Message from the Director – Sam Katz
I have spent my entire professional life engaged in cities: as an undergraduate student in urban affairs; a graduate student in urban policy analysis: a staffer for the Lindsay Administration in New York; as a program analyst for a Philadelphia civic organization; as a political campaign manager; as a municipal financial advisor; as a candidate for mayor of Philadelphia; as a CEO for a business civic organization; and as a documentary filmmaker. The opportunity to tell the story of Detroit’s descent into fiscal and service insolvency and through its historic and unprecedented bankruptcy was one I did not want to miss.
While serving as Chair of the Board of Pennsylvania’s Intergovernmental Cooperation Authority, a state created body with responsibility for oversight of Philadelphia’s finances, I began monitoring the fiscal distress that was making bankruptcy a real possibility in Detroit. I had spent 25 years of my professional career as a financial advisor to state and local governments across the country while serving as CEO
of Public Financial Management (now The PFM Group). I had advised numerous cities that were undergoing fiscal distress but never one that was a bona fide candidate for bankruptcy. When bankruptcy emerged as a serious option in Detroit, I began thinking that a documentary on a major municipal bankruptcy could be fascinating and entertaining. After seeing the film THE BIG SHORT, which made sub-prime mortgages and collateralized debt obligations an entertaining and engaging story, I felt confident that the Detroit bankruptcy would be a terrific subject for a documentary.
Commencing in late January 2016, I made contacts with many of the people who had played a significant role in the bankruptcy proceedings. I knew we needed the participation of the professionals who participated in the adjudication of the bankruptcy case as well as Detroiters who had lived through the city’s decline and eventual bankruptcy. That process took about a year. I was fortunate to assemble a terrific team of experts and production professionals.
Detroit has long been America’s city. It was one of the nation’s most significant centers of industrial production, marketing, design and engineering. Its music and culture gave America its soul. Important developments in organized labor, the rise of black political power, racial segregation, the creation of middle class, suburbanization, deindustrialization and ultimately municipal decline were all Detroit exports. Bankruptcy and the extraordinary changes occurring in the city are but another in a series of events that make Detroit a bellwether community for the best and worst of urban America.
In this bankruptcy, the state of Michigan assumed control of the city’s finances and operations through the appointment of an emergency manager. Then Detroit borrowed the powers of the federal government to impair contracts and restructure the city’s finances and operations. One participant described the bankruptcy as “asset-less,” but in fact Detroit owed at least one very valuable asset: the Detroit Institute of Arts and its priceless collection. Through an ingenious and audacious plan to infuse the city with fresh cash from philanthropy, the DIA and the state of Michigan, Detroit was able to save its museum and art while nearly fully honoring its pension obligation to first responders and dramatically reducing adverse impacts for civilian retirees. The exit from bankruptcy occurred in just 17 months, ending in December 2014. With democracy suspended, the process of “kicking the can down the road” finally ended. Complex negotiations involving thousands of creditors required a collaboration of unlikely heroes willing to make previously impossible choices and to do so in a political environment made possible only in bankruptcy.
Today Detroit is alive and aspiring. That is happening precisely as a reflection of the heart and determination of its people and some courageous compromise between major stakeholders. The outcome—the survival of Detroit and an ever-widening sense of possibility for the city’s future—was indeed a grand bargain.
We are all very excited to be poised to tell that story to a national audience.
