A Motor City Miracle

Detroit’s unexpected turnaround provides a model for improving U.S. cities.

By Aaron M. Renn is a senior fellow at American Reformer. His writing can be found at www.aaronrenn.com.

Detroit is on the way up. To understand the significance of that, you must know that for decades, Detroit was a byword for American urban decline. It was the major American city that people pointed to as the exemplar of intractable urban problems. A local in nearby Cleveland made a viral humorous fake tourism video for his city that ended with the tag line, “At least we’re not Detroit.” Critics in cities like Chicago that are facing challenges will invoke, usually speciously, the specter of Detroit as a possible future for their city if bad decisions are made. 

Detroit’s problems go back much further than people think. TIME ran a major story talking about the decline of the auto industry and growing blight in the city—in 1961. Detroit suffered major riots in 1968. White flight hit, especially after the election of the city’s first black mayor, Coleman Young, in 1973. Young told criminals to leave his city, saying to “Hit 8 Mile Road!” (the city limits), but whites took it as a call for them to leave. By 2000, the city was 81% black. As in many troubled cities, corruption and insider dealing were endemic. Former mayor Kwame Kilpatrick was involved in a particularly egregious case, and was convicted of 24 federal counts of corruption in 2013. In a segregated, polarized region, L. Brooks Patterson, the leader of Detroit’s most flourishing suburban county, was infamously quoted as saying, “What we’re gonna do is turn Detroit into an Indian reservation, where we herd all the Indians into the city, build a fence around it, and then throw in the blankets and the corn.”

But seemingly against all odds, Detroit managed to draw a line under its problems and start on an upward trajectory. No one will mistake the city for a boomtown, but it is place where improvement is in the air.

The city’s recovery started with filing for bankruptcy in 2013. This was forced on the city by then Gov. Rick Snyder, a Republican who wanted to address the problems of Michigan’s most troubled cities. He became infamous for his failures in Flint, where errors by the city under a state-appointed emergency manager contaminated the city’s water with lead. But his Detroit intervention was very successful in turning around the city’s fortunes. People tend to write Snyder out of the Detroit recovery story, but make no mistake, had he not forced the city into bankruptcy, it would still be limping along as a financial zombie, and most likely much of the recovery would never have happened.

Under specialist bankruptcy attorney Kevyn Orr, the emergency manager appointed by Snyder, Detroit’s bankruptcy allowed the city to restructure its finances and shed debt and pension obligations. A unique aspect of this was the so-called “grand bargain.” The city of Detroit directly owned the region’s highly regarded major art museum, the Detroit Institute of the Arts, and creditors wanted its art sold off to pay them. Under the terms of the grand bargain, a number of foundations including the Ford, Kresge, Knight, and Mott Foundations agreed to inject $800 million into the city in return for the museum being spun off intact into a standalone non-profit.

A second key leader was hospital executive Mike Duggan, who was elected as mayor in 2013. Taking full control after the conclusion of bankruptcy, he’s widely been viewed as a competent leader. His administration demolished roughly 45,000 vacant homes that had become eyesores. He began reinvesting in the city’s infrastructure, replacing all of the streetlights in the city. Crime moderated and unemployment fell on his watch. Downtown Detroit saw major investment and revival, though many of the city’s neighborhoods remain deeply troubled. While decades of decline can’t quickly be reversed, during Duggan’s three terms, the city rebounded from its low point and began to see positive momentum in terms of public services and development. A key indicator is that according to Census Bureau estimates, the city’s population has begun growing again for the first time since 1950. Detroit lost 1.2 million residents between 1950 and 2020, falling from over 1.8 million to just a bit over 600,000 in 2020. But the population is up 1% since then. Duggan is now running for governor of Michigan as an independent.

A third key leader came from the private sector, billionaire Dan Gilbert, who made his fortune in the mortgage company business. Through his real estate arm Bedrock Detroit, Gilbert bought up a large number of buildings in the city’s downtown and set about rehabilitating them. He purchased over 100 buildings and had invested $5.6 billion into them as of 2018. He moved his firm, now called Rocket Mortgage, and its 1,700 jobs into downtown Detroit in 2010, even before the bankruptcy and its associated municipal turnaround.

Gilbert’s strategy was to do well by doing good. He took a market-based approach, investing in properties and projects that, if successful, would turn a profit as well as help revitalize the city. There have been some controversies around public subsidies to his projects, but these subsidies are ubiquitous in America’s downtowns. There’s no doubt that Gilbert has had massive skin in the game when it comes to investing in downtown Detroit. And he hasn’t stopped. Among his current projects is a proposal to redevelop the fortress-like Renaissance Center, a collection of 1970s-era towers that has housed General Motors’ headquarters (which is slated to move to another Gilbert development, a new office building on the site of the former Hudson’s department store). He wants to demolish two of the towers and reconnect the rest to the urban fabric.

Investment by Gilbert catalyzed other private sector movement. Ford Motor Company bought Michigan Central Station, the city’s former train depot that had been derelict for years, and spent nearly a billion dollars renovating it to house the firm’s innovation center. 

The Detroit turnaround story shows that the city is now an outlier in a good way rather than a bad one. In a country where the capacity and quality of urban civic leadership has declined precipitously, Detroit has benefited from a collection of strong, bold, competent leaders who were willing to make big, risky bets to start turning the city around, including people like Snyder, Duggan, Gilbert, Bill Ford, and others besides. Their lessons for others: Elected officials need to focus on improving delivery of public services, while taking big political risks to address major festering issues. Voters need to back them in doing this. Private companies and local wealthy players need to be willing to put money into risky, even speculative investments, not just take it out through subsidy collections on stadiums or other such projects. Foundations need to be willing to act innovatively and take on risks to catalyze real transformation.

No one is going to mistake Detroit for Austin, but the shift in the city’s fortunes is real. The Detroit story is a case study in how a combination of public, private, and philanthropic leaders can lead to a major change for the better in a city’s trajectory.