Detroit, Emergency Manager Law, Emergency Managers — December 2, 2014 at 11:10 am

BREAKING: Detroit Emergency Manager Kevyn Orr to resign “within days”


BloombergBusinessweek is reporting that Detroit Emergency Manager Kevyn Orr will soon be resigning. The Detroit City Council voted unanimously in late September to remove Orr as the Emergency Manager and his tenure was to end when the plan of adjustment was approved in bankruptcy court and implemented. The first of those two steps has happened. Orr’s resignation will likely come before the second step has, however:

Detroit Emergency Manager Kevyn Orr said he may submit his letter of resignation to Governor Rick Snyder within days.

Orr, who was appointed to handle the city’s affairs as it labored through a record $18 billion municipal bankruptcy, said he wasn’t interested in repeating his act in another troubled city.

“It’s time for Kevyn Orr to put more steaks in the fridge and line his pockets in the private sector for a while,” he said today in a speech to the Oakland County Business Roundtable.

I’ll confess to being ambivalent about Kevyn Orr. If one concedes that an Emergency Manager was needed – something I do NOT concede – Orr, a Democrat, was a decent choice. In the end, he did not loot the city or throw its poor residents or pensioners under the bus in the way many feared he would.

Orr’s approach often seemed to be to threaten draconian steps and then to pull back to something far less extreme. It’s the classic modus operandi of the Snyder administration, something I have called the “fake concession”. His threats to sell off Detroit Institute of Arts artwork are the most obvious example.

More often than not, it worked. His DIA bluff forced a lot of groups to come to the table to save the artwork, groups who had, until then, sat on the sidelines as the bankruptcy played out.

I have long advocated for Detroit to go through a bankruptcy. As I wrote in an op-ed for in early 2012 titled “The case against emergency managers: How bankruptcy preserves democracy”, bankruptcy prevents the selling off of public assets. In theory, it also protects local democracy:

Section 904 of the law that governs Chapter 9 bankruptcies is very clear about this, limiting the ability of the bankruptcy court to “interfere with – (1) any of the political or governmental powers of the debtor; (2) any of the property or revenues of the debtor; or (3) the debtor’s use or enjoyment of any income-producing property” unless the city agrees.

The law also provides a mechanism for the assignment of a judge to oversee the process. While these judges are described in Mr. Bomey’s op-ed as uncaring and dispassionate, the law’s intent is to ensure that politics don’t play a role in how the bankruptcy plays out. When one looks at the people chosen as EMs in Michigan, bean-counting experts in outsourcing and union-busting, a non-political, neutral judge begins to sound a bit less scary.

The piece quotes Howard Ryan, director of legislative affairs for the Michigan Department of Treasury saying Chapter 9 bankruptcies are “eviscerating” and “kinder and gentler” than an EM. Mr. Ryan helped write Public Act 4, the so-called “emergency manager law,” so it’s unsurprising that he would defend it in this way. What he doesn’t do is provide any proof for this assertion. Even Gov. Rick Snyder’s argument is simply that the Chapter 9 bankruptcy process is “uncertain” and “without precedent.”

So, for all the fear-mongering about Chapter 9 bankruptcies, what we really have is something that looks and sounds an awful lot like an emergency manager without the politics and propensity toward union-busting and outsourcing. And it also comes without unilateral selling off of public assets or, more importantly, the disenfranchisement of residents who lose the representation of their elected officials.

Unfortunately, the Snyder administration figured out how to do an end run around the law’s intent to keep local, democratically elected officials in power. Gov. Snyder replaced the local government with a state-appointed overseer first. Only then did he take the city into bankruptcy. By doing this, the bankruptcy process proceeded with the local government in place with the inconvenient truth that the “local government” was, in fact, one individual, unelected and unaccountable to the residents of the city of Detroit.

In the end, I give Orr fairly high marks for what he managed to do in Detroit and the extent to which he avoided the most egregious aspects of his anti-democratic position. That said, the imposition of an Emergency Manager should never have happened and, once the voters of Michigan had overturned Public Act 4 in 2012, the law should never had been allowed to go back on our books. Democracy is often not pretty and certainly doesn’t always produce results that some may want. But that’s the price we pay to live in a free society and it should not be abridged.

[Keyyn Orr photo from Detroit City website]