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Opportunity in Bankruptcy

Business leaders confident city will emerge strongerBy James MartinezPages 10-11As word of bankruptcy spread and the eyes of the world centered on Detroit, regional business leaders rallied to deliver a clear message: Detroit will emerge a stronger, more vibrant city.

“Today’s Chapter 9 bankruptcy declaration by the city of Detroit is the  first step toward a better and brighter tomorrow for our city … Bankruptcy will be painful for many individuals and organizations, but together we will get through it and come out stronger on the other side,” said Dan Gilbert, founder and chairman of Rock Ventures and Quicken Loans in a statement.

For many business leaders, the bankruptcy was inevitable and the only step left in addressing the city’s unsustainable  financial structure and unprecedented debt of $18 billion – problems decades in the making.
“Bankruptcy is like going into surgery. No one looks forward to it, but you have to do it. If you had a loved one who was suffering and their life was in jeopardy, and surgery was the only option to get them healthy, you eventually welcome the surgery,” Detroit Regional Chamber President and CEO Sandy Baruah said.

As the bankruptcy reflected the dire condition of the city as a municipality and the tremendous challenges ahead, it did little to discourage optimism and the sustained investment in Detroit. Many leaders pointed to the momentum in the private sector of the past couple of years that has persisted despite the well-known financial and political challenges that have plagued the city. Since 2006, more than $10 billion has been invested in commercial, industrial and residential properties in the city, despite the confluence of Detroit’s own fiscal crisis and the region being hit as hard as anywhere during the Great Recession.
“One can only imagine how much additional growth Detroit could experience if it was safer, cleaner and more effective, given the unprecedented level of private investment, foundation support and influx of young professionals occurring today,” said Doug Rothwell, president and CEO of Business Leaders for Michigan, in a statement.

However businesses’ contributions to Detroit’s recovery goes much deeper than words as the private sector is leading the wave of momentum. Key efforts by corporate anchors, such as Blue Cross Blue Shield of Michigan, General Motors, Quicken Loans and others, have added nearly 12,000 jobs in downtown Detroit over the past few years. The Detroit Medical Center, Henry Ford Health System and Wayne State University are working to directly impact the neighborhoods by attracting employees to invest in a home through the Live Midtown effort.

In addition to the increased investment and involvement in the city, a resurgent auto industry, strong health care industry and emerging IT sector are also positioning the city and region for a dramatic comeback.

“Opening our development center in downtown Detroit is one of the best decisions we have made. ‘Outsource to Detroit’ and Information Technology is part of the city’s future. Our banner marks the transition from the past to the future. We are very proud to be Detroiters,” wrote GalaxE.Solutions’ Chairman and CEO and Chamber Board member Tim Bryan.

The recently announced entertainment district by Olympia Development, which would include a new arena for the Detroit Red Wings, is expected to create approximately 8,300 jobs for the entire district. In addition, the New International Trade Crossing is expected to further economic development in the region while creating at least 10,000 jobs related to the project.

That type of momentum continued throughout the summer, even as bankruptcy became a foregone conclusion. In July – a month that started with speculation on the next step by Emergency Manager Kevyn Orr and ended with the nation’s largest municipal bankruptcy – there was more than $125 million in new investment announced in the city of Detroit.

“Investment is continuing in Detroit because it is a city of opportunity,” Baruah said. “The city and the surrounding region offer a highly skilled workforce, a pro-growth business climate and access to the global supply chain. Shrewd investors know a good opportunity when they see it, and Detroit is filled with them.”

Those types of opportunities are exemplified by businesses locating to the city and driving innovation throughout Detroit, such as the iconic watch manufacturer Shinola, which opened a production facility as well as a store in Midtown. The M@dison Theatre Building is also a prime example. The historic building, built in 1917, has been transformed into a unique entrepreneurial hub for tech-based start-up companies in Detroit anchored by tenants including the Detroit Venture Partners and their various companies, and Skidmore Studio.

Progress can also be found along the Detroit River, as more than $1 billion has been invested by the public and private sectors in last decade. Led by Faye Nelson, the RiverFront Conservancy has developed 3.5 miles — 45 city blocks — of the east riverfront and continues to be responsible for the maintenance, beautification, fundraising and programming of that space.

Amid the optimism, business leaders have acknowledged the significant challenges ahead, as well as how critical it will be for the revitalization occurring downtown to continue to spread to impact the city’s neighborhoods.

“The evidence of Detroit’s comeback is already apparent — investment, jobs and young professionals are flocking to the central business district,” said Baruah. “This positive energy will eventually flow into the neighborhoods, and it’s important that all parts of Detroit participate in the renaissance. However, the experience of other cities has shown us that successful transformations are not linear or even – but with sound city government and planning, everyone should benefit.”
James Martinez is the editor of the Detroiter.