JR Afternoon with Chris Renwick

Behind The Grand Bargain That Saved Detroit

November 15, 2024 ~ Chris checks in with Judge Gerald Rosen, the architect of the 'Grand Bargain', that saved Detroit. He has a new book that looks behind the scenes to tell us what really happened during Detroit's Bankruptcy. You can get the book for yourself at GrandBargainBook.com

Duration:: 10m
Broadcast on:: 15 Nov 2024
Audio Format:: other

So it, boy, in the grand scheme of things, it really just wasn't that long ago. I mean, you're talking 11 years ago when Detroit spiraled into bankruptcy, coming off of the reception or the recession at the end of the 2000s, Detroit was in a mess. They were in a really, we were in a really bad spot and crime was rampant. The infrastructure was crumbling and they're just, they didn't seem like a great direction. Fast forward 11 years, it is a remarkable comeback story and how far and the perception of Detroit is really remarkable. And the chief mediator in the largest municipal bankruptcy in American history was Judge Gerald Rosen and he's got a new book out. It's called Detroit resurrected to bankruptcy and back and the good judge joins me here this afternoon. It's great to have you. Chris, how are you? I'm well in part because of the steps that have been taken to bring Detroit back from, from the dark ages. What do you, when you look back, it is, it's, it's, it's the greatest of all stories. Everybody loves a comeback story. And when it involves a city that was once the, the, the shining beacon on the hill to the depths of despair that we fell to, the, the, the turnaround is remarkable. When you look back, when you look back into those early days of where Detroit had fallen, what was your perspective on the city and of the situation that we had found ourselves in? Well, it was pretty bleak. When I was first appointed as the chief judicial mediator by Judge Stephen Rhodes back in July of 2013, Detroit was flat broke and flat on its back. And not only as you, as you talked about were city services not being provided. In fact, there's a term used by bankruptcy experts called service delivery and solvent, which basically means that the city really wasn't a city at all. There were no services being offered consistently throughout the city, but in addition to that, the city had very few assets that could be monetized to pay creditors. And that was a, that was a very serious challenge for me. And then once, once you got your feet under you and you understood the, the, the depths of, of, of how broke the city truly was, when, when did that, when did the, the decisions start to be made of, okay, well, here's what we need to do. And of course, then there was, you know, the, the, the state appointed emergency manager. And when did you kind of start realizing and putting the pieces together of how we get out of this? Well, actually I can remember exactly almost, after I was appointed, I was on a long planned golf trip with my 15 year old son down in Florida. And I had taken a lot of reading with me about the city's fiscal distress. And one of the, one of the things I had taken down to read was Kevin or Kevin or was the emergency manager, I had taken his proposal for creditors, which was really much more than a proposal. It was a deep dive into the city's fiscal and financial dysfunction. And I was reading it and it really hit me when I got to the section on assets and saw that there were almost no assets. And of course, my job, my deliverable as the mediator, was to, was to get settlements with creditors and to get settlements, you have to have either money or assets that can be monetized into money. And I realized the only asset, the only real asset that the city had was the wonderful collection of art at the Detroit Institute of Arts and all of the creditors and even the city, we're talking about liquidating that. I thought that would be just a shame. So I immediately began thinking about a way to monetize the art without selling it or in any way, or in any way losing that incredible collection that we have, which is a real gem for Detroit. And that was how it started, really, if I could make just one correction, the name of my book is Grand Bargain, which is what it became, it's called Grand Bargain, the inside story of Detroit's dramatic journey from Bankruptcy to Rebirth. The book that you talked about, Detroit Resurrected to Bankruptcy and Back was by Nate Bomi. And it came out about eight or nine years ago. It's sort of a precursor to my book because when Nate wrote his book, of course, the rebirth was just getting started. It was right after the Bankruptcy ended, but fast forward nine years later, and we're really hitting on all cylinders now in the resurrection and rebirth of Detroit. I apologize for that, so Grand Bargain in the book. And so when you look back at everything that has transpired since, when you look back at, you know, the NFL draft most recently, or all of the restaurants that have come to town or the way that the city government has operated over the last decade, do you ever sit back and go, oh my God, I cannot believe we're here or I can't believe it's, this is happening already, the great relationships between the city and the state and the business community, did you, did you anticipate this kind of fast track resurrection? I didn't anticipate that would happen this quickly. And you know, the things that you're talking about, like the rebirth of the restaurant scene, the rebirth, the rebirth of activities in Detroit and people coming back to Detroit. And the kids are coming back, the kids that went to, you know, LA and Florida and Chicago and New York, they're coming back to start businesses too. And that's happened, it's all happened much more quickly. But you know, there's a more fundamental rebirth to Detroit. And that is the financial and infrastructure piece of it. I wrote an epilogue to the book about four, three or four months ago. I thought I could write the epilogue in maybe two or three days. And it took me three weeks because so much has happened. It's 20, the epilogue is 20 some odd pages. And just as an example, I, I sent the epilogue over to Mayor Duggan for him to read to make sure I didn't miss anything because he's of course been such a big part of the rebirth. And he invited me over to his office and while I was there, his chief of staff, Stephanie Washington came in and said, Mayor, we've just heard from Moody's that Detroit's credit rating has been increased again. This is the 10th increase in the city's credit rating in 10 years. That's almost unheard of. And it puts Detroit right at the top in credit rating of the major cities in the country. And that's a, that's a very fundamental change. And it's important because the, the higher your credit rating, the higher a city's credit rating is the better terms it can borrow money on, for example, if it has to issue bonds to do, to do projects and work. And of the, there are many parts of the rebirth that are miraculous. And that is certainly one of the parts, the fact that the, that the city's credit rating is now so high at the beginning of the bankruptcy in July of 2013, Detroit was at junk status and falling. Well, it's a, I can't wait to read the book. It's the grand bargain, the inside story of Detroit's dramatic journey from bankruptcy to rebirth. Where can we get the book? Thanks for asking. I got a radio show last week and forgot to tell people that my publisher was very happy. So grandbargandbook.com again, grandbargandbook.com. And if I could just talk about the grand bargain in 20 seconds, because what the grand bargain really was was sort of a triple bank shot, which began early one morning at the beginning of the bankruptcy as a doodle on the cardboard backing of a legal pad and became sort of a triple bank shot that monetized the DIA's art by raising $820 million from 13 philanthropic foundations from the state and private donors and locked it off, locked the art off from all of the creditors in perpetuity and gave all of the arts proceeds to the city's civilian and uniform retirees to dramatically reduce their pension loss. Yeah. And it was executed perfectly. I can't wait to read the book. Judge, thank you for your time. Best of luck. And we'll talk soon. Thank you very much, Chris. Yep, you got it. We'll take a break. Come back for more next right here on W.J.