DETROIT — Private industry is blooming here, even as the city’s finances have descended into wreckage.
In late 2011, Rachel Lutz opened a clothing shop, the Peacock Room, which proved so successful that she opened another one, Emerald, last fall. Shel Kimen, who had worked in advertising in New York, is negotiating to build a boutique hotel and community space. Big companies like Blue Cross Blue Shield have moved thousands of workers into downtown Detroit in recent years. A Whole Foods grocery, this city’s first, is scheduled to open in June.
On Friday, just as Michigan’s governor, Rick Snyder, was deeming an outside, emergency manager a necessity to save Detroit’s municipal finances, the once-teetering Big Three automakers were reporting growing sales.
“It’s almost a tale of two cities here,” said Ms. Lutz, who is 32. “I tripled my projections in my first year.”
Around the country, as businesses have recovered, the public sector has in many cases struggled and shrunk. Detroit may be the most extreme example of a city’s dual fates, public and private, diverging.
At times, the widening divide has been awkward, even tense. As private investors contemplated opening coffee bean roasters, urban gardening suppliers and fish farms, Detroit firefighters complained about shortages of equipment, suitable boots and even a dearth of toilet paper.
“You’ve got to walk before you run, and for many years we weren’t even walking,” William C. Ford Jr., executive chairman of the Ford Motor Company, said of the developments of late within Detroit’s private sector. “But now it’s really interesting. Even as the political and financial situations continue to deteriorate, in spite of that, there is very hopeful business activity taking place.”
In the eyes of some, the signs of a private sector turnaround have only served to accentuate divisions: a mostly black city with an influx of young, sometimes white artists and entrepreneurs; a revived downtown but hollowed-out neighborhoods beyond; an upbeat mood among business leaders even as the city’s frustrated elected officials face diminished, uncertain roles under state supervision.
“There’s been way too much focus on the corporations and not enough on the residents,” said Krystal Crittendon, a candidate for mayor and a critic of government incentives, including tax breaks, that have helped encourage some of the projects. “Private businesses are coming in and basically purchasing properties for a penny, but meanwhile there’s no concentration on the neighborhoods and the common folks. We have to be sure everyone participates in this recovery.”
Daniel F. McNamara, the president of the Detroit Fire Fighters Association, described the city’s economic growth as “small little pockets” in an otherwise painful cityscape where services like fire protection have shrunk to too few firefighters and too many shuttered fire companies.
“If you’re a hedged investor, this is great,” Mr. McNamara said. “There are lots of attempts at tremendous things going on. But for you and me, has our world changed any? Not so much. There are so many individual tragedies going on.”
No doubt the picture here remains murky and unfinished. For all the talk of a private sector renaissance, demographers say that much of the economic growth remains mostly around the downtown and midtown sections, a small fraction of a vast 139-square-mile city that is otherwise wrestling with vacant homes, empty blocks, darkened streetlights, crime fears and overburdened police officers. While businesses have returned to Detroit, some others have left, and this city’s most essential problem, its swiftly dipping population, demographers say, has yet to reverse itself.
This city grew up around the automobile, becoming home to more than 1.8 million residents by 1950, before the population began sinking along with a decline of manufacturing, wide-scale flight to the suburbs, and the travails of the American automobile industry. From 2000 until 2010, Detroit’s population dropped by 25 percent, the biggest percentage loss during that decade for any American city with more than 100,000 people, aside from New Orleans, which had been pummeled by a hurricane. About 707,000 people live here now, by recent estimates, though some demographers say the city has already lost more residents.
But so much misery also brought newcomers: out-of-town investors who learned of properties for sale at prices unimaginable in other cities and young entrepreneurs, artists and musicians who said they valued Detroit, in part, for its grit and its seemingly wide open spaces, the very elements that had made some people flee. Business incubators, like TechTown, began emerging, and Michigan business executives began reinvesting in the city, among them figures like Dan Gilbert, the founder of Quicken Loans, who has bought building after building downtown.
Meanwhile, Detroit’s car companies have experienced what had once seemed like the unlikeliest of comebacks after the financial crisis. General Motors and Chrysler emerged from bankruptcy filings and government bailouts to far more upbeat signs — and with investments in Detroit. Not long ago, Chrysler moved its regional marketing team into a downtown building here, and an assembly plant in the city, Jefferson North, was retooled to produce a new version of the Jeep Grand Cherokee sport utility vehicles, among the company’s hottest sellers.
Governor Snyder’s announcement last week that the city had reached the point of financial emergency drew new, widespread awareness to the crisis, but business leaders here said they had been well aware of the government’s misery — and defiantly moving on in the face of it — for years. In a way, some viewed the announcement as merely a public acknowledgment of a long-held truth, raising the prospect that the public sector might eventually be sorted out and catch up to industry.
“Everything has sort of been operating on separate tracks,” said Kurt Metzger, director of Data Driven Detroit, a nonprofit organization that tracks demographic, economic and housing trends in the region. “The business and philanthropic communities had basically just decided to go ahead in spite of government.”
Still unanswered, though, is how a shifting government alignment may change the business climate. Mr. Snyder’s decision would shore up Detroit’s finances with a state-assigned manager granted sweeping powers to merge or eliminate city departments, call for the sale of city assets, and adjust contracts with labor unions. That move has created new uncertainty for some entrepreneurs about what exactly that may mean for business.
“The honest answer is, I just don’t know,” said Ms. Kimen, the hotel and community space developer, whose plans for the Eastern Market neighborhood include something like a cross between a museum and a public library. She said she had at various points considered Maine, Memphis, even Alaska before she left New York City in 2011 for Detroit. “I’m here and I’m committed,” she said, adding, “This city has had so many heartbreaks.”
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