Emergency manager to take Detroit's reins today


DETROIT — When Kevyn Orr starts his new job today as the state-imposed emergency financial manager of Detroit, he will wade into a city of crumbling neighborhoods where police fail to respond to some calls, arson fires burn out of control, and residents scour charred buildings for scrap metal to sell.

Except for the business district and a cultural area including a university, museum, and some theaters, the city of Detroit, population 700,000, is in bad shape.

Mr. Orr, a bankruptcy lawyer based in Washington, will have the official title of emergency financial manager, but his task will range far beyond money.

He could be greeted by protesters as he arrives at work and plans to spend his first day meeting with some city officials who for months fought against creating his job at all.

Mr. Orr, 54, is under no illusions that he’ll be treated as a hero when he begins his duties.

His appointment by Michigan Gov. Rick Snyder makes Detroit the nation’s largest city ever put under state control.

Mr. Orr says he is motivated by the opportunity to engineer one of the greatest fiscal turnarounds in U.S. history.

“My set-in-stone plan is to get to the office ... and start meeting folks.”

A review team spent two months scrutinizing Detroit’s books and reported to Mr. Snyder that the city was in a financial emergency, citing its long-term debt of more than $14 billion and a $327 million budget deficit.

Mr. Snyder agreed and earlier this month announced Mr. Orr, who represented automaker Chrysler LLC during its successful restructuring, as the man for an even larger fix-it task.

State law allows emergency managers to negotiate labor contracts and deal with vendors. He can sell off city assets to raise money and cut the salaries of elected officials to save bucks.

Opponents, led by Detroit clergy and residents, say the law snatches power from elected officials.

The Rev. Jesse Jackson has called for mass demonstrations outside City Hall.

Early success could be crucial for Mr. Orr to win over citizens who are skeptical about whether an emergency manager really is needed, bankruptcy expert Doug Bernstein said. Such victories can be as simple as getting “street lights on and get police on the street,” he said.

“Public safety is paramount,” said Mr. Bernstein, managing partner of the Banking, Bankruptcy and Creditors’ Rights Practice Group for Michigan-based Plunkett Cooney law firm.

The new emergency financial manager agrees, saying his top priority on Day 1 will be improving public safety.

“We have to gain the public’s trust, and to do that, we have to show progress with fire and police services,” Mr. Orr told Reuters in an interview.

This could be what one former Detroit police chief called a “Herculean task” for Mr. Orr, who said he thinks the stories of Detroit’s demise “are overrated in my opinion.”

The number of Detroit’s uniformed police officers has fallen from 3,070 in 2000 to 2,000 today, according to city figures. This has left the department so understaffed officers cannot get to some crimes, even violent ones.

Mayor Dave Bing reluctantly reduced the department’s budget by 20 percent last year, and pay for police and firefighters was cut 10 percent because there was no money to pay them.

The number of murders per 100,000 people in Detroit in 2012 was around 10 times the national average, according to U.S. government statistics.

Detroit Fire Department records show the city has an average of 30 fires daily, most of them suspected arson. Fire department union president, Dan McNamara, said the culprits usually get away with it because of a shortage of arson investigators.

Beyond public safety, a host of other problems await Mr. Orr — including health-care costs, pension concessions, privatizing services if necessary, and, finally, weighing whether the only real solution is municipal bankruptcy.

Although he likes what he has seen in parts of the city — downtown, resurgent Midtown, the strong cultural and central business districts — Mr. Orr acknowledges other neighborhoods are “in need of some TLC.”

Amid all these problems, he acknowledges there’s a risk of being unable to solve them, though he insists he will within the 18 months dictated under Michigan’s emergency manager law.

“Failure is not an option,” Mr. Orr said. “It’s just a question of designing the architecture around what can be creating a future — and a sustainable future — for the city.”