(Corrects identity of Jase Bolger's spokesman to Ari Adler from
Virgil Smith in 18th paragraph)
By Steve Neavling and Tom Hals
DETROIT/WILMINGTON, Del. Feb 15 Wanted: A
financial whiz with powers of persuasion, an acute political
radar and thick skin, for the demanding assignment of taking
over a major American city on the brink of bankruptcy.
That's what Michigan Governor Rick Snyder is likely looking
for as he decides whether to appoint an emergency financial
manager for the city of Detroit, according to restructuring
experts and Michigan politicians.
Snyder revealed this week that he has a "short list" of
candidates for the job. He still awaits a report from a team of
advisers to decide whether Detroit needs an emergency manager,
said spokeswoman Sara Wurfel, but is "talking to and looking for
prospective qualified candidates."
It's a job few may want as it will probably involve
decisions that could lead to further cuts in jobs and services
in a city that has been in decline for a long time - with its
high crime rate, abandoned buildings and many unlit streets.
Still, success could make the manager a star in the world of
restructuring - especially given a number of other financially
distressed cities in the United States which might have to seek
a similar savior.
"When there is not enough money to go around, somebody is
going to be disappointed. And that disappointment will be aimed
at whoever is the poor devil that took the job," said Steve
Miller, a top turnaround specialist with strong Michigan ties
who has worked for automakers Ford Motor Co and Chrysler
Group LLC, and parts maker Delphi Automotive Plc
The ideal qualifications would be someone with both a
business background and a sense of public service to do the job
for little or no pay, said Miller, who is now non-executive
chairman of insurer American International Group, which
was bailed out by the U.S. government during the financial
Scott Eisenberg, managing partner of corporate restructuring
firm Amherst Partners and a past president of the Detroit
chapter of the Turnaround Management Association, goes even
further, saying "a magician" is needed for the job.
"You have a city council that doesn't want to lose control,"
Eisenberg said. "Who knows how much the mayor will go along.
This will be filled with legal challenges over what you can and
can't do. Everything the person does that is controversial will
be challenged in court."
Snyder isn't talking about the candidates on his short-list,
but politicians and restructuring experts say he needs to take
their race into account. Eighty-three percent of Detroit's
population is black and Mayor Dave Bing and city council members
are all African American.
"To forcibly put a Caucasian in that position could have a
very negative effect on the workforce, the voting populace and
the people he will have to work with," said State Senator Virgil
Smith, a Detroit Democrat, who is black.
A HISTORY-MAKING BANKRUPTCY
No large American city in recent history has seen a decline
like Detroit. Once the fifth largest city in America, it is now
only the 18th biggest, according to the latest population
figures. With the exodus has come declines in the tax base and
revenue, the flight of jobs, rising numbers of poor, increased
crime and a city saddled with the infrastructure and labor costs
of a bygone era.
Urban policy experts across the country are closely watching
the struggles of Detroit, which could be an example for a number
of cities still trying to recover from the housing bust and
financial crisis, at a time when their pension and healthcare
costs are soaring.
The emergency financial manager could choose to recommend
that Detroit files for bankruptcy, although the decision
ultimately rests with a board composed of people appointed by
If Detroit files for Chapter 9 bankruptcy, its outstanding
rated debt of $8.2 billion would make it the largest municipal
bankruptcy in U.S. history, almost double the 2011 filing by
Alabama's Jefferson County.
Other American cities have gone to the edge of insolvency
including New York in 1975, Cleveland in 1978 and Philadelphia
in 1991. But none of them filed Chapter 9 municipal bankruptcy.
Republican state lawmakers, who hold majorities in the
legislature, said Snyder has not sought their counsel on the
appointment of an emergency manager. But in interviews this week
there was a virtual consensus among Michigan lawmakers in both
parties that an emergency manager is likely.
"Every day that goes by and Detroit does not take action to
save itself limits the governor's options," said Ari Adler,
spokesman for Michigan's Republican House Speaker Jase Bolger.
NO POPULARITY CONTEST
Snyder has kept the names on his short list within a small
circle of advisers, saying only that few people have the
financial knowledge and people skills to do the job.
So far, several of the names swirling around Detroit
political circles have said they are not in the running.
The Detroit News reported on Sunday that former Washington,
D.C. mayor Anthony Williams, now in private law practice, had
turned down the job. Repeated efforts to contact Williams for
comment were not successful.
Another former politician whose name has surfaced in the
speculation said he was not interested in the job.
"I am not a candidate for the emergency manager of Detroit,"
Thurbert Baker, a former attorney general of the state of
Georgia now practicing law in Atlanta and Washington, told
Reuters in an email.
If anyone knows the challenges a Detroit financial manager
would face, it could be Robert Bobb, who from 2009 to 2012
served as the state-appointed emergency financial manager for
Detroit Public Schools.
Bobb closed dozens of schools, outsourced school services,
increased class sizes and laid off hundreds of teachers.
"If you are there for a popularity contest, then cast that
aside," said Bobb, who said he had not been contacted about the
Detroit emergency manager position.
While some described it as the job from hell, others said it
could be a huge opportunity for someone to become the leading
municipal turnaround specialist in the nation.
"It's a bit amorphous as to what constitutes success in this
project, but there are a lot of careers built on one successful
job," said Tim Skillman, a managing director in the Los Angeles
office of turnaround firm Gavin/Solmonese.
(Additional reporting by Karen Pierog and James Kelleher in
Chicago, Paritosh Bansal, Jessica Toonkel and Nicholas Brown in
New York, and Dawson Bell in Lansing, Michigan; Writing by Greg
McCune; Editing by Mary Milliken and Tim Dobbyn)