28 August 2013

Owner protests as tax debt sends home into Oakland County auction

Story originally appeared on the Detroit News.

Highland Township— Leo Ortkras has lived in his home off Duck Lake for 37 years, rebuilding the dilapidated cottage he purchased on a land contract and turning it into what he calls “a nice little piece of property on the lake.”

On Monday, Ortkras’s home will go up for auction through Oakland County because he failed to pay back taxes on the property. Ortkras says that would be understandable, except he has the money to pay and the county won’t take it now that he’s missed the deadline.

“I’m going to lose my home and all the equity in the house because I owe $12,400,” said Ortkras, a concrete contractor. “It’s something I’ve worked my whole life for and they are just going to take it.”

According to state law, Oakland County Treasurer Andy Meisner is doing exactly what he must, but that has prompted some people to question whether the law needs to be changed.

Meisner says his office contacted Ortkras no less than 10 times in the past two years, even offering him a $25 a month payment plan. After paying off back taxes for 2009, Ortkras never accepted a payment plan for outstanding taxes he owed for 2010 onward, Meisner said.

Ortkras says he didn’t know about the payment plan program and that he was notified in April that he had failed to pay the taxes on his 1,186-square-foot property with an assessed value of $83,340. Three weeks ago, a sign appeared on his lawn declaring the property up for auction.

Ortkras has a history of several federal and state liens being placed against his property dating to 1997, money woes he attributes to the economy.

“I haven’t done any new construction in six years,” he said. “I used to make a lot of money doing it, but the economy’s been terrible for building.”

County treasury officials are required by law to follow through on auctioning properties to recoup unpaid taxes and fees.

For most delinquent owners, foreclosure becomes official on March 31 following three years of unpaid taxes, at which point the homeowner has no more right to the property. . To prevent situations like the one Ortkras is facing, Oakland County has offered payment plans to homeowners who know they are at risk but want to save their homes.

“I understand that there have to be deadlines, but if the deadline is April 1, you should allow the homeowner to pay up until the last minute of the auction,” said Oakland County Commissioner Bob Hoffman, R-Highland, who is working with Ortkras.

Meisner said he has been a proponent of allowing county treasurers more flexibility in the state law, but his hands are tied.

“If we think this is a genuine issue, we don’t talk to the guy whose job it is to administer the law,” he said. “We have to talk to lawmakers.”

Ortkras isn’t the only owner listed on the deed. He bought it with a woman he was living with at the time, Mary Lynne Havey, who now spends most of the year in Florida but also has a house in White Lake Township. She says she was never notified of the sale from the county and can’t believe the house would be up for auction.

“I’ve seen the commercials with Andy Meisner talking about the auctions and how you can get your dream home,” she said. “But what they don’t tell you is you get these houses on somebody else’s bad luck.”

Wayne County Treasurer Raymond Wojtowicz recently changed his office’s policy, which had allowed taxes to be paid up to the point of sale. Dearborn Heights sued the treasurer after being denied the right to purchase a foreclosed property on South Beech Daly last year, but lost a Wayne County Circuit Court ruling in the case earlier this year.

Oakland County will auction off properties in townships and villages on Monday, property in cities on Tuesday and properties specifically in Pontiac on Wednesday. According to a listing with the county, there are 1,073 properties for sale in the auction. Ortkras and Havey are prohibited from bidding on the property, which requires a minimum bid of $12,211.

In the meantime, Ortkras and Havey are working with lawyers to try to get a judge to halt the sale, but they don’t have much hope.

“I don’t want to lose my home,” said Ortkras. “It’s a very nice house and I take care of my property. I’ve just been trying to get by.”

Meisner said the county “doesn’t want anybody’s property.”

“We want to promote homeownership,” said Meisner. “Ultimately what it comes down to is if people take responsibility and follow the rules.”

U.S. new-home sales plunge as mortgage rates rise

Story originally appeared on the Detroit News.

Washington — Americans cut back sharply in July on their purchases of new homes, a sign that higher mortgage rates may weigh on the housing recovery.

The Commerce Department said Friday that U.S. sales of newly built home dropped 13.4 percent to a seasonally adjusted annual rate of 394,000. That’s the lowest pace in nine months. And it is down from a rate of 455,000 in June, which was revised sharply lower from a previously reported 497,000.

New-home sales have risen 7 percent in the 12 months ending in July. The annual pace remains well-below the 700,000 that is consistent with a healthy market.

The housing market has been one of the strongest performers this year in an otherwise sluggish economy, helped by steady job gains and low mortgage rates. But mortgage rates have risen a full percentage point since May and have started to steal some of the market’s momentum.

“The spike in mortgage rates is slowing the pace of improvement,” Dan Greenhaus, chief global strategist for BTIG, an institutional brokerage, said in an email. “Given the speed at which housing was improving, and the growing talk of a renewed bubble, some moderation, assuming it doesn’t materially worsen, is not a terrible outcome.”

In July, builders began work on the fewest single-family homes in eight months. And mortgage applications from potential buyers have fallen since rates have risen more than a full percentage point.

The impact of higher mortgage rates has surfaced in the new-home market faster because the July sales report reflects signed contracts. Sales of previously occupied homes reached a nearly four-year high last month. But that report measured completed sales, which typically reflects mortgage rates locked in a month or two earlier.

The jump in previously occupied home sales likely reflected a rush by home buyers to lock in lower rates. Some economists expect those sales to fall back in August.

Even so, most economists expect the housing recovery will persist. Mortgage rates remain relatively low by historical standards. The average rate on a 30-year mortgage this week was 4.58 percent, according to Freddie Mac.

Slower sales pushed up the supply of new homes for sale to 171,000 at the end of July, the most in more than two years. Tight supplies of new and previously owned homes have led to sharp price increases. An increase in the supply could moderate those price gains.

Though new homes represent only a fraction of the housing market, they have an outsize impact on the economy. Each home built creates an average of three jobs for a year and generates about $90,000 in tax revenue, according to data from the homebuilders association.

Many Michigan businesses struggle to grasp Obamacare

Story originally appeared on the Detroit News.

Auburn Hills business owner Bill Kittle still isn’t sure how the federal law will impact his small company.

“I’m looking for the complete idiot’s guide to the affordable care act,” said Kittle, whose company tracks the fiscal health of local governments and school districts and employs a handful of full- and part-time workers.

The owner of Munetrix is typical of Michigan’s 800,564 small business owners. Many are still in the dark about the rules and requirements of federal health care reform, also known as Obamacare or the Affordable Care Act, and how it will impact their bottom line, according to business leaders, insurance officials and independent agents interviewed by The Detroit News this week.

“Most small employers haven’t really grasped it yet,” said Joe DiCresce, vice president of Brown and Brown, a Detroit-based independent insurance agency. “A lot of them have tried not to pay attention to it until they really had to, and now they’re being forced to pay attention to it.”

The health insurance law hopes to add millions of Americans to insurance rolls through a combination of reforms, including added responsibility on individuals and businesses, and expanded Medicaid.

Although various components have been implemented, the Obama administration has postponed an employer mandate until 2015. That will require businesses with 50 or more employees to provide comprehensive insurance to their workers. All individuals, however, must have insurance by Jan. 1. That includes employees waiting for their firms to meet the federal requirement by 2015.

But business owners still face a litany of requirements, such as notifying their employees by Oct. 1 about the Michigan health insurance exchange.

Many independent business owners have found themselves too busy cutting hair, fixing cars, stocking shelves or providing consulting services to get up to speed on the complex Affordable Care Act, said Charlie Owens, state director of the National Federation of Independent Business in Michigan. “Every minute, every hour they’re spending on this, they’re not growing their business,” Owens said. “No one got in business to administer the Affordable Care Act.”

Misinformation abounds

Jane Johnson, president of Rochester Hills-based Osco Inc., which designs and manufactures injection molding systems for the plastics industry, said she’s tried to stay on top of law, but that’s been difficult because of the many regulation changes handed down by the Obama administration. “Even though you have plenty of access to information, it keeps changing,” Johnson said.

There’s also a lot of misinformation circulating in the business community, Owens said.

“There’s a big void between what they think they know, and what they actually know,” said Owens, who’s been trying to get his 10,000 Michigan members of the National Federation of Independent Businesses up to speed. “A lot of them read about the change in the employee mandate and they think they don’t need to know anything for a year — that’s not the case.” Owens said there are many things businesses need to know now.

Employers, for example, are required to provide each employee with a notice by Oct. 1 informing them about Michigan’s health insurance exchange. Businesses also should know that after January, the waiting period for workers to qualify for company-sponsored health insurance can’t be longer than 90 days.

On the up side, owners with fewer than 10 employees could qualify for tax credits equaling up to 50 percent of insurance costs if they choose to buy policies for their workers.

Business organizations and health insurers, including Blue Cross Blue Shield of Michigan, have been holding workshops on the law, and the Small Business Association of Michigan has launched a service, ACANotice.com, to help small businesses mail out notices about the health exchange to their workers.

John Dunn, vice president of middle- and small-group business for Blue Cross Blue Shield of Michigan, said hundreds of business owners have attended his workshops.

“A lot of small employers didn’t realize if you are a small employer (with fewer than 50 employees), you are not subject to the employer mandate” to provide insurance or pay a penalty, “and if they don’t give notice (about the health insurance exchange), they will be subject to fines,” Dunn said. “The last big area is we try to educate them in is how their (insurance policies) are going to be priced.”

Costs will go up

Amid all the uncertainty about the law, there is one thing employers with 50 or more employees know for sure. They’re going to pay more — and for Johnson, that presents an agonizing dilemma.

“Years ago, we paid 100 percent of our health care for everyone, whether it was for a family or a single,” said Johnson, who employs 35 workers at Osco. “We still pay 65 or 70 percent.

“I suspect we’ll be forced to make some sort of alterations, but we always want to take care of our employees. We’re not ones to say ‘Just go to the exchange,’ so we’re really going to have to struggle with our decision. We’re kind of a family here and it’s important to us.”

Milan Gandhi, vice president of Med-Share Inc., a Southfield a diagnostic imaging provider, said the Affordable Care Act will be good for business — more people will have insurance to pay for medical tests. The company has five imaging centers and 40 mobile imaging units.

But with 90 full-time employees, the company’s health insurance costs also will increase — by about $2,000 per employee. It would be cheaper to give workers a $4,000 stipend to buy their insurance on the health exchange, but that’s an option the company won’t consider.

“We’ll find a way (to afford health insurance) because it’s important to us,” Gandhi said. “But it’s a strain for sure on our company, and that doesn’t matter what industry we’re in.”

19 August 2013

24/7 Wall St: America's favorite summer towns

Story originally appeared on USA Today.

Summer tourism provides a needed boost for many American cities. For some regions, the influx of visitors and people with summer homes is absolutely vital to the local economy.

In over 25 of the nation's metropolitan areas, more than a fifth of homes and rental properties are vacant for at least a part of the year. In many cases, this is caused by hard times and weak demand. In some, however, it is because the regional economy is seasonal, and needs to accommodate potentially millions of visitors over the course of a few months. Using U.S. Census Bureau vacancy data, 24/7 Wall St. reviewed metropolitan areas that serve as popular summer destinations, where more than half of property vacancy is due to seasonal use. These are America's favorite summer towns.

Most of the destinations with high seasonal vacancy are located in the northern part of the country. This is likely because unlike many southern vacation destinations, some of these areas -- which include Cape Cod, Mass. and Portland, Maine -- largely close down for the winter.

An influx of people during the summer months comes from two sources. The first is tourism. All of the cities on this list have lots of attractions, restaurants, museums, and amusement parks to accommodate short-term visitors. The majority of summer destinations are on the ocean, and all feature some major body of water. Naturally, these places are usually hospitality-based economies. Nationally, 9.4% of the working population is employed in the accommodation or entertainment industry, but in seven of these 10 summer destinations, it is more than 11.5%. In Ocean City, more than 30% of jobs are in these categories.

In addition to tourism, many of these destinations are popular locations for second homes. Places like Ocean City, N.J., Cape Cod, Mass., and Wenatchee, Wash. all have a significant number of summer residents, often primarily people from nearby metropolitan areas. Possibly as a result, the median home price in many of these places tends to be higher than the nation as a whole. The median home price in Cape Cod is more than double the national median.

In some of these communities, seasonal visitors vastly outnumber the year-round population. This means that employment tends to skyrocket in the summer months. In Ocean City, for example, employment jumps from less than 35,000 people in January to more than 50,000 each summer.

In order to identify America's summer destinations, 24/7 Wall St. reviewed the metropolitan statistical areas with at least 20% of homes and rental properties vacant at some point during the year according to the U.S. Census Bureau. Of these, we identified metro areas where over half this vacancy was the result of seasonal, recreational, or occasional use. In addition, we spoke to local chambers of commerce to identify seasonal destinations where the majority of occasionally-used properties were not intended for the summer months. We also considered home values and the percentage of residents employed in the arts, entertainment, recreation, accommodation, and food services, all from the Census Bureau for 2011. We additionally reviewed monthly changes in nonfarm employment from the Bureau of Labor Statistics.

These are America's favorite summer towns.

10. Atlantic City-Hammonton, N.J.

> Pct. vacancy for seasonal use: 50.7%
> Vacancy rate: 21.3% (24th highest)
> Entertainment & accommodation employment: 31.1% (the highest)

More than half of all vacant homes in the Atlantic City area are used for seasonal, recreational, or just occasional purposes. This is due in part to the inflow of tourists and vacationers — over 30 million each year, according to New Jersey's official tourism website. Atlantic City is especially well known for its famed boardwalk, its beaches, and, perhaps most of all, for its casinos. Among the major casinos in Atlantic City are Caesars, Harrah's and the Trump Taj Mahal. However, casinos in Atlantic City have continuously lost money in recent years, and two years ago the state took over the tourism district in order to help the gaming industry survive.

> Pct. vacancy for seasonal use: 50.8%
> Vacancy rate: 26.2% (12th highest)
> Entertainment & accommodation employment: 9.4% (158th highest)

The Niles-Benton Harbor area, which consists entirely of Berrien County, is located on the southeastern shore of Lake Michigan. The lakeside destination is a popular location for summer homes, including for families from the Chicago area, which is less than a two-hour drive away. As of 2011, over 10,000 homes in Berrien County were used either seasonally or only occasionally. Many homes in the area, especially in Saint Joseph, can often exceed $1 million. Among the area's draws are its beaches and the Krasl Art Center.

8. Wenatchee-East Wenatchee, Wash.

> Pct. vacancy for seasonal use: 51.9%
> Vacancy rate: 20.6% (26th highest)
> Entertainment & accommodation employment: 12.1% (45th highest)

The Wenatchee area is popular with Seattle residents looking for second homes. Numerous upscale properties surround Wenatchee. Homes in the area tend to be fairly expensive, with a median value of more than $234,000 as of 2011, well above the U.S. median of $173,600, and prices can reach well into the millions. One of the primary attractions for tourists is the Wenatchee River, which flows into the Columbia River — splitting Wenatchee and East Wenatchee. While these second homes are used in the winter, they are especially popular in the summer months. Visitors to the area enjoy hiking along the Apple Trail and visiting Lake Wenatchee State Park.

7. Wilmington, N.C.

> Pct. vacancy for seasonal use: 55.4%
> Vacancy rate: 26.6% (11th highest)
> Entertainment & accommodation employment: 11.5% (54th highest)

More than one quarter of Wilmington area homes were vacant in 2011, of which 55% were used largely for seasonal purposes. Among the tourist destinations in the area are multiple beaches and popular destinations, including Figure Eight Island and Bald Head Island. As tourists arrive each summer, leisure and hospitality employment jumps, last year adding over 5,000 jobs between the start of the year and the end of the summer. This year, leisure and hospitality employment reached a record high, with over 25,000 workers in the sector.

6. Myrtle Beach-North Myrtle Beach-Conway, S.C.

> Pct. vacancy for seasonal use: 59.6%
> Vacancy rate: 42.1% (2nd highest)
> Entertainment & accommodation employment: 19.9% (4th highest)

Vast beaches, numerous golf courses and affordable prices drive tourists to Myrtle Beach each year. During the summer, employment in the Myrtle Beach area swells as tourists arrive. In 2012, employment jumped from 103,000 at the start of the year to over 125,000 in the summer. As of 2011, nearly 20% of area workers were employed in entertainment, accommodation, or food services jobs, the fourth highest percentage in the nation. That same year, over 42% of Myrtle Beach homes were vacant, the second highest percentage in the nation. Nearly 60% of these homes were vacant due to seasonal or only occasional use, close to double the national percentage.

5. Portland-South Portland-Biddeford, Maine

> Pct. vacancy for seasonal use: 70.3%
> Vacancy rate: 20.0% (29th highest)
> Entertainment & accommodation employment: 8.7% (150th lowest)

With a diverse arts and entertainment scene, and among the most per-capita restaurants in the country, the city of Portland, Maine, gets more than 4 million visitors each year. Most of these visitors come during the summer months. Each summer, the Portland metro area adds between 10,000 and 15,000 jobs. Located on the southern coast of Maine, the region is a popular destination for tourists and people with summer homes alike. According to the Portland Chamber of Commerce, Peaks Island, a popular destination for tourists, has a year-round population of 1,000, which roughly triples during the summer months.

4. Flagstaff, Ariz.

> Pct. vacancy for seasonal use: 75.3%
> Vacancy rate: 30.0% (7th highest)
> Entertainment & accommodation employment: 20.1% (3rd highest)

Flagstaff is a popular summer destination for residents of Phoenix, which is roughly two hours away by car. Approximately 18% of the region's homes are second homes and, according to the Flagstaff Chamber of Commerce, most of these are for summer use. Because of its high elevation — roughly 7,000 feet above sea level — the area is much cooler than the rest of Arizona, making it popular among visitors and state residents alike. According to the Chamber of Commerce, the average temperature in Flagstaff is approximately 30 degrees cooler than Phoenix. As of 2011, more than 20% of the working population was employed in arts, entertainment, recreation, accommodation, and food services — the third-highest percentage in the country.

3. Glens Falls, N.Y.

> Pct. vacancy for seasonal use: 78.0%
> Vacancy rate: 23.2% (20th highest)
> Entertainment & accommodation employment: 9.6% (144th highest)

The Glens Falls area had over 15,000 vacant properties at some point in 2011, of which 78% are seasonal. The area is home to Lake George, a popular travel and summer home destination. Property in the Glens Falls area is not as expensive as many other summer destinations. The median home value in 2011 was just $162,500, lower than the national median home value of $173,600. The Glens Falls area also serves as a gateway to the Adirondacks National Park, a very popular summer destination for people in the northeast.

2. Barnstable Town, Mass.

> Pct. vacancy for seasonal use: 89.4%
> Vacancy rate: 41.3% (3rd highest)
> Entertainment & accommodation employment: 11.9% (48th highest)

In Barnstable County, otherwise known as Cape Cod, 41.3% of homes and rental properties were vacant at some point in 2011, and nearly 90% of those were empty due to seasonal or recreational use. The Cape Cod National Seashore, the first designated National Seashore in the country, has 115 public beaches and gets well over four million visitors each year. In comparison, the Cape has roughly 215,000 permanent residents. In the summer months, the area adds tens of thousands of jobs. According to Michele Pecoraro, vice president of operations at the Cape Cod Chamber of Commerce, the majority of visitors come from the greater Massachusetts area, and many Boston residents have second homes there.

1. Ocean City, N.J.

> Pct. vacancy for seasonal use: 92.3%
> Vacancy rate: 58.1% (the highest)
> Entertainment & accommodation employment: 18.6% (5th highest)

More than 58% of all homes in Ocean City were listed as vacant by the U.S. Census Bureau, by far the highest percentage in the nation. But Ocean City is hardly a ghost town: more than 92% of these homes are used for seasonal, recreational, or occasional use. As the summer rolls around, people flock to their homes in the area, which are among the most expensive in the nation, with a median value, as of 2011, of $323,100. That year, 6.8% of homes in the area were worth over $1 million, one of the highest percentages in the nation. Much of the area's economy revolves around accommodating and entertaining tourists and vacationers. Job in in these functions accounted for over 18% of all employment in 2011.

15 August 2013

Popcorn lid from Grand Rapids shakes up theaters

Story originally appeared on the Detroit News.

Grand Rapids — A mid-Michigan family is shaking up the movie theater popcorn scene.

Justin Kovitz, 22, a Mount Pleasant college student, and his father, Ray Kovitz, have spent the past year developing and selling a plastic lid that snaps over the rim of the ubiquitous popcorn bucket. With a few shakes, moviegoers can then evenly distribute butter or toppings over their popcorn. The lid also serves as a bowl or snaps on to take home uneaten popcorn. They call it Shake N’ Share, according to The Grand Rapids Press.

The lid is made at Display Pack in Grand Rapids. The Kovitzs have sold about 220,000 units and have invested more than $150,000 in the venture, which they say projects to hit 1 million units sold by the end of the year.

They don’t plan to stop with movie theaters. They are negotiating with distributors to have the lids in sports facilities and other venues.

“If it wasn’t for Justin, there wouldn’t be any of this,” Ray Kovitz told the newspaper. “Sometimes you just have to go for it, and that’s what he did.”

His son got the idea last November at a theater in Mount Pleasant. As the Central Michigan University business student watched patrons fumble and spill popcorn, the lid idea dawned him.

“It just clicked in my head,” said the younger Kovitz, who then took the idea to his father.

Ray Kovitz, a manufacturers’ representative in the chemical and coating business, said he’s been pitched many ideas but this was different.

“Most of the time when they come to you with ideas, it’s either already been done before or it’s something I don’t understand, like an app,” he said. “This one kind of rang true. It sounded like something that should be done.”

They applied for design and utility patents, and settled on Display Pack, a family-owned packaging company, as the manufacturer.

In April, an industry writer for the Las Vegas Weekly covering CinemaCon, the annual trade show for the National Association of Theater Owners, called Shake N’ Share the “kind of basic, convenient advancement that movie theaters should embrace.”

The lid is now available at theaters in Florida, Texas, Tennessee, Utah, California and Washington.

Michigan Safety Net for Boomers Frays on Bankrupt Detroit

Story originally appeared on Bloomberg.

There’s a made-in-Michigan quality to Art Reyes, a third-generation autoworker with a pension, retiree health benefits and income that enabled him to send three of his four children to college.

He’s a product of the old Michigan, which gave birth to organized labor, worker protections and wages that propelled the middle class. That Michigan is almost gone. Now overseeing the nation’s largest municipal bankruptcy in Detroit, the state is at the forefront again, this time playing host to the unraveling of the homemade fabric that cloaked and comforted working families for generations.

“I’m literally one of the last at my facility to have a defined pension and health care as a retiree,” said Reyes, 45, a General Motors Co. employee and president of UAW Local 651 in Flint. His unit has 800 members, down from 9,000 when he joined in 1991.

Just as the bankruptcy of Detroit, the city that put the nation on wheels a century ago, is a symbol of urban decay, the effort to fix it through cost-cutting measures may set a stricter made-in-Michigan standard for the rest of the U.S.

Related: The $1M Check That Sat in a Drawer: How Detroit Went Bust

“Other major cities are not too far behind, and they are going to be watching,” said John Mogk, a professor at Wayne State University Law School in Detroit. “This could set the template.”

Wild Swings

While Michigan has ridden the wild swings of auto-industry fortunes for more than 75 years, it has struggled to recover from the economic swoon that began in 2008. The eighth-largest U.S. state, with 9.9 million people, Michigan was the only one whose population dropped in the last decade. It lost almost 550,000 jobs as unemployment stayed above 10 percent -- reaching a high of 14.2 percent -- from December 2008 through October 2011.

Bonds from Michigan issuers have lost about 4 percent this year, more than the 3.8 percent drop for the broader $3.7 trillion municipal-debt market, according to Barclays Plc data. Only 11 states have had bigger declines, the data show.

Union members made up 26 percent of the workforce in 1989, according to the Bureau of Labor Statistics. The number dropped to 16.6 percent last year, including the loss of 42,000 employees. While the predecessors of Chrysler Group LLC and GM that filed for bankruptcy in 2009 and emerged last year are now profitable, they’ve succeeded with smaller workforces and wage contracts for new hires cut by as much as half.

Comeback Kid

The auto industry recovery has helped Michigan’s economic growth exceed all states except North Dakota since 2010, according to the Bloomberg Economic Evaluation of States.

“We’re the comeback state in the United States,” Republican Governor Rick Snyder said in a July 26 interview. He also said Michigan wouldn’t bail out Detroit.

The comeback involves a redefinition of a state whose identity remains tied to motor vehicles and the union members who build them. The United Automobile Workers was born in Michigan after the historic Flint sit-down strike of 1937. Along with two major transportation arteries leading into Detroit -- the Edsel Ford and Chrysler freeways -- is Interstate 696, named after Walter P. Reuther, who led the UAW from 1946 to 1970.

Snyder, 54, the former chairman of the computer company Gateway Inc., was elected in 2010. The Republican-controlled legislature gave him the right to appoint emergency financial managers in distressed cities and school districts. That led to his selecting Kevyn Orr in March to oversee the operation of Detroit.

Unraveling Net

In a move packing a symbolic wallop, Snyder signed into law a measure prohibiting mandatory union dues in government workplaces, making Michigan the nation’s 24th -- and most unlikely -- right-to-work state.

“Starting in the 1930s, Michigan defined itself as a state that provided security for working people -- that was unprecedented,” said Kevin Boyle, a Detroit native, history professor and author of “Arc of Justice: A Saga of Race, Civil Rights and Murder in the Jazz Age.”

“Now that has unraveled. The question is what replaces that?” said Boyle, a professor at Northwestern University in Evanston, Illinois.

Orr said he expects Detroit to emerge from bankruptcy by the fourth quarter of 2014. How the financial solution will affect wages of workers, pensions of retirees and services to 700,000 residents is up to the bankruptcy court. Orr has proposed eliminating defined-benefit pensions for new employees or those with less than 10 years’ service, and moving retirees to federal programs from a more generous city-paid plan.

‘Death Rattle’

Detroit’s population, which peaked at 1.85 million in 1950, has plummeted to about 700,000, according to Census data. Manufacturing jobs fell to fewer than 27,000 in 2011 from about 296,000 in 1950. About 60,000 properties in the city, or 15 percent of all parcels, were barren, and at least 78,000 buildings were vacant, including 38,000 deemed potentially dangerous, Orr said in a report this year.

To some, the Detroit bankruptcy filing proves the economic formula that supported the state and its largest city no longer works.

“We all suffered through the death rattle of big government, big business and big labor,” said Patrick Anderson, principal and chief executive officer of Anderson Economic Group, in East Lansing, Michigan. “It was a terrifically successful model from about 1920 to 1974. That model hasn’t worked for at least 20 years.”

New Road

The economic outlook for Michigan is one that will be hampered by a disproportionate share of baby boomers, manufacturing job losses and slow income growth, according to a report from the University of Michigan’s Institute for Research on Labor, