Rebuilding Detroit, Responsibly

By: Tom Croft

A virtual national Kickstarter campaign has sprung up in the last two years to rebuild Detroit, which was hammered by the Great Recession, and strangled by decades of plant closings in the auto and manufacturing sectors, dramatic populations losses, and failing civil society institutions.

From our perch in the Steel city, which suffered the terrible collapse in the metals industry during the 1980s, we think the help and attention being offered to the Motor City is a good thing. Because, three decades later, cities like Pittsburgh and many Mon Valley milltowns are still bankrupt, (though many of our communities are well on the road to recovery).

The can-do energy happening in Detroit is remarkable and we applaud the people who are making it happen. But take it from us, Detroit needs more than infusions of "pop-up" projects and cool-sounding entrepreneurial initiatives. Detroit needs huge investments in many of their stressed, marginalized neighborhoods and smart capital for the real economy, not just more downtown revitalization. Turning around the Motor City will not be easy and will not come quick.

One of our latest posts below provides a short report on the new AFL-CIO Housing Investment Trust's (HIT) innovative program to repair and rehab up to 300 single-family homes and properties, a down payment on a scalable project that could make a big difference for Detroit residents. In 2012, we examined the strategies of pension funds and worker-friendly private capital funds to rebuild the manufacturing base of the region in a lively Heartland RoadShow in Detroit. The work of HIT and other responsible housing infrastructure groups adds to those efforts. (See:

We've also posted a remarkable piece by the late Rick Cohen, "A City in Remission: Can the "Grand Bargain" Revive Detroit?" that explains some of the many conflicted and tainted initiatives to "save Detroit" and what that has meant for retirees including firefighters and cops whose pensions were cut as part of major restructuring partly driven by foundations.

Currently, we will not get into the recent man-made disasters in Detroit and Flint wrought by the disgraced Michigan Governor and his austerity policies and bad privatization schemes. Those myopic, ill-planned policies have resulted in lead contamination in the Flint water system and wildcat teacher strikes in Detroit due to unsafe, unhealthy conditions in the schools. Many of the state's so-called emergency managers have been fired or resigned, and as Flint resident Michael Moore has suggested, maybe the guilty parties should see some jail time. We may return to this tragedy in the future.

For now, we are siding with the people of Detroit who are trying to dig out of the mess and working to democratically control their own fate. We also hope to demonstrate that workers' capital is being invested responsibly, with more to come, to renew the city and many older industrial communities across the country.

A City in Remission: Can the “Grand Bargain” Revive Detroit?

By: Rick Cohen

Donna Murray-Brown, CEO of the Michigan Nonprofit Association, lives the duality experienced by many Detroiters faced with tough decisions to make for the city’s economic recovery. On the one hand, she is a nonprofit executive, a public policy advocate, and—to some extent—a player at the table in the discussions of what Detroit needs to do to recover from the brink of economic collapse and chart a path toward citywide recovery; on the other hand, she is the daughter of a senior Detroiter whose retirement pension was reduced as one of the components of the partly foundation-funded “grand bargain” that became the blueprint for Detroit’s escape from a prolonged and debilitating bankruptcy. Her father’s perception is that the grand bargain and other elements of Detroit’s rescue involve things “being done to him rather than for him.”1

In a way, that is the real challenge of Detroit’s recovery: the contrast between bold, innovative ideas that envision a very different Detroit from the prosperous manufacturing metropolis of half a century ago, and the conditions of longtime residents of the Motor City—a population that is in high majority black, mostly lower income, in many cases unemployed or underemployed, and at risk in the tens of thousands of displacement due to tax foreclosures, mortgage foreclosures, unpaid water bills, and—surprisingly for a city that has huge tracts of vacant, dilapidated buildings—pockets of upscale gentrification. How does Detroit come back from the verge of economic collapse and municipal bankruptcy to devise and implement a future for long-established Detroiters and new residents?

A History of Unrealized Plans and Hopes

In the wake of Detroit’s declaration of municipal bankruptcy and complex plan involving state, municipal, and philanthropic resources to escape that bankruptcy, the city still looks and feels to many Detroit residents like it is staggering along a difficult trajectory toward its goal of sustainable revitalization.

