Detroit on the edge
The following script is from "Detroit" which aired on Oct. 13, 2013. The correspondent is Bob Simon. Tanya Simon, producer.
Few cities have provided more to more Americans than Detroit. When it filed for bankruptcy in July, it became the largest American city to do that and admit defeat. It wasn't a sudden blow; a hurricane or a tornado. Detroit's decline was more than 50 years in the making. What happened? People will tell you any number of things. They're all true and they're all linked: the decline of the auto industry, race riots, a mass exodus, corruption, bad management and bad luck. The end result: $18.5 billion of debt that Detroit can't pay.
The bankruptcy filing just confirms what residents had known for years: the city that was once an industrial capital of America had hit rock bottom. But there are those who believe that you've got to get there before you can rise again, before you can reinvent yourself. But we begin with what an American city looks like when it has gone bankrupt.
It looks like it has lost a war. It could be Dresden after the Allied bombing. Factories, stores, schools, left to rot. Houses gutted by fire. Streets abandoned, derelict, populated by crime. It turns dark after dusk because 40 percent of the streetlights don't work. The buses don't run on time. The cops don't come in time -- if they come at all. They're understaffed. And if your house is burning even when firemen get there they might not have what it takes to do much about it.
Detroit has long been a playground for arsonists, yet during a decade of massive budget deficits, the city has lost a third of its cops, a third of its firefighters. Fire companies have been shut down. Equipment that has broken down doesn't always get fixed. The firefighters at Ladder 22 told us everything on their rig is in pretty good shape -- everything, that is, except the tank that's supposed to hold their water. Jonathan Frendewey told us it's leaking.
Bob Simon: Now, how long have you had this leak?
Jonathan Frendewey: The leak's been going on for probably a year we've been reporting it. Within the last six months we stopped filling the tank because it's leaking so bad that by the time we get somewhere we're outta water anyway.
Which happened recently when Frendewey and Jeremy Mullins responded to a car fire.
Jeremy Mullins: When we got to that car fire the only option we had to stop this car from spreading to the house was a garden hose, was the neighbor's garden hose. Problem is-- is that that's just not adequate. That car fire turned into a house fire. It spread up the wall and into the house.
Bob Simon: So the occupants were out there watching their house burn down?
Jonathan Frendewey: Yeah.
Jeremy Mullins: I don't know why there aren't people banging down city hall right now saying, "Why is my firehouse closed? Why is this firehouse closed?"
Bob Simon: They're resigned to it. They just--
Jeremy Mullins: I believe that people in the city have lived with it this way for so long that maybe they don't understand that this isn't how it's supposed to be.
Schools are supposed to be safe places, but this one is abandoned and Camille Rhymes says it has become a safe house for criminals. She lives across the street with her children and wasn't surprised when, after spotting intruders in her yard and calling the cops, she waited. And called again -- and waited.
Bob Simon: And how long is it between your first call and the cops arrival here?
Camille Rhymes: Anywhere between two and three hours.
Bob Simon: You say that very calmly as if--
Camille Rhymes: I mean, because that's normal. I've called the cops and it took 'em up to six hours to come. So I think if you not screaming that you dying and somebody killing you right then and there, they not gonna rush to get to you.
And even if they did, Detroit is huge. 139 square miles -- enough space to contain Boston, San Francisco and Manhattan. Some 80,000 buildings abandoned. But drive a few minutes from the desolation and you're in another city. Another world. Clean streets, classy architecture, nice places to grab lunch -- an oasis of activity. Hardly what comes to mind when you think bankruptcy. This is downtown Detroit, and its renaissance is largely due to one man.
Bob Simon: You look out the window, it looks pretty good.
Dan Gilbert: Yeah, it's not what bankruptcy looks like, huh?
That man is Dan Gilbert, born in Detroit and the founder and chairman of Quicken Loans, the third largest mortgage provider in the country. It made him a fortune. He's invested more than a billion dollars here, buying and renovating buildings in the city's central core.
Bob Simon: Which of the buildings we're looking at are yours?
Dan Gilbert: The First National Building over here is ours. The Chase Building and then the one there near the river, One Woodward.
He got them at what he calls a skyscraper sale.
Bob Simon: What did you pay for 'em?
Dan Gilbert: Not a lot. Not a lot.
Bob Simon: Have any numbers?
Dan Gilbert: You know, we paid for a lot of these office buildings less than what you would pay for one year's rent per foot in New York City.
Bob Simon: Are you doing what's good for Detroit or what's good for you?
Dan Gilbert: I know that sometimes there's Hollywood movies that, you know, describe every investor and profit-making capitalist as somebody very greedy. But in our case, I think it's doing well by doing good. And I think that fits very nicely together.
Some think of him as doing for Detroit what Carnegie did for Pittsburgh, what Rockefeller did for New York. Dan Gilbert is the second largest private landowner here, behind only General Motors. But it's not land that is in short supply. It's people. The city has lost nearly two thirds of its population - more than a million residents, most of them white -- over the last 60 years.
So three years ago, Gilbert moved his company's headquarters from the suburbs to downtown. He has filled his buildings with more than 10,000 of his own employees - offers them subsidies to live here, sometimes even a ride to work. And to make them feel safe in a place with the highest violent crime rate of any major city in the country, he set up this security command center, which monitors some 300 cameras looking downtown.
Dan Gilbert: Whenever we're engaged we want to make sure our people - we have 10,000 of them down here - are safe and sound.
So far Gilbert has managed to lure more than 90 companies here, including Chrysler, which never had an office downtown before. Now he wants to build a tech town on the ruins of what was once Motor City. This old theater was abandoned for 25 years. Twitter now has an office here, as do more than 20 Internet start-ups that have all gotten seed money from Gilbert.
