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Detroit enclave built on auto industry struggles under $20M water debt

HIGHLAND PARK, Michigan (AP) — Kevin Houston traces the gutter between Highland Park’s vacant lots and overgrown vacant lot to abandoned dilapidated homes, boarded up shops, and potholed roads. Buried, Fixer Upper and scanned Michigan streets spanned by old houses.

“It’s not a bad place to live,” Houston says. “It’s not the best.”

The area, which is largely surrounded by Detroit, is on the brink of bankruptcy after being unable to pay the bills to utilities that provide drinking water and sewerage services to the once-automobile city. Lost in the midst of a manufacturing transformation, plagued by neighborhood dissatisfaction, neglect and devastating poverty, it is now an example of a blue-collar city that has become a mere skeleton of the past.

In 1930 over 50,000 people lived there. The graceful and spacious residences rivaled some built in Detroit. The city, which is just under three square miles (7.8 square kilometers) of his size, still bears the remnants of the former car tycoon, when manufacturing flourished and money flowed. Today, less than 9,000 people can call it home. Auto companies have long since disappeared, leaving strip malls and retail stores to support the city’s dwindling business tax base.

And Highland Park is considering bankruptcy of the local government because it paid about $20 million to the local water utility. This is a ten-year-old strategy. City of Detroit allowed $7 billion in debt to be erased or restructured — to preserve your financial future.

Troubled cities like Highland Park are the hardest cases to find solutions in America because they have so few assets to build, says his forthcoming book Small Cities Shrinking. said Alan Malak, author of World: Learning to thrive without growing. “

“They have alarming levels of poverty and abandonment,” Malak said. “Cities like Highland Park probably can’t turn things around on their own. They just don’t have the resources.”

Highland Park and such communities were in decline as jobs dried up and families moved, but before the decline began, the automotive and manufacturing industries helped build some of these inner ring suburbs.

In 1907, Henry Ford bought 160 acres of land What is his Highland Park Ford factory? The first mobile assembly line was started at the factory a few years later. Immigrants and other workers want to earn $5 a day flocked to the area.

Then came a building boom, with thousands of houses built along the canopy-covered streets.

“Highland Park was really a shining city on a hill. It was really a great place to live,” said Jeff Horner, professor of urban studies at Wayne State University in Detroit. Horner credits Ford for turning the city into an important and successful suburb, run by his political friends.

Ford to relocate car production to nearby Dearborn in the 1920s. Automakers left their tractor factories in Highland Park, and Chrysler (now Sterantis) set up its headquarters in the city. However, both drifted apart in the 1990s.

As in Detroit and other large cities, white residents began fleeing Highland Park to the suburbs in the 1950s. Jobs followed. About 85% of Highland Park residents are black. Median household income is about $25,000 and about 40% of the population lives in poverty. According to the US Census.

In some areas of the city, neighborhood animosity and neglect are overwhelmingly prevalent. In early February, in an empty apartment infested with rats, authorities found the body 3 aspiring rappers. The trio were scheduled to perform at a Detroit club on January 21st, but disappeared.

“There are very few tax revenues left that built this city,” Horner said. “In inner-ring little suburbs that can’t grow on land, we always have to bring in a tax base. We need to bring in more residents.”

Highland Park said Property taxes for fiscal year 2022 were about $9.6 million.Estimated revenue for the next fiscal year is expected to be about $12.6 million, according to Mayor Glenda McDonald. 2023-24 budget proposal.

Income tax and property tax yield $4.7 million and $2.6 million, respectively. According to the budget, he would also receive $3.5 million in state revenues.

McDonald’s declined to comment because of ongoing court-ordered arbitration over its water debt with the Great Lakes Water Authority.

The debt to the Great Lakes Water Authority dates back at least to the 1990s, when the Detroit Water and Sewerage Authority operated the water system.

In 2014, the state determined that Highland Park was in serious financial trouble and appointed a manager. In 2015, a court awarded a $19 million judgment against the Water Authority against Highland Park. The ongoing arbitration is expected to finalize a plan on how the debt will be paid.

Highland Park has not paid for sewerage services since April 2021 and has paid less than 1% of its water bill since 2012, according to the water department.

The water authority said Highland Park’s non-payment has caused charges in other communities in the system. Officials said these communities would be reimbursed once the judgments were paid.

And those communities “have no sympathy” for Highland Park, said Michigan Citizens Research Council president Eric Rufer.

“They don’t want to float the city anymore and they don’t want to float the debt until the city solves this problem. They want the best for Highland Park, but they don’t want to pay for Highland Park. No,” Rufer said.

The office of Democratic Gov. Gretchen Whitmer said the water department and Highland Park need to find a solution that doesn’t impose costs on homeowners and businesses.

In April, the Highland Park City Council voted 3-2 to ask Mr. Whitmer to expedite the municipal bankruptcy.

The state finance department is investigating the city’s financial review request.

Malak said bankruptcy was just a “first aid” for Highland Park.

“It’s not just the water debt,” Malak said. “The city is unable to provide adequate services or generate enough income to reverse the downward spiral in real estate.

But Houston, a 40-year-old resident who remembers his family living in every home in Highland Park, said he disagrees with the bankruptcy option.

“If that’s the best way out of the situation, then you have to do what you gotta do,” he said.

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