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Eastpointe, Roseville

December 18, 2013

Few specifics, but Detroit bankruptcy may affect suburbs

By Kevin Bunch
C & G Staff Writer

EASTPOINTE/ROSEVILLE — While neither Roseville nor Eastpointe are facing down bankruptcy court, their proximity and inexorable connections to Michigan’s largest city means Detroit’s bankruptcy could have ripple effects outside city limits.

With a bankruptcy court giving the city the go-ahead to enter bankruptcy, Detroit has the authority to take a variety of steps to get on sound fiscal footing, which can include amending or canceling contracts to monetizing city assets.

Macomb County Commissioner Veronica Klinefelt, who represents Eastpointe, Warren, St. Clair Shores and Grosse Pointe Shores, called the bankruptcy a “double-edged sword.”

“We have a lot of folks in Macomb who depend on pensions from Detroit, so how Detroit handles the pensions will obviously have a direct effect on us,” Klinefelt said. “On the other hand, ultimately, if Detroit emerges as a strong, vibrant city that is on firm financial ground, then Macomb County and surrounding areas can only benefit.”

She said the Detroit Institute of Arts situation, where city-owned artwork could be sold, is something commissioners are keeping a close eye on due to the county’s millage to support the museum. Detroit’s water services with the suburbs are also a major concern.

Both Eastpointe and Roseville have long-term contracts with the Detroit Water & Sewerage Department, and Roseville City Manager Scott Adkins said that what happens to it during the bankruptcy will directly impact its suburban neighbors linked to its system.

“There is talk of spinning that off, so we do have that concern, but without us knowing the exact direction these things will go, it’s hard to pick those things out, and that’s our biggest concern,” Adkins said.

He also said that transportation services with the city could be impacted, as well as contacts in the business community between Roseville and Detroit. However, with details still scarce on what shape the bankruptcy will take, Adkins could not get into specifics.

“I would say it’s going to have pretty much a negligible financial impact,” he said. “It’s not going to be something that’s noticed; however, it does have an impact in the sense that we, as part of the region, are reliant on Detroit having success.”

Eastpointe City Manager Steve Duchane went a step further and said that what happens to the Detroit Water and Sewerage Department could directly impact residents in the broader metro area, if water rates get changed. He added there is no way for Eastpointe to replicate the system Detroit has, which sees the larger city responsible for water distribution to a number of communities.

“We are all contracted in for extensive times, and there’s no way to replicate it, so we’re tied together forever, in all reality,” Duchane said. “We contract with Detroit, so what happens to Detroit impacts our bottom line.”

More broadly, however, Detroit’s fate will be mirrored in the suburbs. Duchane said if Detroit emerges from bankruptcy with a solid plan for managing its government and without all the debt, it could have a “positive rebound effect” on its neighbors, something with which Adkins agreed.

“If people feel safe across the border in our adjacent city of Detroit, the positive will spill over just like the negativity can,” Duchane said.

“We all have to remember that the success and failure of Detroit has a reach out to the region,” Adkins said. “For all of us to be successful, Detroit has to be successful.”

Klinefelt said the county commissioners are, much like their counterparts in the cities, simply awaiting more information before making plans related to the bankruptcy.

You can reach C & G Staff Writer Kevin Bunch at kbunch@candgnews.com or at (586)498-1030.