United States: Water wars

Water war bubbling up between California and Arizona

LA Times

Once upon a time, California and Arizona went to war over water.

The year was 1934, and Arizona was convinced that the construction of Parker Dam on the lower Colorado River was merely a plot to enable California to steal its water rights. Its governor, Benjamin Moeur, dispatched a squad of National Guardsmen up the river to secure the eastern bank from the decks of the ferryboat Julia B. — derisively dubbed "Arizona's navy" by a Times war correspondent assigned to cover the skirmish. After the federal government imposed a truce, the guardsmen returned home as "conquering heroes."

The next water war between California and Arizona won't be such an amusing little affair. And it's coming soon.

Nineteenth-century water law is meeting 20th-century infrastructure and 21st century climate change, and it leads to a nonsensical outcome.

- Bradley Udall, a senior fellow at the University of Colorado Law School

The issue still is the Colorado River. Overconsumption and climate change have placed the river in long-term decline. It's never provided the bounty that was expected in 1922, when the initial allocations among the seven states of the Colorado River basin were penciled out as part of the landmark Colorado River Compact, which enabled Hoover Dam to be built, and the shortfall is growing.

The signs of decline are impossible to miss. One is the wide white bathtub ring around Lake Mead, the reservoir behind Hoover Dam, showing the difference between its maximum level and today's. Lake Mead is currently at 40% of capacity, according to the latest figures from the U.S. Bureau of Reclamation, which operates the dam. At 1084.63 feet on Wednesday, it's a couple of feet above its lowest water level since it began filling in 1935.

But the rules governing appropriations from the river are unforgiving and don't provide for much shared sacrifice among the states, or among farmers and city dwellers.

The developing crisis can't be caricatured as farmers versus fish, as it is by Central Valley growers irked at environmental diversions of water into the region's streams. It can't be addressed by building more dams, because reservoirs can't be filled with water that doesn't come. And it can't be addressed by technological solutions such as desalination, which can provide only marginal supplies of fresh water, and then only at enormous expense.

Nor can a few wet years alleviate the need for long-term solutions. "We had a solid year this year, which takes a bit of the panic out," says Jeffrey Kightlinger, general manager of the Metropolitan Water District of Southern California, which serves 19 million residents and gets about half of its water supply from the Colorado. But because "demand outstrips supply, we expect a long-term decline. And possibly because the crisis has been developing slowly, we're nowhere near a solution."

What will be necessary is a fundamental reconsideration of 100 years of water-appropriation practices and patterns. Farmers, whose claims on Colorado river water are senior to all others, may have to give up, or sell off, some of their rights. Strict legal provisions that would turn whole swaths of the inhabited Southwest back into desert to slake the thirst of California cities will have to be reconsidered.

"Nineteenth century water law is meeting 20th century infrastructure and 21st century climate change," says Bradley Udall, a senior fellow at the University of Colorado Law School, "and it leads to a nonsensical outcome."

If the Western drought continues, Arizona would have to bear almost the entire brunt of water shortages before California gives up a drop of its appropriation from the river. Few observers of Western water affairs believe that's politically practical, but few have offered practical alternatives.

A quick history lesson: The Colorado Compact, reached by six of the seven basin states in 1922 under then-Commerce Secretary Herbert Hoover, aimed to replace the tangle of state water allocation laws with a single legal regime in order to get the dam built. (Arizona finally signed the deal in 1944.) But the compact was based on a fraud — an estimate of river flows that Hoover and the states' negotiators almost certainly knew was wildly optimistic.

Many times, the compact has been revised and supplemented to meet changing conditions. In 1968, Congress authorized construction of the Central Arizona Project, a massive aqueduct serving Phoenix and Tucson, by passing the Colorado River Basin Project Act. Arizona agreed to be last in line for water from the Colorado if a serious drought struck.

