David Sole, right of the Moratorium NOW! Coalition and Abayomi Azikiwe, editor of the Pan-African News Wire, stand in front of the federal court house during the first day of Detroit's municipal bankruptcy proceedings., a photo by Pan-African News Wire File Photos on Flickr.
September 10, 2013 at 1:00 am
Federal officials reach out to boost Detroit - but no bailout planned
David Shepardson
and Daniel Howes
Washington— In the wake of Detroit’s historic Chapter 9 bankruptcy filing, the Obama administration is intensifying efforts to reach out to Detroit business, foundation and labor leaders for help identifying ways to better use federal funds to help the Motor City.
The White House convened a meeting the Friday before Labor Day weekend to discuss Detroit’s struggling finances and to determine how the city could maximize existing federal programs and grants. It was attended by some of Detroit’s most prominent business and community leaders, four cabinet officers and key presidential advisers.
“It was a very productive meeting,” said former Detroit Mayor Dennis Archer, declining to discuss details. He was one of a small group that included Quicken Loans Inc. Chairman Dan Gilbert, Rock Ventures LLC CEO Matt Cullen, Kresge Foundation CEO Rip Rapson and Henry Ford Health Systems CEO Nancy Schlichting.
White House officials explicitly ruled out any federally financed bailout or special legislation to support the cash-strapped city. Instead, they pushed for ways the administration could help the city’s business and political leadership leverage existing federal tools to speed the restructuring and soften the blow of bankruptcy.
“As strongly supportive as they were,” presidential adviser Gene Sperling “was very clear they could not be talking in terms of a bailout,” Rapson said in an interview Monday. “They made it very clear that was not in the cards, technically or politically.”
Sperling, chairman of the president’s National Economic Council, and Housing and Urban Development Secretary Shaun Donovan led the meeting in the Roosevelt Room, which opened at 10 a.m. and concluded nearly three hours later. Administration officials included Obama senior adviser Valerie Jarrett, Attorney General Eric Holder, Labor Secretary Thomas Perez and Transportation Secretary Anthony Foxx, who was changing planes and took part by phone.
Holder stepped out of an Oval Office meeting with the president and others on Syria to attend a portion of the meeting. Other administration officials included Cecilia Munoz, a Detroit native and director of the White House Domestic Policy Council, and Brian Deese, the deputy Office of Management and Budget director who was a key aide in the $85 billion auto industry bailout. The new president of the Ford Foundation, Darren Walker, attended as well.
“This was one of many meetings that the administration is doing to reach out to a broad and comprehensive diverse group of stakeholders,” said Debbie Dingell, a participant who chairs Wayne State University’s board of governors.
The meeting is one in a series organized by Sperling, an Ann Arbor native whose brother, Rick, is founder and CEO of Mosaic Youth Theater. A week earlier, Sperling and Dave Agnew, head of the White House office of government affairs, met at the White House for 30 minutes with Gov. Rick Snyder to discuss Detroit’s finances.
And Friday, Sperling and Donovan are scheduled to meet with United Auto Workers President Bob King, AFSCME officials and other labor leaders to discuss the Detroit bankruptcy, its implications for the community and organized labor.
“There’s probably not going to be new money but we want you to look at what’s stuck, what hasn’t gotten out,” a senior administration official involved in the Detroit meetings said. “This isn’t going to be the kind of thing where there’s one day where you say, ‘Here’s the package for Detroit.’ This is going to be an ongoing thing.”
The Obama administration remains unlikely to get involved in Detroit’s pension underfunding or debt problems in bankruptcy, thorny problems it has repeatedly said must be resolved by the city and its creditors in bankruptcy court.
The goal, according to individuals close to the situation, is to exploit the inherently unique opportunity afforded by the largest municipal bankruptcy in American history, but do it with the input of diverse — if competing — constituencies such as business, labor and foundations.
It’s a delicate balance. Detroit’s bankruptcy, widely supported in business and civic circles, is anathema to organized labor. The Obama administration effectively is pursuing an “all of the above” strategy, partly in recognition of Detroit’s grim financial reality and partly out of frustration with the inability of elected city officials to administer federal programs aimed at helping Detroit.
The city receives about $290 million annually in 71 different grants ranging from community development block grants to Justice Department funding for police. Detroit has a long history of mismanaging and misspending some grant funding or being out of compliance with grant requirements.
A June 5 internal report on Detroit’s grant management status, commissioned by Emergency Manager Kevyn Orr, noted that “every grant-receiving department in the city has performance issues,” many of which are flagged in annual audits. In November 2011, for example, the city forfeited more than $9 million in weatherization funding because it didn’t spend the money.
The meeting already is producing results, participants say. HUD agreed to release Community Development Block grants bottled up by bureaucracy, and officials in the Transportation Department arranged to speed approval of permits that threatened to block the start of construction on the M-1 rail line along lower Woodward.
Treasury also agreed to facilitate making existing “new markets tax credits,” designed to encourage private investment in distressed urban areas, available to would-be investors in the city — a move that could induce tax-paying businesses to invest in a city badly in need of additional tax revenue.
Initially, President Obama had tasked some of his aides to keep close tabs on how the city was faring, and now the administration is on a more policy footing, looking at ways of helping the city grants. The White House has asked all of its cabinet offices to consider how the federal government can help through existing programs.
Corporate heavyweights such as Ford Motor Co. Executive Chairman Bill Ford Jr. and industrial mogul Roger Penske were invited to attend, but Penske was in Australia. The administration intends to hold future meetings with community leaders in Detroit, as well as additional meetings with business and civic leaders.
“This was not intended to be a final word,” said one participant in the meeting. “It was a preliminary sounding on what is possible and what is not. It was quite remarkable.”
dshepardson@detroitnews.com
daniel.howes@detroitnews.com
From The Detroit News: http://www.detroitnews.com/article/20130910/METRO01/309100031#ixzz2eSp5F1vB
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