Obama administration officials are expected to propose roughly $300 million in aid to Detroit later today. It’s a paltry amount for largest U.S. city to ever declare bankruptcy and comes nowhere near the $18.5 billion of debt obligations Detroit has on its books.
This latest cash infusion is being made by a motley assortment of federal, state and private foundations and is ear-marked for improvements to the transit system and “blight improvements.”
Investing in transit while demolishing vacant buildings nicely encapsulates the process of “creative destruction” at work in Motown. At 138,000 square miles Detroit is a massive, increasingly desolate place. Over the last 60 years the population has dropped more than 60% from 1.85 million in 1950 to 700,000 today. It’s the kind of city where gorgeous buildings are stuck in desolate, dangerous locations.
One of the people in charge of saving Detroit is Michigan Governor Rick Snyder. A Michigan native who built a net worth in the vicinity of $200 million as a Gateway executive and venture capitalist, Snyder is a self-described “nerd” with a pragmatic, tech-friendly approaching to remaking the city.
Speaking to Breakout from a packed tech conference last week, Snyder insists Detroit is already on the mend. “This isn’t about starting from scratch,” Snyder insists, “It’s already been going for several years.”
Detroit’s history is all about building cars, but Snyder knows he can’t rely on the Big Three to rebuild. He isn’t playing favorites with different industries when it comes to luring companies into the city.
“The role of government is not to tell people what those industries are going to be,” Snyder says, “I view our role as creating a level playing field."
By demolishing rotting buildings and improving mass transit Snyder hopes to create an affordable mecca for start-ups and young professionals to build from the ground-up. Both literally and metaphorically Snyder is trying to raze the old to make room for the new.
“We are going to solve 60 years of accumulated problems. Detroit is going to be the value place to be in Michigan, in the United States and in the world.
Maybe. The federal government clearly isn’t going to do the financial heavy lifting. Putting $300 million into Detroit is like dumping a cup full of water in Lake Michigan. It’s a nice addition but unlikely to turn the tide.
Snyder’s sales pitch sounds a lot like a businessman peddling a value investment. Detroit is affordable, wide-open, and entirely dependent on a sufficient number of early adopters for funding. The city is simply too big and has too much in the way of resources to die.
There will be a Detroit comeback but like any turnaround story a lot of early investors are going to get wiped out before the real money is made. Snyder is impressive to liberals and conservatives alike. He’s the kind of leader Detroit needs, but the question is whether or not he’s there at the right time.
- Consumer Discretionary