Bob Simon: What's the pitch you give to companies to move here, and for people to move here?
Dan Gilbert: "You can impact the outcome in Detroit." And that sells. It's crazy, but it sells. Here you can actually see what you do affect a great American city, and its hopefully historical comeback.
Bob Simon: You walk around downtown, you see what you've renovated, and one becomes optimistic. But the border comes very suddenly, doesn't it?
Dan Gilbert: Uh-huh (affirm).
Bob Simon: Between downtown, which is looking good, and the rest of Detroit.
Dan Gilbert: There's no big city in the world that I can think of that has strong neighborhoods and a weak downtown. But there's no doubt that absolutely the challenge of Detroit is to, you know, have our neighborhoods come back.
There are neighborhoods here that are doing OK, but in vast parts of this vast city, people say they haven't seen much change, though not everyone has surrendered. John George drove us around the neighborhood where he was born. Brightmoor used to house the American dream. Auto workers bought homes here, joined the middle class. Today, people use parts of it as a dumping ground. Literally.
Bob Simon: It says here, "Dumpers will be shot."
John George: People should not feel safe coming into someone's neighborhood and dumping their trash.
Bob Simon: I don't mean to get hyperbolic, but this street is as bad as any street I've seen in the United States.
John George: Well, of course. If all of this would have happened overnight, you'd see FEMA here, the president, helicopters flying over. But because it took 50 years, there's no urgency.
[John George: It's talking about your mama!]
Which is why John George isn't waiting for the government to save his neighborhood. For 25 years, he has been commanding his own cavalry of volunteers to do the job the city hasn't been able to do. Tear down those houses. Remove all that blight.
John George: Blight is a very cunning adversary. You eliminate it here and it pops up over there and it kills everything. So you're constantly battling that enemy.
He's one of many activists doing this. And with help from corporations - including Dan Gilbert's - he has managed to demolish 300 houses. Look at what it takes to tear down just one.
Bob Simon: Rough estimate, how many are left to work on?
John George: Only 80,000.
Bob Simon: Do you ever feel overwhelmed?
John George: Every day.
For 25 years, John George has been commanding his own cavalry of volunteers to do the job Detroit hasn't been able to do: remove the blight. Geor...
But what do you do with all that land once the houses are gone? Detroit has become an urban jungle in a unique way. Paul Weertz used to be a public school teacher. Now he's a farmer -- right in the middle of the city -- cultivating acre after acre of abandoned lots.
There used to be 10 houses here. Now there's kale...
Paul Weertz: eggplant, tomatoes, lots of vegetables, potatoes and garlic you can't see-- they're underground.
And not just for family consumption. This movement - urban farming - is growing as a commercial venture. Everything is for sale.
Bob Simon: If Detroit is, in fact, moving slowly uphill, do you think what you're doing, this movement, is part of it?
Paul Weertz: Yes, yes I think it's going to be the citizens that change it a little at a time. And I think we're doing that.
But, a little at a time just won't cut it when you've got a debt of $18.5 billion. Earlier this year, the governor of Michigan declared a financial emergency and appointed bankruptcy attorney Kevyn Orr to take over Detroit. He's been given 18 months to figure out how to repair the damage caused by more than 50 years of plummeting tax revenues, spending sprees, borrowing binges, and corruption. Orr is looking for ways to free up more than a billion dollars to restore basic services that have been missing for so long.
Kevyn Orr: We're getting at some of the issues already. We have a new lighting authority stood up. The new police chief is getting at some much needed reform over at the police department.
Bob Simon: A better fire department?
Kevyn Orr: All those issues in public safety: police, fire, EMS. When I leave, I think those issues are going to be in place.
Bob Simon: OK now, these things are for you more important than the numbers?
Kevyn Orr: No. They're all equally important because if I don't get the balance sheet issues resolved, I can't do anything else.
But balancing the books will include cutting health care and pension costs - which make up much of Detroit's debt. If Orr's declaration of bankruptcy is approved by a federal judge, it will allow Detroit to pay only a fraction of what it owes to bondholders who lent it billions and to city employees and retirees counting on their pensions.
Bob Simon: What do you tell a pensioner who's making $20,000 a year that he might make less?
Kevyn Orr: I'm sorry. This is unfortunate. I recognize how severe it is. You know, I come from pretty common stock. I by no means am insensitive to the human cost, but we don't have a choice. These choices have been made for us a long time ago.
The dispute over who gets hit and how hard has moved into the unlikeliest of places: the Detroit Institute of Arts. The museum's director, Graham Beal, showed us around.
Graham Beal: The whole collection is owned by the city.
When Kevyn Orr hired Christie's Auction Jouse to appraise the collection, it created a frenzy about whether he might sell some of Detroit's treasures to help pay the bills.
Bob Simon: What would the Matisse go for?
Graham Beal: I really don't know. Seventy million, 80 million, something like that. I leave that to the experts.
But what do you sacrifice first? A pension or a painting?
Bob Simon: Don't you think it would be a very nice symbolic sign to people in the neighborhoods if you sold off a few very valuable paintings?
Kevyn Orr: I'm really not interested so much in symbolism. I'm interested in what makes sense both now and in the legacy. You know, New York didn't have to turn Central Park into condos. A number of different cities when they went through this process-- you don't have to sell off your, you know, grandmother's china and your wedding silver.
What Detroit needs is cash: the city has started fighting blight with some of the nearly $300 million in federal funds that Orr has helped secure. For Detroit that's just a jump start. The country will be watching the Motor City to see if it can begin moving forward -- after 50 years of going in reverse.