The bill's drafters probably never thought supplies would become so tight. But the bill from nearly a century of overuse is on the verge of coming due. During the last 50 years, according to figures from the Reclamation Bureau, the population served by the river has grown from 12 million to 30 million. Over that period, the average flow on the river has fallen from 15.5 million acre-feet to as low as 12 million. (An acre-foot serves two households a year.)

The river's apparent abundance has encouraged exceptionally wasteful usage. For example, thirsty forage crops such as alfalfa and pasture land account for as much as half the irrigated acreage in California, according to a report last year by the Pacific Institute. And as my colleague David Pierson reported recently, much of the harvest is shipped to China.

The Pacific Institute finds that stingier but still effective irrigation practices could save nearly 1 million acre-feet a year throughout the Colorado basin, and replacing alfalfa with cotton and wheat would save 250,000 acre-feet. But plainly, a trade pattern that effectively exports the West's scarce water to China isn't sustainable.

Other old assumptions will also have be discarded. One crucial need is to keep Lake Mead's water level well above 1,000 feet, the point at which it is unable to deliver water to Las Vegas and its ability to generate hydroelectricity is compromised. That task would be considerably eased by draining Lake Powell, the reservoir behind Glen Canyon Dam, upstream of the Grand Canyon.

That proposal has been pushed by the Glen Canyon Institute, a Salt Lake City-based environmental group, but faces hurdles in Utah, Wyoming, Colorado and New Mexico, where residents fear that draining Lake Powell will only allow California, Arizona and Nevada to deprive them of their legal right to the river's flow.

The political resistance to shutting down Lake Powell is intense, though in time it may be trumped by the sheer scale of the water crisis. "We've gone from seeming to be the lunatic fringe to being taken seriously," says M. Lea Rudee, a board member of the Glen Canyon Institute.

Another assumption being challenged is the primacy of agriculture's claim on water. The solution is to buy farmers out, trading cash for their water rights to keep supplies flowing to urban areas. The MWD is working to develop a plan to pay growers to fallow their land to raise the water level of Lake Mead. "But we really don't know what the response will be to a cash offer to take land out of production," Kightlinger says.

What is certain is that the solutions will be complicated and contentious. The last major effort to settle legal rights on the Colorado River involved a sheaf of interstate and interagency pacts known collectively as the Quantification Settlement Agreement. The QSA was reached in 2003 and then litigated for the next 11 years. Last month a federal appeals court upheld the QSA against an environmental challenge, but that may not be the last word — a petition for rehearing is in the works, and a challenge in California state court is still alive.But they these efforts still don't provide a framework for the future. "The arrangements in place right now are politically untenable," Udall says. But what can be done when the solutions are, too?

Water is a Human Right: Detroit Residents Seek U.N. Intervention as City Shuts Off Taps to Thousands.

Activists in Detroit have appealed to the United Nations over the city's move to shut off the water of thousands of residents. 

The Detroit Water and Sewerage Department says half of its 323,000 accounts are delinquent and has begun turning off the taps of those who do not pay bills that total above $150 or that are 60 days late. 

Since March, up to 3,000 account holders have had their water cut off every week. The Detroit water authority carries an estimated $5 billion in debt and has been the subject of privatization talks.

 In a submission to the United Nations special rapporteur on the human right to safe drinking water and sanitation, activists say Detroit is trying to push through a private takeover of its water system at the expense of basic rights. 

We speak to Maureen Taylor of the Michigan Welfare Rights Organization and Meera Karunananthan, international water campaigner for the Blue Planet Project.

"In Michigan it is particularly egregious because a household that has welfare involvement and water is turned off with minor children in the home, means that protective services can come in and take the children out and put them in foster care," Taylor says. "This is an orchestrated attack by banks and corporations...in an effort to try to enrich themselves."

