Sometime in the next month Detroit pensioners, creditors and the DIA should have some clarification as to how they fair in Detroit's bankruptcy. While all groups involved can expect to receive a reduced level of compensation the current agreement protects the DIA and limits the loses for pensioners. Bond holders stand to see the biggest drop which explains why they are also the most vocal opposition to the current plan that many are calling the grand bargain.
As with any bankruptcy the goal is to restructure debt in a way that allows the entity - the city of Detroit in this case - a chance to recover and become a functioning entity again. For this reason protecting the DIA from a fire sale makes a lot of sense. The DIA hosted over a half million visitors last year and has seen in increase in attendance for each of the past four years. It brings people to Detroit and gives the community a world class cultural facility.
It should be noted that the DIA while perhaps the most valuable asset in Detroit is far from the only asset in Detroit. If Michigan officials are serious about rebuilding Detroit then they should consider taking some of the 50,000 or so government owned properties and offer them to the creditors. This could be a win/win for both parties since it offers creditors a chance to recoup some of their lost profit by constructing commercial properties, parking structures, grocery stores, apartment buildings, shopping malls, or entertainment complexes.
Imagine if the motor city were to have a new complex that hosted NASCAR or Indy car races that also served as a state of the art facility that the big three could use to show off new products. Imagine if the Detroit casinos were flanked by a number of Las Vegas style theaters that hosted acts like Cirque du Soleil, the Blue Man Group or top Michigan music acts. Imagine if Detroit had the facilities to host a top golf, tennis, boxing or horse racing event.
The more attractions Detroit can provide the more people will visit and these visitors will create jobs that Detroit and Michigan can obviously use.
Of course free blighted properties aren't necessarily a prize for these investment companies however if the state also offered tax abatements to these groups as well they might be more motivated to develop the property or partner with a company that will.
No one should feel bad for some of Detroit's biggest creditors since they knew full well going in that they could lose their investment and they would receive a good return based on this risk. But in the end when it came to finding a solution that avoided devastating financial damage to the hard working men and women of this city while also protecting a valuable asset and iconic Michigan institution these groups were able to find creative options, there is no reason this can't be done with other creditors as well with an eye towards expediting the transformation of Detroit.
No comments:
Post a Comment