Traverse City Record-Eagle

Michigan

March 15, 2013

Bankruptcy expert named Detroit emergency manager

DETROIT (AP) — Michigan’s governor appointed an auto-industry turnaround expert Thursday to steer Detroit back from the brink of ruin. The one-time symbol of America’s industrial might became the biggest U.S. city to be placed under state financial control.

Kevyn Orr, a partner in the Cleveland-based law firm of Jones Day who represented Chrysler during its successful restructuring, will have broad powers to control all spending, including renegotiating labor contracts, selling off assets and even suspending elected officials’ salaries.

“We can rise from the ashes,” Orr told a news conference. “This is a beautiful city and a wonderful state that gave me my start. I feel compelled to do this job.”

Under state law, his appointment is to last 18 months. But Orr doesn’t expect the turnaround to take nearly that long.

The job “has a fuse on it,” he said. “And If I do a good job, I get fired. I am highly motivated. If we work together, we can get this done significantly shorter than 18 months.”

Detroit is saddled with a $327 million budget deficit and more than $14 billion in long-term debt — a morass that developed slowly during the decline of the auto industry, the exodus of a quarter million people from 2000 to 2010 and outright mismanagement at city hall.

At the height of its manufacturing boom, in 1950, Detroit was home to 1.8 million people. The 2010 census put the population at 713,000. Some estimates now place it below 700,000.

The city 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 has also instituted mandatory unpaid days off for many city workers.

When he met with Gov. Rick Snyder, Orr said, he called the manager job “an unsung hero task.” He asked the governor why he would bother to help the city. Snyder’s response was: “Kevyn, it’s the right thing to do, and it’s the right time to do it.”

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