Fire at chemical plant in Detroit

HAZMAT Level 3 Fire Blazing at Chemical Plant in Detroit Michigan

They have cleared off only a 300 yard radius, The problem is that this toxic plume is drifting about 2,000 yards in 1 direction and not all of those people have been evacuated!

http://www.myfoxdetroit.com/story/239…

http://www.freep.com/article/20131114…

Read more at http://investmentwatchblog.com/hazmat-level-3-fire-blazing-at-chemical-plant-in-detroit-michigan/#J3RvwxQ0XjkuDXpZ.99

'Things break down, not up'

Detroit Power Outage Due To Public Lighting ‘System Overload’

CBS ,

11 September, 2013

DETROIT (WWJ) – A major power outage is affecting Wayne State University, the Frank Murphy Hall of Justice, the City-County building, the Detroit Historical Museum, and the People Mover in downtown and Midtown Detroit.

“Some institutional public lighting customers are experiencing service interruption caused by extreme heat, cable failure, and routine maintenance — all combining causing system overload,” said Robert Warfield, a spokesman for the Detroit Mayor’s Office.

Wayne State spokesperson Jessica Archer said the campus would be closed for the rest of the day, Wednesday, after about half of all buildings — maybe 40 or 50 — lost power. She said they would decide later about Thursday’s schedule.

Passengers aboard the People Mover were directed off at the nearest station. The People Mover is closed until further notice.

At City Hall, EMS crews were called out to help a pregnant woman on the 4th floor after an evacuation forced people to walk down the stairs to safety. Officials said she’d doing fine.

“We made sure that there was somebody was with every person that was stuck on the floors until we could get them down, said Detroit Fire Chief Gene Biondo. ”When I found out that she was eight months pregnant, I said we’ve gotta get her out of there first.”

Biondo said they were able to get power restored to the building briefly through an emergency system to get that woman and two others down on elevators.

Courtrooms at the Frank Murphy Hall of Justice were evacuated and proceedings in a high-profile Grosse Pointe Park murder case were delayed.

“… The courtroom was plunged into darkness,” reported WWJ’s Marie Osborne. “A few very scary moments as deputies tried to make their way to their prisoner, Bob Bashara. Within seconds, though, the generator kicked on, and there was a bit of light.”

Presiding judge Kenneth King said continuing problems with the city’s aging electrical grid are a huge security concern.

“That’s a whole different dimension in very scary proposition,” King said. “Now, because we can’t use the elevator, the deputy sheriffs have to escort the prisoners down a dark stairway.”

“Given what happened just a few days ago, it’s not a good situation,” King added, referring to an incident during which a prisoner, being moved into a holding cell at the courthouse, stabbed a deputy with a makeshift knife and fled.

The lights went out at around 1 p.m. Warfield said he hoped power would be restored to all affected buildings sometime Wednesday night.

“The Public Lighting Department is asking customers, once power is restored, to only turn on lights …. not to use air conditioners or other non-essential appliances,” Warfield said.

A DTE Energy spokesman said, although it’s not a DTE problem, DTE crews are assisting the city in working to decrease load on the system to avoid more outages.

DTE said full restoration in the city could take up to 24 hours.

There were no reports of power problems at downtown hospitals.

Social collapse

SWAT Cop Says American Neighborhoods Are 'Battlefields,' Claims Cops Face Same Dangers As Soldiers In Afghanistan

Huffington Post,

21 August, 2013

One of the central themes of my book is that that too many cops today have been conditioned to see the people they serve not as citizens with rights, but as an enemy. My argument is that this battlefield mindset is the product of a generation of politicians telling police that they're at war with things -- drugs, terrorism, crime, etc. -- and have then equipped them with the uniforms, tactics, weapons, and other accoutrements of war.

Over the last several days, the popular online police magazine PoliceOne site has been rolling out a series of opinion pieces in response to my book. As you might expect, most of them are critical, although a couple have been thoughtful.

One essay by Sgt. Glenn French was particularly disturbing. French serves as commander of a SWAT team in Sterling Heights, Michigan. French doesn't criticize me for arguing that too many police officers have adopted this battlefield mindset. Rather, he embraces the combat mentality, and encourages other cops to do the same. Referring to an article I wrote here at HuffPost, French writes:

“What would it take to dial back such excessive police measures?” the author wrote. “The obvious place to start would be ending the federal grants that encourage police forces to acquire gear that is more appropriate for the battlefield. Beyond that, it is crucial to change the culture of militarization in American law enforcement.”

