In November 2013 this blog posted on Detroit’s bankruptcy and lessons infrastructure managers could learn from this.
A recent Fortune Magazine article looks at the progress that Detroit has made a year after the bankruptcy. The Fortune article is worth the read, and I would encourage you to look at it.
Incredibly given the dark news of a year ago, the Fortune article details a good news story that can be summarised as follows:
- Cities have to set a platform for growth – market trends for growth favor cities over suburbs
- City governments need to fix the basics to signal to business and residents it is time to stay and invest
For Detroit these mean:
- Making sure services are paid for, collecting debts, and improving on-going revenue stream;
- Transferring of a park to state management on 30-year lease;
- Using a $185M bond package to replace 55,000 broken street lights with state-of-the-art LED bulbs;
- Requiring owners to fix vacant homes, and assisting reinvestment in homes through an auction site;
A key insight in the Fortune Article was that cities are networks, not just governments.
Examples of this network effect cited for Detroit were:
- Civic, business, and philanthropic actors are committing billions of dollars into downtown and midtown and supporting a smart plan for the city’s physical and economic future.
- The M1 rail line, for a long time a problem is now being funded by a consortium of companies, philanthropies and other anchor institutions.
- The task force on Detroit’s new innovation district has great leadership and will draw on the talents and resources of private, public and civic actors and institutions.
- A city government can—and must—fix the basics, but it cannot generate economic growth all by itself. It takes a larger group of committed actors to shape a city’s future.
- Finally, every metro area has something worth fighting for, rather than fighting over. The Detroit Institute of Arts brought a fractured region together. Back in 2012, suburban voters agreed to tax themselves to support the museum. The dollar amount per household was small, but the symbolic importance was huge, since it showed that suburbanites saw the DIA as a regional, not just city, asset.
- Even with its extraordinary challenges, there is a new spirit, a new civic and political culture that’s unlike what we’ve seen in the city before.
Infrastructure Management Practice Observations
Based on the Fortune Magazine article, and the original Inframanage blog post, a number of observations relevant to infrastructure asset management practice can be made.
- Invest in and fix the basics to signal that private investment was also prudent. This provides a platform for economic performance and underlines the importance of providing infrastructure basics to cities
- Make sure you address revenue streams to ensure services and investment are paid for, and you have the revenue to operate, maintain, renew and invest in new infrastructure as required
- Alternative funding mechanisms (Detroit using the bond funding for the street lights) can be used to resolve major issues. Have the discussion on this, and don’t be afraid to look at alternatives
- Look at a broad range of solutions (not just your particular assets) to address the underlying problems and issues
- Be aware of the power of network effects in building a consensus (and releasing/ mobilizing) for action, investment, and change.
- Seek the involvement from non-government actors – civic, business and philanthropic
All of these observations are involved in good infrastructure management practice as we develop and implement longer horizon infrastructure asset management plans with consideration of:
- Levels of service required by communities
- Future demand for services
- Sustainability of services
- Risks associated with the provision of service
- Lifecycle management of infrastructure assets deployed in the provision of service
- Funding and revenue requirements needed to sustainably deliver services
From the information provided in the Fortune article we can observe that Detroit has turned the corner, and whilst there will be a long way to go, and a lot of hard work to get there, investment is occurring and the basics are being fixed.
Finally, it is clear from the Detroit example that challenged cities can be creative and resilient, and that through network activation and mobilization creative energy and investment for city revival can be released.