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Billionaire Detroit business leader says "blight is like a cancer"
[DETROIT] Detroit needs to eradicate blighted properties and keep its art collection in order to thrive once it exits bankruptcy, a billionaire business leader told the city's bankruptcy trial on Wednesday. "Blight is like a cancer. Blight grows," Dan Gilbert, founder of Detroit-based mortgage lender Quicken Loans, said after taking the stand in the historic bankruptcy case.
Gilbert, who chaired a presidential task force that cataloged Detroit's wide-spread problem of dilapidated and vacant mostly residential properties, called it an "all or nothing" issue that needs to be tackled head on.
Gilbert, chairman of Quicken Loan's parent company Rock Holdings, was the first high-profile witness called to US Bankruptcy Court by Detroit to support its plan to shed about US$7 billion of its US$18 billion of debt and obligations and plow US$1.4 billion into improving the city.
The plan would spend about US$440 million on blight removal, which Gilbert said is more than halfway to the US$850 million price tag identified by the task force.
Gilbert is often considered one of Detroit's biggest boosters. His companies have snapped up dozens of downtown Detroit buildings, brought in thousands of employees, and donated money to community causes such as acquiring police cars.
He said blight removal was one of Detroit's most pressing problems, along with education, joblessness and crime.
Gilbert, who said his business has as much as a US$1.5 billion investment in Detroit real estate, called the Detroit Institute of Arts, one of the largest and most significant museums in the United States, its leading cultural attraction.
The museum's collection, targeted by Detroit's creditors as a potential source of settlement funds, should not be sold off to help pay for the city's emergence from bankruptcy, Gilbert said.
Financial Guaranty Insurance Co, Detroit's last major hold-out creditor, has advocated tapping the collection to increase recoveries for all of the city's creditors.
In questioning by an FGIC attorney, Gilbert said he could not quantify the museum's economic benefit to Detroit or how selling one or two works would impact the museum.
The so-called "Grand Bargain," a key component of Detroit's debt adjustment plan, would protect the art by giving the city a pot of money raised by foundations, the museum and the state of Michigan to ease pension cuts for city retirees.
Quicken Loans and the Rock Ventures Family of Companies, also founded by Gilbert, have pledged US$5 million to the museum for the grand bargain.
Judge Steven Rhodes began the trial to determine if the city's restructuring plan is fair and feasible on Sept 2. The city's state-appointed emergency manager Kevyn Orr, was set to take the stand Wednesday afternoon. - Reuters