We trainers have spent the past decade trying to ingrain in our students the concept that the American police officer works a battlefield every day he patrols his sector.

Note the choice of words. Not neighborhood, but "sector." Although I suppose such parsing isn't even necessary when French just comes right out and declares America a battlefield. Note too that French isn't even referring to SWAT teams, here. He's suggesting that all cops be taught to view the streets and neighborhoods they patrol in this way.

French then tosses out some dubious statistics.

The fact is, more American police officers have died fighting crime in the United States over the past 12 years than American soldiers were killed in action at war in Afghanistan. According to ODMP.org, 1,831 cops have been killed in the line of duty since 2001. According to iCasualties.org, the number of our military personnel killed in action in Afghanistan is 1,789.

Cops on the beat are facing the same dangers on the streets as our brave soldiers do in war.

Even accepting French's preposterous premise here, his numbers are wrong. The U.S. has lost 2,264 troops in Afghanistan, about 22 percent more than French claims. Moreover, more than half police officer deaths since 2001 were due to accidents (mostly car accidents), not felonious homicide. Additionally, depending on how you define the term, there are between 600,000 and 800,000 law enforcement officers working in the United States. We have about 65,000 troops in Afghanistan. So comparing overall fatalities is absurd. The rates of cops killed versus soldiers killed aren't even close. And that's not factoring in the soldiers who've come home without limbs. The dangers faced by cops and soldiers in Afghanistan aren't remotely comparable.

As I've pointed out before, the actual homicide rate for cops on the job, while higher than that in the country as a whole, is still lower than the rate in about half of the larger cities in America. If cops on the beat face "the same dangers on the streets as our brave soldiers do in war," so does everyone who lives in Boston, Atlanta, or Dallas.

That is why commanders and tactical trainers stress the fact that even on the most uneventful portion of your tour, you can be subjected to combat at a moment’s notice.

I think French's choice of words in this passage speaks for itself.

What is it with this growing concept that SWAT teams shouldn’t exist? Why shouldn’t officers utilize the same technologies, weapon systems, and tactics that our military comrades do?

We should, and we will.

Again, it's hard to even respond to this. You're either alarmed to hear this kind of language from a domestic police officer, or you aren't. And if you aren't, I don't think there's much I can write to convince you otherwise. I highlight it here only to point out that it is indeed a domestic police officer who wrote this. I've been criticized at times for making the argument that too many cops in America today see their jobs in this way -- that I'm exaggerating when I write or say that some cops see American streets as war zones. Well, here it is.

Black helicopters and mysterious warriors exist. They are America’s answer to the evil men that the anti-SWAT crowd wouldn’t dare face.

The second sentence is undoubtedly true. I'm not opposed to SWAT teams. When used properly -- to defuse an already violent situation, where lives are at risk -- they perform marvelously. I am opposed to using them to raid organic farms in response to nuisance violations, or to storm animal shelters to kill baby deer. Or, more to the point, to serve search warrants on people suspected of consensual drug crimes, the reason for the vast majority of the 100+ SWAT raids conducted each day in America.

One could argue that French is merely one cop, and there's no evidence that his essay, alarming as it may be, is representative of any significant percentage of law enforcement officials. The problem is that his essay appeared on PoliceOne, one of the most popular police destinations on the Internet. It's a part of a series of essays that the editors of that site chose to run in response to my book. If French's perspective isn't representative of a significant portion of law enforcement, it's difficult to see why PoliceOne would have chosen to run it. At the very least, the editors don't appear to have found it objectionable enough to exclude from the series.

It's also worth noting that French trains other police officers. He has also written a book on policing. So his perspective and approach to the job is getting passed on to other officers. Moreover, there's ample anecdotal evidence that plenty of other law enforcement officials share his perspective. Here, for example, is the sheriff of Clayton County, Georgia in 2008:

"The war on drugs in Clayton County, as in most jurisdictions, I liken it to the Vietnam War," Hill said. "Hit and miss, there is no clear win — we don’t know if we’re gaining ground or not. What we want to do is we want to change our strategy. We want to make this more like a Normandy invasion."

