Detroit Files for Bankruptcy; Largest US City in History to Do So

The city of Detroit filed for bankruptcy on Thursday with estimated debts of $18.5 billion, making it the largest municipal bankruptcy in U.S. history.

"We have a great city, but a city going down hill for the last 60 years," Michigan Gov. Rick Snyder said at a press conference. He added that as much as 38 percent of Detroit's budget has been going into "legacy costs," such as pensions and debt service, police take almost an hour to respond to calls, and 40 percent of street lights are turned off.

"That's unacceptable," Snyder added, according to CNN. "Let me be blunt. Detroit's broke," he added in another statement.

The Michigan governor admitted that the city cannot raise enough revenue to meet its current obligations, and the situation was only projected to get worse if it did not file for bankruptcy.

Mayor Dave Bing has said that public services will keep running and public workers will continue being paid. BBC News noted, however, that such services are "nearing collapse" and that 70,000 properties lie abandoned.

"I really didn't want to go in this direction - but now that we are here, we have to make the best of it," Bing said.

Michigan state-appointed emergency manager Kevyn Orr asked a federal judge to place the city into bankruptcy protection on Thursday, and if it is approved, he will move on to liquidate city assets to satisfy creditors and pensions.

"Detroit's fall is complete. It is a depressing, if inevitable, end to a grotesque saga of decline, corruption and mismanagement. The irony is that the bankruptcy comes just as the private sector is picking up in Motor City. There is a buzz downtown, with commercial and residential occupancy at record levels," wrote BBC Washington correspondent Jonny Dymond.

Reuters noted that the city's "crippled condition threatens to overwhelm its image as the home of Henry Ford's pioneering assembly line and Motown's 1960s soul-music hit machine."

Although major cities like New York, Cleveland and Philadelphia had previously been threatened by bankruptcy, Detroit has now become the largest U.S. city to have to undertake such a measure.

"Only one feasible path offers a way out," Gov Snyder reflected.  "The only way to do those things is to radically restructure the city and allow it to reinvent itself without the burden of impossible obligations.

"It is clear that the financial emergency in Detroit cannot be successfully addressed outside of such a filing, and it is the only reasonable alternative that is available."

The White House has also released a statement on Detroit, noting that President Barack Obama continues to monitor the situation.

"While leaders on the ground in Michigan and the city's creditors understand that they must find a solution to Detroit's serious financial challenge, we remain committed to continuing our strong partnership with Detroit as it works to recover and revitalize and maintain its status as one of America's great cities."

Rep. Candice Miller (R-Harrison Township) admitted that the city has been heading down a problematic road for decades now, hurt both by fiscal mismanagement and public corruption.

"It is now clear that the city has come to the end of the road making the bankruptcy filing the only path forward," Miller said, according to Detroit News. "I applaud the Governor for his courage to appoint the Emergency Financial Manager and Kevyn Orr for his steadfast efforts to find equitable settlements with the City's creditors."

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