Detroit’s Turnup

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from TIME Magazine,

An unlikely deal lifts Motown out of bankruptcy.

Standing in the middle of downtown Detroit, it’s hard to believe you’re in a city that went belly up.

At 5 p.m. on any given workday, you’ll see the hipster hordes of 20-somethings in skinny jeans and nerdy-cool glasses who work at the dozens of tech and design startups in the center of the city start to convene.

Of course, if you walk just a few blocks away, you’ll find plenty of decay–burned-out buildings that sit in the shadow of General Motors’ obelisk-like headquarters. You’ll find homes with roofs that have fallen in. On one abandoned building, a graffiti artist has scrawled Destroy what Destroys you.

That juxtaposition is almost as startling as the deal that was approved on Nov. 7 to bring Detroit out of the red.

At first, it seemed impossible that Main Street and Wall Street would ever come to an agreement over the city’s $18 billion debt–specifically, over who would pay for the shortfall. Detroit’s public-employee pensioners were being asked to take huge cuts in their retirement income to pay hundreds of millions of dollars to bankers. Some people were even arguing that Detroit should mortgage the priceless art in its hallmark museum–including works by van Gogh, Whistler and Degas–to keep cops and ambulances on the street.

Then something unexpected happened: A group of private donors, including family foundations with landmark names like Fisher and Ford, banded together with community-development agencies, big businesses and the state itself. They decided that it was inconceivable that the onetime heart of American power–which had already lost half its tax base, more than half its population and a devastating portion of its labor pool–should fall further. They came up with $800 million to offset some of the pension pain and save the art–a “grand bargain,” as it has become known, that gave the city a future.

Suddenly, there were reasons to hope again. The city, its workers and Detroit’s creditors were more willing to make a deal. Residents got creative, and financial institutions took payment in assets that represented a bet on Motown’s future, rather than grabbing what cash they could before fleeing. Union reps accepted 5% to 20% decreases in pension payments–a painful and contentious decision, but much less draconian than what Detroit’s emergency manager, Kevyn Orr, had originally proposed.

As Michigan’s Republican governor Rick Snyder tells Time, “None of this would have been possible without the grand bargain. If people were going to accept this kind of pain, they had to feel that the private sector–and the state–were helping.” It was a rare thing in American civic life these days: compromise.

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