Who had advised our PM on this project?
We demand Tabung Haji not to proceed with this deal. Here are few MAJOR reason why the they should not invest there.
Why Detroit collapsed
Everyone in Detroit knew that without enormous, radical change, the city was dying. They have known this since at least the early 1980s. But that radical change never came.
The city’s population peaked at almost 2-million in 1950, during the boom times of the post-war era. It then had the highest median income of any city in the United States. These days, it ranks 66th out of the largest 68 cities in the nation. And the population of the city has sunk to just above 700,000.
Yet the city still acts as if it has 2-million residents. Despite drastic cuts since 2000, Detroit is still one of the most overstaffed cities in the United States. As of 2011, it had one city employee for every 55 residents — by far the highest ratio in the United States. Public services remained bloated, and the bureaucracy remained clogged with useless union workers who could not be fired.
From 1961 onward, Detroit became the crucible into which progressives poured every utopian idea imaginable. The city spent more per capita on education, welfare and infrastructure than almost any other urban center in the country during the sixties and seventies. The city passed tough regulations, allowing city leaders to manage which businesses could open in the city, and which could not. Large bureaucratic city service industries bloomed, usually controlled by local labor unions. It was essentially a state-controlled capitalist economy.
The cycle was kept alive because of the boom times in the auto industry. Then the gas crisis of the 1970s put an end to that, as General Motors, Ford, American Motors, and Chrysler all struggled with market changes.
Race issues became politically dominant. Mayor Coleman Young was considered a leading African American progressive when he became leader of Detroit in 1974. But from the start, he was one of the main race-baiters of the Democrat Party, and blamed many of the ills of the city on the rich, white upper class. (Among black leaders at the time, the claim was widespread that whites were conspiring to drown blacks in drugs, and thereby “keep the black man down.”)
Detroit files largest municipal bankruptcy in U.S. history
Once the very symbol of American industrial might, Detroit became the biggest U.S. city to file for bankruptcy Thursday, its finances ravaged and its neighbourhoods hollowed out by a long, slow decline in population and auto manufacturing.
The filing, which had been feared for months, put the city on an uncertain course that could mean laying off municipal employees, selling off assets, raising fees and scaling back basic services such as trash collection and snow plowing, which have already been slashed.
“Only one feasible path offers a way out,” Gov. Rick Snyder said in a letter approving the move.
Kevyn Orr, a bankruptcy expert hired by the state in March to stop Detroit’s fiscal free-fall, made the Chapter 9 filing in federal bankruptcy court.
Michael Sweet, a bankruptcy attorney in Fox-Rothschild’s San Francisco office, said the city would pay current employees. But “beyond that, all bets are off.”
“They don’t have to pay anyone they don’t want to,” Sweet said. “And no one can sue them.”
Cheap Detroit homes a bad deal — for investors and the community
The house, sold at an auction last fall, sits at the edge of Detroit’s infamous urban blight. And scrap thieves, or “strippers,” have taken anything of value, including the kitchen sink and metal pipes, requiring repairs of up to $15,000.
“You could take a great picture of this house, put it online and make buyers … think it’s a good thing,” said Antoine Benjamin, chief operating officer of real estate firm Benjigates Estates, which bought the house at a Wayne County auction to renovate and rent out. “But you have to understand how close you are to wasteland.”
Low property prices in Detroit in the wake of the housing crash in 2008 have lured investors from California to China. Speculators bank on high returns despite a financial crisis so dire Detroit’s state-appointed emergency manager, Kevyn Orr, has cited a 50-50 chance the city will file for bankruptcy.
But small-time speculators eyeing quick profits often let the houses fall into disrepair because they lack the funds for renovations or end up abandoning them — and frequently do not pay real estate taxes.
In 2011 alone, the last year for which data is available, Wayne County had to write off $170 million in uncollected taxes on Detroit properties. About 100,000 city-owned properties, many of which are abandoned, are in limbo until a study of local property values is completed.
“The city has made no effort to make those 100,000 available, so we don’t have a real market,” said Jerry Paffendorf of Loveland Technologies, whose widely followed property database includes Detroit’s tax delinquencies and foreclosures.
“There is serious concern that the assessment process in Detroit is broken and many, if not most, properties have been inappropriately assessed at artificially high levels for years,” Nowling wrote in an email.
A state plan to demolish abandoned buildings may eliminate some of the blight, but would do little to resolve city property codes that are unclear or largely ignored.
“The lack of property code enforcement means there is no risk for investors who buy here and neglect their properties,” said Khalilah Gaston, executive director of the local nonprofit Vanguard Community Development Corporation. “We have to ensure there is risk and not just reward.”
One speculator, 22-year-old graduate student Darin McLeskey, who also runs a non-profit urban farming group, noted Detroit’s many rules on property use but few resources to police them.
“With no code enforcement, it’s the Wild West,” said McLeskey, who moved to Detroit from an outer suburb. And he has taken his shot, spending $25,000 to snap up 20 empty plots and three homes in the city.