Here's a Milwaukee detective and former SWAT officer writing in National Review a few years ago, chastising Berwyn Heights, Maryland Mayor Cheye Calvo for pushing for reform after his home was invaded and his dogs were killed by a SWAT team in a botched, mistaken raid:

Sorry if Calvo and his mother-in-law were “restrained” for “almost two hours.” Would you rather have them be comfortable for those two hours, and risk officers’ lives and safety? Calvo should be able to understand what the officers did and why they did it.

Municipal police departments do fight a war on the streets of this country daily. This incident should not be considered overkill (to take a word from Reason’s Radley Balko), but sound police tactics.

Here's Milwaukee Police Chief Ed Flynn, explaining how he will instruct his officers to ignore the state's gun laws:

“My message to my troops is if you see anybody carrying a gun on the streets of Milwaukee, we’ll put them on the ground, take the gun away and then decide whether you have a right to carry it.”

There are lots of examples like these. The sheriff in Orange County, Florida recently referred to his agency as a "paramilitary organization." New York Mayor Michael Bloomberg recently referred to NYPD as "the seventh largest army in the world.” I've recently written about the disturbing culture of police t-shirts, which dehumanize the citizens they serve and make light of police brutality. ("We get up early, to beat the crowds.")

Incidentally, a few notes about Sterling Heights, Michigan, where Sgt. French works. According to the city's website, in 2010, Sterling Heights was rated the safest city in Michigan with a population of 100,000 or more people. It was also named one of the 100 best cities in America to raise a family. In 2008, it had the lowest crime rate of any city in Michigan. From 2005 to 2010 (the last year data was available) it had all of 10 murders, in a city of about 130,000 people. This is the "battlefield" where Sgt. French works. I'd be curious to know what the residents of Sterling Heights would say upon learning that the commander of their city's SWAT team views each of them more as potential combatants than citizens with rights.

The lead essay for the PoliceOne series on militarization is a review of my book by Lance Eldridge. It's titled: "Police militarization and rise of the warrior journalist: Radley Balko’s new book on police militarization — and subsequent articles by him and others — signals the radicalization of America’s discourse on civilian law enforcement."

PoliceOne published an essay by a SWAT leader and police trainer that urges cops to view American streets and neighborhoods as "battlefields," absurdly claims that working as a cop in America is as dangerous as serving in a war zone in Afghanistan, and says cops should look at the citizens they serve as potential combatants.

Yet it is those of us who find all of this troubling who are the "radicals."

Detroit Has Gone To The Dogs... Literally

Zero Hedge,

23 August, 2013

Detroit may be on its way to becoming a ghost town, but the disappearance of homo sapiens from the streets just means the largest US bankrupt city is about to have a new master - man's formerly best friend, in the form of tens of thousands of stray dogs most of which happen to be a particularly vicious breed of pit bulls. Step aside Motown, and say hello to Dogtown.

Bloomberg reports that as many as 50,000 stray dogs roam the streets and vacant homes of bankrupt Detroit, replacing residents, menacing humans who remain and overwhelming the city’s ability to find them homes or peaceful deaths. Dogs which are becoming ever hungrier, and ever less domesticated. "Dens of as many as 20 canines have been found in boarded-up homes in the community of about 700,000 that once pulsed with 1.8 million people. One officer in the Police Department's skeleton animal-control unit recalled a pack splashing away in a basement that flooded when thieves ripped out water pipes. “The dogs were having a pool party,” said Lapez Moore, 30." Well at least someone is having a party.

With everyone concerned about zombies roaming the streets in the Post-New Normal, it appears everyone forgot about the dogs. And especially the "Highland Park Red" pitbull.

