. The distressed city, which was once one of the nation's most prosperous manufacturing centers, is now the largest U.S. city to have its finances placed under state control.
Gov. Rick Snyder announced today that he had chosen Kevyn Orr, a partner in the Cleveland-based law and restructuring Jones Day firm, as Detroit's emergency manager. He officially will be hired by Michigan's Emergency Loan Board, which had scheduled a meeting for 3 p.m. today.
During a news conference today, Mr. Orr called Detroit a “storied American city.”
“We can rise from the ashes,” Mr. Orr said. “This is a beautiful city and a wonderful state that gave me my start. I feel compelled to do this job.”
Detroit, which at one time was the symbol of American progress and held great political power thanks to the auto industry, has lost a quarter-million people during the last decade and remains saddled with a $327 million budget deficit and more than $14 billion in long-term debt. It has been making ends meet on a month-to-month basis with the help of bond money held in a state escrow account. The city also has instituted mandatory unpaid days off for many city workers.
Mr. Orr said when he met with Governor Snyder, he called the manager job “an unsung hero task.” He asked the governor why he would bother to help the city, and Mr. Snyder's response was: “Kevyn, it's the right thing to do and it's the right time to do it.”
A state-appointed review team previously determined that because of Detroit's cash deficit, the city would have had to either increase revenues or decrease expenditures — or both — by about $15 million per month for three months starting in January to “remain financially viable.”
Those troubles, along with underfunded city services such as police and fire departments and the absence of legitimate turnaround plans from Mayor Dave Bing and the City Council, ultimately forced Governor Snyder to appoint an emergency manager.
“The bottom line here is that we must stop fighting each other,” Mayor Bing said Thursday. “We must start to work together. I'm happy that now I've got teammates, I've got partners that can help me do things that need to be done in our city.”