McLeskey is a rarity among speculators because he plans to make Detroit his home. Detroit’s population fell 25% in the past decade to 700,000, well off its 1950 peak of 1.8 million, as manufacturing declined and white residents moved to the suburbs following race riots in the late 1960s.
In a few neighborhoods, sales are picking up on recent talk of new infrastructure projects including a light rail line, a new hockey stadium and a new bridge to Canada.
At Wayne County’s annual foreclosure auction last year, 12,000 properties were sold online, some for the minimum $500 bid. More bargain seekers are expected this fall when around 25,000 properties will go on the block.
“Just a few years ago the big joke was, ‘You can buy a house in Detroit for $500, ha ha ha,’” said Ted Phillips, executive director of the nonprofit United Community Housing Coalition, which helps homeowners fend off foreclosure. “Now the buzz is, ‘You can buy a house in Detroit for $500 and it’s a great investment.’”
Detroit property prices rose 20% year-on-year in April, Standard & Poor’s Case-Shiller Home Price Index showed.
Benjamin estimates the house Benjigates bought in Northwest Detroit for less than $4,000 will ultimately cost about $20,000 after renovations. But the company has a renter lined up and should be able to sell it for $30,000, he said.
The North End district in central Detroit sits alongside the route of a planned $137 million, 3.5-mile light rail line and has attracted serious investors. On a recent visit to the area, groups speaking with New England, British and other accents and were seen walking the neighbourhood looking for deals.
Phillips of the United Community Housing Coalition worries about a get-rich-quick mentality. “These homes are not just paper investments,” he said. “If they’re left to disintegrate, they undermine neighbourhoods.”
America’s Suicidal Cities
Detroit refuses to take its medicine.
Some major American cities are dying, and the worst part is that these grievously ill patients often are refusing to take even the mildest medicine that would make things better.
Take Detroit, a city that has become a synonym for urban failure. The murder rate of one per 1,719 people last year was more than eleven times the rate in New York City. One contributing factor may be that two-thirds of Detroit’s streetlights are broken.
Once the fourth-largest city in the country, Detroit’s population has dropped by almost 30 percent since 2000 to below 700,000. Its vacant lots cover more land than the entire city of Paris. Despite enormous subsidies from the state government, Detroit is likely to finish the next fiscal year in June a full $50 million in the red. An audit could result in a state takeover of Detroit’s finances, and that could in turn lead to the nation’s largest-ever municipal bankruptcy.
With conditions so dire, you’d think the city would grab any life preserver tossed to it. Last year, the state of Michigan offered to take over management of Belle Isle, the 1.5-square-mile island park that sits in the Detroit River, just inside the U.S. border with Canada. Now sadly neglected and crumbling, Belle Isle was once an urban jewel designed by Frederick Law Olmsted, one of the creators of New York’s Central Park.
The state offered to manage it as part of a ten-year lease that could be renewed only if both parties agreed. Access to the park, which is connected to Detroit by a bridge, would be controlled by charging $11 for an annual vehicle pass that would also cover admission to every other state-operated park. The state would pump in dollars to repair and upgrade the island’s facilities, saving the city at least $6 million a year in upkeep.
Sounds like a win-win idea, but Detroit’s city council nixed it at a tumultuous meeting on Tuesday night. The council voted 6 to 3 to not even put the proposal on its agenda. Governor Rick Snyder’s office then promptly withdrew the offer because a key deadline for the state’s budget wouldn’t be met.
Opponents who showed up at the meeting angrily denounced the proposal as akin to selling the island to outsiders. “The governor has his hands on our jewels,” one skeptic told the council.
Henry Payne, a writer for the Detroit News, says the tenor of the council meeting depressed him. “It was a throwback to old conspiracy theories that have long prevented progress in Detroit,” he told me. “Several speakers raved on about the Belle Isle deal being a suburban plot to take over Detroit.”
Not all city leaders agreed with such views. Mayor Dave Bing said in a written statement that he is “extremely disappointed” with the council’s decision: “I believe the majority of Detroiters supported this lease agreement. City Council’s actions today will force us to look at making additional cutbacks that may negatively impact the City’s other parks.” Dan Gilbert, the owner of Quicken Loans, which is headquartered in Detroit, could only scratch his head. “[The deal is] light years better. What is so hard?” he asked in a Tweet.
There are many explanations, but a common one is that Detroit has a reactionary political class that views almost any proposed change as smacking of “union busting” or “selling off the city” to white interests. Unions have sued to block Mayor Bing’s labor reforms, even though the city’s public-pension system is $11 billion in the red. Some city workers now retired and in their 80s have been drawing retirement benefits since they left the city’s employment in their 40s. Budget controls are incredibly lax. This month, it was discovered that Barrett Jones, a full-time consultant for the Detroit Water and Sewage facility earning $139,000 a year, had a second full-time job at $135,000 a year as public-safety administrator for the city of Flint, which is 70 miles away. He has resigned from his Flint job but still works for the city of Detroit.