– Detroit By The Numbers (ZeroHedge, July 23, 2013):
With the Detroit bankruptcy hearing under way (constitutional crises notwithstanding), we thought it useful to cut through the rhetoric, break-down the mutally-assured-destruction barriers, and peer into the cold-hard facts as the city looks to restructure its $18 billion in debt.
$18 billion Detroit’s estimated debt obligations.
$11.9 billion City’s unsecured obligations to lenders and retirees.
$6.4 billion City’s obligations backed by enterprise revenues (Revenue Bonds).
38 cents Of every tax dollar that the city collects goes to service legacy debt and other obligations rather than providing services for the city’s residents and businesses.
$115.5 million Detroit’s negative cash flows in fiscal year 2012.
8% Interest accrued on Detroit’s deferred payment of pension fund contributions.
Over 100,000 Estimated number of Detroit creditors.
22% Reduction in city employees since fiscal year 2010.
1.85 million Detroit’s population in 1952, its highest point.
62% Decline in Detroit’s population from 1950 to 2012.
150,000 Number of manufacturing jobs Detroit lost between 1947 and 1963 as smaller auto makers disappeared and Big Three auto makers move operations to suburbs and out of state.
47% Detroit’s share of US auto sales in 2008.
80% Of Detroit’s manufacturing was lost between 1972 and 2007.
78% Of Detroit’s retail establishments were lost between 1972 and 2007.
735,104 Number of jobs in Detroit for residents and non residents in 1970.
346,545 Number of jobs in Detroit for residents and non residents in 2012.
9.4% Jobless rate in Detroit as of June 2013.
30% Decline in Detroit’s municipal income tax receipts since 2002.
36% Of Detroit’s population lives below the poverty level.
54% Of Detroiters own a home.
16% Of Michigan’s population lives below poverty level.
28% Decline in Detroit’s receipts from utility user’s tax over the last decade.
$1.6 billion Decline in city’s assessed property values over the last five years.
$134.9 million Property tax revenues for city’s 2013 fiscal year.
139 square miles Detroit’s city footprint.
40% Of city’s street lights do not work.
78,000 Number of abandoned structures in Detroit, representing 20% of the city’s housing stock.
210 City parks were closed during fiscal year 2009, reducing its total by 66%.
Source: Alexander Rozens, Bloomberg Brief
The two sides (the unions and the city managers) are arguing over the ‘special’-ness of pensions as the courts back-and-forth over whether the Chapter 9 filing violates state constitution. The unions claim, said pension benefits “are sacrosanct under state law… The state has certain powers that the federal government cannot superimpose itself on, unlike a normal bankruptcy.”
While independent law professors appears to see this a different way, “… the argument that a bankruptcy filing violates the Michigan Constitution is specious and will be quickly dismissed by Rhodes,… The federal constitution preempts state law.”
As Reuters reports, to remain in bankruptcy court, Detroit must prove that it is insolvent and that it made a good faith effort to negotiate with its creditors, including its employee pension funds, over the city’s more than $18 billion of debt and unfunded liabilities. Union officials on Monday contended some of the city’s 48 bargaining units were shut out of pre-bankruptcy negotiations. The arguments over eligibility could take a long time as the unions challenge the legality of the filing.
In the case of Stockton, California’s bankruptcy case, the eligibility determination took a year.
It seems clear to us that without a pre-petition DIP (which is not there), this posturing is just that – simply put – where will all the money come from? Of course, there is always teh chance that the ‘delays’ are in order to get Detroit to the vinegar strokes of cashflow in order to froce the government to provide the DIP (as purely a short-term ‘aid’ to enable negotiations to continue)… though of course, just as we saw with the irish bankers, once the government is in for a few billion, they are in for good…