Poverty roils the Motor City and many dogs have been left to fend for themselves, abandoned by owners who are financially stressed or unaware of proper care. Strays have killed pets, bitten mail carriers and clogged the animal shelter, where more than 70 percent are euthanized.

“With these large open expanses with vacant homes, it’s as if you designed a situation that causes dog problems,” said Harry Ward, head of animal control.

...

Pit bulls and breeds mixed with them dominate Detroit’s stray population because of widespread dog fighting, said Ward. Males are aggressive in mating, so they proliferate, he added.

One type of fighting pit bull has become known as far as Los Angeles as the “Highland Park red,” named after a city within Detroit’s borders, Ward said.

Their prevalence was clear as Ward and officers Moore and Malachi Jackson answered calls Aug. 19. On a block where vacant houses and lots outnumbered occupied ones, they found four dogs in an abandoned house -- a male and three females, including a pregnant pit bull with a prized blue-gray coat.

For now the biggest casualty of the dog infestation is the long-suffering, and longer-insolvent, USPS.

Aggressive dogs force the U.S. Postal Service to temporarily halt mail delivery in some neighborhoods, said Ed Moore, a Detroit-area spokesman. He said there were 25 reports of mail carriers bitten by dogs in Detroit from October through July. Though most are by pets at homes, strays have also attacked, Moore said.

“It’s been a persistent problem,” he said.

Mail carrier Catherine Guzik told of using pepper spray on swarms of tiny, ferocious dogs in a southwest Detroit neighborhood.

“It’s like Chihuahuaville,” Guzik said as she walked her route.

At two nearby homes, one pet dog was killed recently and another injured by two stray pit bulls that jumped fences into yards, said neighbor Debora Mattie, 49.

***

Four months ago, a woman sitting on her porch on the east side was attacked by two strays that tore off her scalp, Ward said.

“We got those dogs,” he said. “It’s a big difference to that lady that those dogs were gone that day.”

* * *

Last year, there were 903 dog bites in Detroit, according to Ward, adding that most go unreported to police. He said 90 percent are by dogs whose owners are known.

That was before the rabies spread.

Summarizing the surreal reality of Dog Town best is Kristen Huston, who leads the Detroit office of All About Animals Rescue, a non-profit that obtained the Humane Society’s $50,000 grant last year to feed, vaccinate and sterilize pets.

“Technically, it’s illegal to let a dog roam, but with the city being bankrupt, who’s going to do anything about it?”

The good news: for now the strays are dogs. How long before humans are forced to hunt other humans, some of them rabid, vicious killers, roaming the streets of whatever the latest and greatest municipal bankrupt casualty is?

Detroit is bankrupt

Detroit Seeks Bankruptcy, Facing Debts of $18 Billion

Detroit, the cradle of America’s automobile industry and once the nation’s fourth-most-populous city, has filed for bankruptcy, an official said Thursday afternoon, the largest American city ever to take such a course.

NY Times,

18 July, 2013

The decision to turn to the federal courts, which required approval from both the emergency manager assigned to oversee the troubled city and from Gov. Rick Snyder, is also the largest municipal bankruptcy filing in American history in terms of debt.

Not everyone agrees how much Detroit owes, but Kevyn D. Orr, the emergency manager who was appointed by Mr. Snyder to resolve the city’s financial problems, has said the debt is likely to be $18 billion and perhaps as much as $20 billion.

For Detroit, the filing comes as a painful reminder of a city’s rise and fall.

Founded more than 300 years ago, the city expanded at a stunning rate in the first half of the 20th century with the arrival of the automobile industry, and then shrank away in recent decades at a similarly remarkable pace. A city of 1.8 million in 1950, it is now home to 700,000 people, as well as to tens of thousands of abandoned buildings, vacant lots and unlit streets.

From here, there is no road map for Detroit’s recovery, not least of all because municipal bankruptcies are rare. Some bankruptcy experts and city leaders bemoaned the likely fallout from the filing, including the stigma it would carry. They anticipate further benefit cuts for city workers and retirees, more reductions in services for residents, and a detrimental effect on future borrowing.

