On Thursday, Michigan’s emergency loan board approved Republican Gov. Rick Snyder’s top pick for Detroit’s emergency financial manager in a unanimous 3-0 vote.
Snyder announced his choice, bankruptcy Kevyn Orr, at a press conference Thursday at Cadillac Place in Detroit. The governor said Orr, a partner at the Jones Day law firm in Washington, D.C., fulfills the qualities he looked for in an emergency financial manager: strong interpersonal skills, technical skills and decision-making experience. The state will pay Orr $275,000 to overhaul Detroit’s deeply troubled finances.
Orr, a Michigan alum who earned degrees from the college of Literature, Science and the Arts and the Law School, said he will resign from his position at Jones Day in order to avoid any suspicion of impropriety since the firm performs services for the city. In a meeting with the emergency loan board, Orr said he will move to Detroit and start his job on March 25.
As his first order of business, Orr plans to look at the city’s financial data with Detroit Mayor Dave Bing, who also spoke with Snyder and Orr at the press conference. He said this initial discussion will drive his decision-making process. Orr added that he expects the daunting job will be completed in 18 months. In the position he will be able to override some elected officials.
Snyder declared Detroit to be in a state of financial emergency on March 1 after accepting a report produced by a team of six members including state treasurer Andy Dillon that revealed that Detroit has $14 billion in long-term liabilities and a $327-million yearly deficit.
As protesters surrounded Cadillac Place during the press conference, Snyder said the emergency manager position provides an opportunity for Detroit to get back on its feet.
“I don’t view this as an act of isolation,” Snyder said. “This is not about asking one individual to come in and turn around the city of Detroit … This is an opportunity for us to work together and to bring people together as Detroit, Michigan.”
Orr said this moment represents “the Olympics of reconstruction,” and added that he feels compelled to do this job to help restore the city to which he has such strong personal ties. Orr specializes in corporate restructuring, bankruptcy, litigation, appeals, and legal recruiting and diversity at his law firm. He previously helped guide Chrysler through its 2009 bankruptcy proceedings.
Bing said he believes he and Orr will work well together and that, regardless of who the mayor or city council members are, Detroit’s citizens deserve help.
“Because of the financial pressures that we’ve been under, we’ve not been able to give citizens who pay the taxes the services that they require,” Bing said.
Between 2000 and 2012, the city lost 200,000 residents. Between 1970 and 2012, the population decreased from 1.5 million to fewer than 700,000 people. The decline in population has left Detroit with extensive infrastructure, pension and maintenance liabilities, but an insufficient tax base to support its obligations.
University Law Prof. John Pottow, who specializes in bankruptcy and commercial law, said Wednesday that Orr is prepared for the emergency manager role due to his background in corporate reorganization.
“He’s used to dealing with tough, really painful situations that you have to do to keep a company alive,” Pottow said. “I think that will make him, I hope, a cool and dispassionate actor in the restricting realm.”
State Rep. Jeff Irwin (D–Ann Arbor) was unavailable to speak Thursday due to illness, but said earlier this month that he believes an emergency financial manager is “a bad thing” for Detroit. He added that most emergency managers drive their respective cities into further debt.
LSA senior Lauren Coffman, the communications director for the University’s chapter of the College Democrats, said the appointment takes power out of the hands of democratically elected local officials.
“I think it’s really important for (Detroit citizens) to have that autonomy to decide what’s best for them,” Coffman said. “This is a really important time for the citizens of Detroit to mobilize and make their voices heard in whatever way they can.”
LSA senior Rachel Jankowski, chair of the University’s chapter of College Republicans, said Wednesday an emergency financial manager would help Detroit recover from its financial decline.
“We need someone who is definitely serious about it, is responsible, and is willing to make difficult decisions.”
Follow Jen Calfas on Twitter at @JenCalfas.