Detroit is the poorest large city in the United States. It has significant unemployment—officially, nearly 13 percent in August 2015, and an unofficial rate that may well be double or triple that, if we take into account people having given up looking for jobs or whose unemployment benefits have expired. It also has significant underemployment, due to the automotive industry’s having shrunk and largely decamped—leaving vast tracts of vacant land and buildings across the 139-square-mile Detroit footprint as an additional result.2 Plans to bring Detroit back from the edge of collapse and despair aren’t new to Detroiters; as the city has slid in population and economic significance over the past few decades, reams of renewal initiatives emerged from public-sector, private-sector, and philanthropic sources, with the aim of jump-starting the community’s flagging socioeconomic dynamic and reversing what seemed to many an inexorable decline.

One such initiative, the waterfront Renaissance Center, aimed to capture residents and business headquarters that were leaving for the suburbs or beyond. During the administration of Mayor Coleman A. Young (1974–94), the Renaissance Center was completed—along with other major projects, including the Detroit People Mover, an elevated train meant to transport people through the Downtown area, and the redevelopment of the Joe Louis Arena, home of the Detroit Red Wings National Hockey League team. (The arena is already outmoded and about to be replaced.) Mayor Dennis W. Archer (1994–2002) launched a variety of community-oriented initiatives (though his major economic achievement for the city may have been his success in making casinos a linchpin of Detroit’s Downtown activity) and, like his predecessor, promoted major sports stadium projects, realized after his term in office (Ford Field, where the National Football League Detroit Lions play, and Comerica Park, home to Major League Baseball’s Detroit Tigers).


Home Repair Program to Invest Up to $30 Million to Rejuvenate Blighted Detroit Neighborhood

AFL-CIO HIT and community partners to renovate 300 single-family homes

The AFL-CIO Housing Investment Trust (HIT) announced today that it will invest up to $30 million in the Detroit Neighborhood Home Repair Program, a partnership with leading civic and community organizations to rejuvenate up to 300 single-family homes and properties that have faced decades of blight.

“It is wonderful to see the AFL-CIO, an organization that played such an important role in building Detroit, investing so much to help build Detroit again through the Housing Investment Trust,” said Detroit Mayor Mike Duggan. “This will create jobs and training opportunities to Detroit residents, and will do so much to strengthen our neighborhoods.”

While current programs have made progress in countering decades of disinvestment and high foreclosure rates, it lacked a comprehensive strategy to erase the challenges associated with restoring Detroit neighborhoods. The HIT, a fixed-income investment company, aims to create a sustainable and replicable model program to acquire, repair, and finance abandoned homes and properties in the Detroit Land Bank Authority inventory utilizing union labor over the next three to five years.

“Union workers using union pension money to rebuild homes for working families is the right formula for rebuilding Detroit,” said AFL-CIO President Richard Trumka.


AFT's Dan Pedrotty Joins the 2016 Class of Presidential Leadership Scholars

Congratulations to Heartland Capital Strategies Governing Board Co-Chair, Dan Pedrotty!

WASHINGTON—American Federation of Teachers President Randi Weingarten on the selection of AFT Pensions and Capital Strategies Director Dan Pedrotty as a member of the Presidential Leadership Scholars class of 2016:

"This is a great honor and recognizes the passion and leadership that Dan brings to everything he does, from his work promoting infrastructure investment in the United States by our members' pension funds, to our efforts to protect and expand retirement security and long-term value creation in the capital markets."

The Presidential Leadership Scholars is a unique leadership development initiative that draws upon the resources of the U.S. presidential centers of Lyndon B. Johnson, George H.W. Bush, William J. Clinton and George W. Bush. These presidential centers have partnered to bring together a select group of leaders who have the desire and capacity to take their leadership strengths to a higher level in order to help their communities and our country.

Pedrotty is the director of Pensions and Capital Strategies at the 1.6 million-member American Federation of Teachers. He also chairs the Center for Retirement Initiatives at Georgetown University, and serves on the Advisory Council for the Trustee Leadership Forum for Retirement Security at the Harvard Kennedy School. The AFT program organizes workers' capital (pension funds and savings plans) into a voice for corporate accountability and retirement security. Dan also represents the AFT with lawmakers and agencies on the issues of capital markets and corporate governance. He graduated from Dickinson College with a B.A. in political science in 1999 and from Wake Forest University Law School in 2002.

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