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Seeing Detroit’s Resurgence Firsthand
June 11, 2018
If there was one key moment from last week’s Michigan Investors Summit in Detroit, it was when State Treasurer Nick Khouri used the word “resiliency.” Resiliency has marked the passage of time over the last half decade in the Motor City. From the state’s structurally balanced budget with surpluses, to the multiple ratings upgrades of both the City of Detroit and Wayne County.
Walking into the Westin Hotel at Detroit Metropolitan Airport’s McNamara Terminal for this conference was surreal. The last time I saw so many investors in this city was for a meeting with Detroit’s Emergency Manager Kevyn Orr. Come to think of it, it was about five years to the day – in the same hotel!
As part of the negotiating process, Orr tried to strong-arm creditors and investors into taking a 90% haircut on their outstanding bonds. Those were dark days for everyone involved, except for the lawyers. During those discussions, I could hardly imagine that the City would be in a position like it’s in so soon.
How quickly things can change with strong financial management.
This time around, the city and state were brimming with positive energy and excitement for the inaugural investor conference, hosted by the State Treasurer’s Office, City of Detroit and numerous other state authorities. Mary Martin, Director for Bureau of State and Authority Finance at Michigan Department of Treasury did a terrific job as emcee for the event.
As a long-time analyst and trader in munis, I’ve seen a lot of changes in our industry, and this conference further reminded me of how far the market has come. I find it very refreshing that more and more municipal issuers are hosting investor conferences like these. And in my opinion – really a consensus among people I’ve spoken to – events such as these show a real commitment to investor outreach, access and transparency. Not surprisingly, this summit was very well-attended, with a strong showing from different types of buyers from the muni investment community.
Though it hasn’t been easy, the last five years has been transformative for the City of Detroit and the State of Michigan. Resiliency has translated into financial flexibility and investor transparency. A good example is the recent article in The Bond Buyer about Wayne County, which is “cited as an example of how state intervention can work positively for a fiscally stressed local government.”
The area’s comeback stands in stark contrast the situation in the Commonwealth of Puerto Rico. A recent NFMA survey showed that the majority (54%) of municipal analysts attending the Annual Conference don’t think the situation will be resolved within the next five years. Of course, who knows what we’ll be saying in 2023.