On this day in 2013: The city of Detroit files for bankruptcy • Michigan Advance (2024)

On July 18, 2013, the city of Detroit filed for Chapter 9 bankruptcy. It was the largest municipal bankruptcy filing in U.S. history.

The decision was made by Kevyn Orr, then-Gov. Rick Snyder’s hand-picked emergency manager. Orr, a corporate lawyer and University of Michigan Law School graduate, had been on the job in Detroit since March of that year. The city was $18 billion in debt, according to Orr.

“This is a difficult step, but the only viable option to address a problem that has been six decades in the making,” Snyder, a Republican, said at the time. He authorized the move after a recommendation from the emergency financial manager he had appointed to resolve Detroit’s dire financial situation, according to New York Times reporting.

U.S. Bankruptcy Judge Steven Rhodes found the city eligible for bankruptcy on Dec. 3, 2013.

City of Detroit office clerks, police officers, firefighters and others suffered a reduction in pay. About 21,000 retirees had their pensions cut and were forced to pay a portion of their own health care.

Orr’s tenure was 21 months long and the city of Detroit elected officials, Mayor Mike Duggan and the City Council, resumed traditional powers.

A component of Detroit’s plan to exit bankruptcy in December 2014 was coined the “grand bargain” that both Democrats and Republicans in the Michigan Legislature approved. It included financial contributions from Detroit Institute of Arts donors and state government.

Since 2014, the city of Detroit government has issued 10 consecutive annual budgets without deficit. Duggan still serves as mayor.

During the last decade, Detroit has seen improvement in some other ways. Tens of thousands of aging streetlights, in some cases, inoperable were replaced. Dozens of city-owned parks have been refurbished. Pay for city police officers increased by $10,000, with starting salary jumping from $43,000 a year to $53,000.

However, water and sewerage rates are still unaffordable for far too many city residents, according to social justice nonprofits. Detroit Action and Coalition for Property Tax Justice, for example, have continually called on the city government to provide compensation for overtaxed homeowners and argued that new housing starts in some areas of the city is gentrification.

At a Monday news conference Duggan applauded Charles Dickerson, an African-American developer who is building a $7.3 million residential development that includes 29 affordable units on the city’s North End.

When asked by the Advance his thoughts about the anniversary of the bankruptcy, Duggan said, “I haven’t any thoughts about the anniversary.”

“I’m giving thought about what’s happening today,” Duggan said. “Twenty-nine new housing units are being built on the North End. …Ten years ago everyone was moving out.”