A fierce legal battle is taking shape over Detroit's eligibility to file Chapter 9 bankruptcy protection. Creditors and unions are joining forces against the city claiming its historic July 18th bankruptcy filing is unconstitutional on both state and federal levels.
But don't tell that to David Kirkpatrick, founder and CEO of Techonomy. He's holding a conference called "Techonomy Detroit" in Motown on September 17th, so clearly he's not worried about the city disappearing before then.
"We wanted to focus on the challenges for the U.S. economy at a time when technology is transforming everything," he explains in the attached video. Suffice it to say no major municipality is quite as challenged as Detroit is at the moment.
Kirkpatrick has three reasons why Detroit is going to come back strong.
1. It's affordable
Housing prices in Detroit rose 19% in May but the city remains a perennial member of the top five most affordable metro areas in the country. It may not have the sex appeal of San Francisco or New York for recruiters, but living on a futon in a studio apartment loses its appeal pretty fast for young tech workers.
2. It's a technological "greenfield"
"They've razed huge sections of the city," Kirkpatrick exclaims "there's green grass growing where there used to be blocks of homes, but when something is blank you can build something new much more readily."
The economic reset provided by bankruptcy has created a situation in Detroit somewhat akin to the Old West when the U.S. opened up to settlers. Land is cheap and outsiders are invited to more or less do with it what they will. Start-ups don't need to do any expensive rewiring, they're starting from scratch.
3. Corporate culture
For all the talk about its demise, Detroit is still home to companies like Ford (F), General Motors (GM) and most recently Quicken Loans. There's an educated, motivated population base that still calls Detroit home. Tapping into that demographic with a business friendly government is a compelling proposition for aggressive corporate chieftains.
"Detroit is poised for a massive long-term revival," Kirkpatrick concludes. Bankruptcy is "a necessary, painful step to take in order to achieve it."
A trial is set for October 23rd to hear arguments over the city's right to file bankruptcy.
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