But others, including some Detroit business leaders who have seen a rise in private investment downtown despite the city’s larger struggles, said bankruptcy seemed the only choice left — and one that might finally lead to a desperately needed overhaul of city services and a plan to pay off some reduced version of the overwhelming debts. In short, a new start.

The decision to go to court signaled a breakdown after weeks of tense negotiations, in which Mr. Orr had been trying to persuade creditors to accept pennies on the dollar and unions to accept cuts in benefits.

All along, the state’s involvement — including Mr. Snyder’s decision to send in an emergency manager — has carried racial implications, setting off a wave of concerns for some in Detroit that the mostly-white, Republican-led state government was trying to seize control of Detroit, a Democratic-held city where more than 80 percent of residents are black.

The nature of Detroit’s situation ensures that it will be watched intensely by the municipal bond market, by public sector unions, and by leaders of other financially challenged cities around the country. Only slightly more than 60 cities, towns, villages and counties have filed under Chapter 9, the court proceeding used by municipalities, since the mid-1950s.

The debt in Detroit dwarfs that of Jefferson County, Ala., which had been the nation’s largest municipal bankruptcy, having filed in 2011 with about $4 billion in debt. The population of Detroit, the largest city in Michigan, is more than twice that of Stockton, Calif., which filed for bankruptcy in 2012 and had been the nation’s most populous city to do so.

Other major cities, including New York and Cleveland in the 1970s and Philadelphia two decades later, have teetered near the edge of financial ruin, but ultimately found solutions other than federal court. Detroit’s struggle, experts say, is particularly dire because it is not limited to a single event or one failed financial deal, like the troubled sewer system largely responsible for Jefferson County’s downfall.

Instead, numerous factors over many years have brought Detroit to this point, including a shrunken tax base but still a huge, 139-square-mile city to maintain; overwhelming health care and pension costs; repeated efforts to manage mounting debts with still more borrowing; annual deficits in the city’s operating budget since 2008; and city services crippled by aged computer systems, poor record-keeping and widespread dysfunction.

All of that makes bankruptcy — a process that could take months, if not years, and is itself expected to be costly — particularly complex.

“It’s not enough to say, let’s reduce debt,” said James E. Spiotto, an expert in municipal bankruptcy at the law firm of Chapman and Cutler in Chicago. “At the end of the day, you need a real recovery plan. Otherwise you’re just going to repeat the whole thing over again.”

The municipal bond market will be paying particular attention to Detroit because of what it may mean for investing in general obligation bonds. In recent weeks, as Detroit officials have proposed paying off small fractions of what the city owes, they have indicated they intend to treat investors holding general obligation bonds as equal, in essence, to city workers — a notion that conflicts with the conventions of the market, where general obligation bonds have been seen as among the safest investments.

Multimedia

Leaders of public sector unions and municipal retirees around the nation will be focused on whether Detroit is permitted to slash pension benefits, despite a provision in the State Constitution that union leaders say bars such cuts.

Officials in other financially troubled cities may feel encouraged to follow Detroit’s path, some experts say. A rush of municipal bankruptcies appears unlikely, though, and leaders of other cities will want to see how this case turns out, particularly when it comes to pension and retiree health care costs, said Karol K. Denniston, a bankruptcy lawyer with Schiff Hardin who is advising a taxpayer group that came together in Stockton after its bankruptcy.

“If you end up with precedent that allows the restructuring of retirement benefits in bankruptcy court, that will make it an attractive option for cities,” Ms. Denniston said. “Detroit is going to be a huge test kitchen.”

Around this city, there was widespread uncertainty about what bankruptcy might really mean, now and in the long term, though leaders of other cities who have been through court cautioned of lingering effects.

“The label sticks with us, unfortunately,” said Daniel E. Keen, the city manager of Vallejo, Calif., which filed for bankruptcy in 2008.

For some Detroiters, recent memories of bankruptcies by Chrysler and General Motors — and the re-emergence of those companies — appeared to have calmed nerves. But experts say corporate bankruptcy procedures are significantly different from municipal bankruptcies.

