Detroit to receive federal help in wake of bankruptcy

As creditors and citizens continue to tussle over Detroit’s bankruptcy in court, the Obama administration says it will free up $300 million in funding for the troubled city to help demolish blighted properties, hire new police officers and improve the city’s transportation system.

The administration made the announcement Friday morning, as local leaders were set to meet with representatives from the White House, including Atty. Gen. Eric Holder, Obama economic advisor Gene Sperling and Transportation Secretary Anthony Foxx.

The funding includes a $65-million block grant from the Department of Housing and Urban Development to clean up blighted housing, $25.4 million for commercial building demolition, $52 million from a Hardest Hit Fund from the Environmental Protection Agency and $10 million for affordable housing.

There are approximately 78,000 vacant structures in Detroit’s 139 square miles, 38,000 of which are potentially in dangerous condition, according to an operational plan filed by Detroit’s emergency manager, Kevyn Orr. The city has recently been plagued by a series of arsons destroying some of these buildings -- an estimated 11,000 fires burn in Detroit each year -- and the Fire Department’s vehicles are old and in need of upgrades.

The city has estimated that it costs $8,500 to demolish each residential structure.

Some of the funding will also go to Detroit’s beleaguered public services. The city’s Police Department has an average response time of 58 minutes this year, compared to the national average response time of 11 minutes.

To help alleviate the problem, the government is awarding the city Justice Department funds to hire new police officers and establish a bike patrol, helping the city access $25 million in Federal Emergency Management Agency funds to hire 150 firefighters and purchase new equipment, and providing Department of Energy services to repair some of the 40% of Detroit’s streetlights that are not functioning.

In a speech in Detroit on Friday, Holder said that the Justice Department would help fund 10 more police officers in the city, award a grant to help law enforcement officials buy new technology, and give $100,000 to the state Department of Corrections, to help parolees reenter society.

“Change won’t happen overnight. It won’t be easy,” said Holder. “That’s why -- as [Detroit Police Chief James] Craig and other city officials move forward -- I want you all to know that this administration, and this Justice Department in particular, will continue to stand with you, and work with you, to advance public safety imperatives.”

About $100 million in funds for transit will come from the Department of Transportation, including $24 million to repair buses and install security cameras on them. Crime has risen dramatically on public transit in the city.

The administration also detailed funding from private sources that is being dedicated to the city, including grants from the Ford Foundation, Invest Detroit and the Skillman Foundation.

Some economists had urged the federal government to help bail out Detroit as it had the auto industry. But some of Detroit’s problems are related to its pension obligations, an ongoing liability that would not be solved by a temporary loan.

The city’s emergency manager is hoping to release the city from some of its pension obligations, an idea that has infuriated many city residents and local unions who say the Michigan Constitution protects the pension benefits of government employees.

Creditors, including city unions, have filed a request to stay the bankruptcy hearing until a state judge can determine the constitutionality of the bankruptcy, but on Thursday, Judge Steven Rhodes issued an opinion denying that request. Interestingly, the opinion frequently cited Stern vs. Marshall, a Supreme Court case involving Anna Nicole Smith’s efforts to receive inheritance money from her deceased husband. Both cases revolve around the jurisdiction of bankruptcy courts in deciding questions about state law.

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