Detroit has new challenges ahead as city continues to recover from bankruptcy

Imbalance between downtown, neighborhoods could create issues

DETROIT – If someone spent an entire day in the middle of Downtown Detroit, they might think all remnants of the city's bankruptcy are in the past.

But Downtown Detroit covers roughly seven square miles, and the entire city stretches across 143 square miles.

The lion's share of the work being performed downtown only impacts about 6 percent of the city, and the imbalances could lead to a major problem for the progress of the city's recovery.

Moody's Investors Service says the city of Detroit is doing particularly well with high-income people paying income taxes, but the company says that's not sustainable if there's a downturn.

According to the company, the city needs a lot of property taxes coming in, and that's where Detroit is falling short. It needs to change for long-term prosperity.

The difference between Downtown Detroit and the neighborhoods has become the modern tale of two cities. The downtown area has trendy shops that are open almost daily, restaurants everywhere and 9,000 people, largely millennials, moved in since 2010.

But outside the downtown footprint, the old Detroit remains, as 25,000 residents moved out in the same time frame.

Many residents who live in the neighborhoods, including Akunna Olumba, stare longingly at the progress downtown.

"Downtown has a lot of stuff at a certain price point, and at some point you say, 'Where is my neighborhood burger joint?'" Olumba said.

She lives in the West Village, where a new neighborhood strategic fund building with yoga and spinning classes was just added.

Detroit's services and infrastructure chief Arthur Jemison said the building came with a specific purpose: to deal with Moody's concerns.

"These are the areas of highest density," Jemison said. "How do we keep everybody that's there and add more people to each of those districts?"

Moody's applauded Detroit's efforts, started with $30 million in grant money. The city is now looking to expand that to 10 districts, hoping to seed about $500 million in investment.

It's a small beginning, but Olumba is glad to see it.

"It's very welcome for somebody who's been a homeowner for a very long time," Olumba said.

Moody's has a number of concerns with the city's economic makeup. The bankruptcy left the city with a major pension shortfall, which will chew up a lot of cash.

The city wants to spend elsewhere and is taking on considerable debt to make things happen. It's warning investors that Detroit's renaissance might be real, but it's confined to a very small space.

About the Authors:

Rod Meloni is an Emmy Award-winning Business Editor on Local 4 News and a Certified Financial Planner™ Professional.

Derick is a Senior Web Producer for ClickOnDetroit and has been with Local 4 News since April 2013. Derick specializes in breaking news, crime and local sports.