The City of Detroit is emerging from its Chapter 9 bankruptcy, and a recent Economist Magazine article notes the major details of the bankruptcy settlement:
- 7 billion debt removed, 11 billion remains
- Retiree pensions and health care benefits reduced
- Detroit Institute of Arts saved
- Infrastructure and basic services expenditure of $1.7 billion approved over 9 years
As the Economist article notes “the big question is whether Detroit will manage to become an attractive city again where people want to live, invest, work—and pay taxes”.
For those following this blog you will know that we have had an interest in following what is happening in Detroit with six blog posts on the subject:
- Lessons for Infrastructure Asset Managers from the Detroit Bankruptcy
- Infrastructure Management Insights, Detroit 1 year on from Bankruptcy
- Detroit Alternative Service Delivery – The Mower Gang
- Detroit Water Shut-offs, an Infrastructure Asset Management Problem
- Detroit Water Shut-offs, Techniques to assist with Payment
- Fixed Costs and Variable Costs, the Impact on Shrinking or Declining Towns
The reason for this interest is that the issues Detroit has struggled with are being experienced by municipalities to a lesser degree in many places, especially where the economy is reducing, and the population is declining and/or rapidly aging.
From an infrastructure asset management perspective decline is the hardest scenario to manage, with very tough decisions around service provision, subsequent impacts on liveability, and affordability – they are not easy trade-offs to discuss or make.
Good infrastructure management planning certainly assists in understanding the issues, the associated costs, and informs the political discussions and decisions.
As the Economist article notes, there are still questions whether the $1.7 billion allocated for infrastructure and services over the 9 years will be enough for Detroit.
What can be observed with infrastructure management is that there is no ‘free lunch’ with regard to expenditure and provision of services.
Someone always has to pay – deferral of expenditure will push the costs on to subsequent ‘generations’ of taxpayers or citizens, and is likely to also involve increased costs, as the infrastructure ages, risks increase, and subsequently maintenance increases to keep the infrastructure working.
The longer-term image and memory of poor service and run-down infrastructure may take a lot longer to overcome than the actual upgrading works to fix the problem.
Hindsight is a wonderful thing, but one can only wonder what position Detroit would be in now if they had been able to invest the 1.7 billion in infrastructure and services over the past 10 years.
We will continue to watch with interest as Detroit moves forward from the bankruptcy and the infrastructure and services investment gets underway.
PHOTO CREDIT: Downtown Detroit Michigan by Mike via Creative Commons.
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