The Obama administration is sending its top economic fix-it man to Detroit on Friday, to hand out more than $300 million in economic aid for the bankrupt city. Gene Sperling, the head of National Economic Council, will meet with Michigan's governor, Rick Snyder, and Kevyn Orr, the emergency manager appointed by the state to oversee the city's finances. Sperling's mission is to help coordinate millions of dollars from numerous sources to help the struggling city get back on its feet. In July, the city filed the largest municipal bankruptcy in U.S. history, with more than $18 billion in outstanding debt.
The bulk of the money will be devoted to "blight eradication," meant to improve both the environment and the safety of city residents. The city limits are choked with abandoned and run-down properties that the city has been unable to do anything about due to lack of resources. Even tearing down the aging and damaged structures is a huge effort, and roughly half of the $300 million will go to demolition, and then construction of smaller affordable housing. The Departments of Transportation and Housing and Urban Development are also taking part.
The funds are not a bailout in the traditional sense, since the majority of the money is coming from pre-existing programs or charitable efforts. Some of it had even been awarded to city already, but was tied up in regulations or red tape that made it impossible for Detroit to actually access it. For example, $65 million in block grants for community redevelopment had been withheld from the city, because it failed to meet certain obligations that recipients must follow. Another $25 million will come from FEMA to hire 150 new firefighters and arson investigators. Sperling and his team are merely leading the effort to get the money where it's needed.
“We’ve found significant resources that we believe can be unlocked and expedited and leveraged to have significant impact on the economy of Detroit,” Sperling said.