Created Equal: What Detroit’s credit bump says about the financial health of the city, residents 

Detroit’s credit rating is moving up — nearly 10 years after the bankruptcy — which means government operations are normalizing and avoiding irresponsible debt.

The city earned 10 step increases since its bond rating dropped to an all-time low in June 2013 — a rise few would have expected following its exit from the nation’s largest municipal bankruptcy in history. Last month, Moody’s Investors Services gave the city a rare two-notch bond rating increase, from Ba1 to Baa2, with a positive outlook for the future.

However, many Detroit residents still struggle with limited opportunity and carry collective debts that put real strain on the city’s financial foundation.

On today’s episode of Created Equal, host Stephen Henderson spoke with Chase Cantrell, a local community developer, and researcher Amanda Nothaft about what the bond rating increase means for both the city and its residents.

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Guests:

Chase Cantrell is the founder and executive director of Building Community Value and a former real estate and corporate attorney. In a recent op-ed for the Detroit Free Press, Cantrell noted that while the improved credit rating is positive for the city, there is still much more work to be done to improve issues not reflected in the score. 

“The whole goal [of these ratings] is to get more revenue in the door. That’s what these rating agencies want to see,” he said. “And when we’re starting to look at the risks that it outlines, the credit score is impacted most by good governance and revenue and paying down debt. But the social risks…population, and crime and income, those things don’t really have a great impact on the score.”

Amanda Nothaft is the director of data and evaluation at the University of Michigan’s Poverty Solutions. She says when it comes to tax rates and investments and retaining residents, it all goes back to balance.

“It’s really hard to attract people to a city if the services don’t offset what you’re paying in taxes.” Nothaft said. “…Supporting the people who’ve always been here to allow them to stay here will help further offset population loss.”

Listen to Created Equal with host Stephen Henderson weekdays from 9-10 a.m. ET on 101.9 WDET and streaming on-demand.