In municipal bankruptcies, for instance, the ability of judges to intervene in how a city is run is sharply limited. And municipal bankruptcies are a form of debt adjustment, as opposed to liquidation or reorganization.

Here, residents are likely to see little immediate change from the way the city has been run since March, when Mr. Orr arrived to oversee major decisions. A bankruptcy lawyer, he is widely expected to continue to run Detroit during a legal process. Mayor Dave Bing and Detroit’s elected City Council are still paid to hold office and are permitted to make decisions about day-to-day operations, though Mr. Orr could remove those powers at any point.

Mr. Orr has said that as part of any restructuring he wants to spend about $1.25 billion on improving city infrastructure and services. But a major concern for Detroit residents remains the possibility that services, already severely lacking, might be further diminished in bankruptcy.

In 2012, Detroit had the highest rate of violent crime in the nation for a city larger than 200,000, a report from Mr. Orr’s office showed. About 40 percent of the city’s streetlights do not work. More than half of Detroit’s parks have closed since 2008.

The face of collapse - Detroit

Detroit rock bottom: City announces $2.5bn debt default

Detroit said it will stop making payment on $2.5 billion of the city’s massive $18.5 billion debt and has asked creditors to accept 10 cents in the dollar of what the city owes them in a bid to avoid the largest municipal bankruptcy filing in US history.

RT,

15 June, 2013

Detroit Emergency Manager Kevyn Orr said the city would stop making payments on its unsecured debt in a bid to “conserve cash” for vital services like police and firefighters. He further said pension benefits both present and future along with healthcare would face cuts, while control over the city’s water and sewage would be turned over to an independent body.

“We’re tapped out," Orr was quoted by WWJ-TV as saying. "We need to come up with a plan to restructure our debt obligations and our legacy obligations going forward — that is: pension, other employee benefits, healthcare, so on and so forth."

Orr continued that $1.25 billion would be set aside over the next decade, $750 million of which will go towards public safety, including funds for police, fire, streetlights and other endeavors. The remaining $500 million will be for blight removal.

The emergency manager spent two hours with about 180 bond insurers, pension trustees, union representatives and other creditors holding Detroit debt on Friday in an effort to fix fiscal problems which have left the city insolvent.

One bond holder present at the meeting who asked not to be identified told Reuters Orr’s proposal was likely more than debt holders would be able to accept.

"It's just too much. It is an unprecedented amount to ask."

If creditors reject the plan, Detroit could be forced into what would be by far the largest-ever municipal bankruptcy in US history.

Orr said there is a “50:50” chance the city will be forced into bankruptcy and that decision would likely happen in the next 30 days.

"Financial mismanagement, a shrinking population, a dwindling tax base and other factors over the past 45 years have brought Detroit to the brink of financial and operational ruin," Orr said.

In a report issued to creditors on Friday, Detroit’s skyrocketing debt, pension and healthcare obligations will sell to almost 65 percent of total city revenue by 2017, up from the current level of 42.5 percent.

Detroit has also experienced a 26 percent decline in population since 2000, while unemployment surged from 6.3 percent in June 2000 to 18.3 percent in June 2012, further shrinking the city’s revenue base. Meanwhile, the city’s budget deficit is likely to exceed $380 million by July 1.

Orr, who was appointed three months ago by Michigan Governor Rick Snyder to salvage the city’s finances and operations, has been met with skepticism by local residents who have accused him of exaggerating the current situation.

“We feel that the bankers and the creditors who are here today with the emergency manager are not going to negotiate in the best interest of the people of the city of Detroit. And we are saying that the same financial institutions that Mr. Orr is negotiating with today are responsible in large part for the crisis that exists in Detroit,” Abayomi Azikiwe, a protester outside the meeting told PBS.

Leaders of some of Detroit’s 48 public sector unions were also upset by the proposals, with water and sewage workers vowing to strike over the privatization plans.

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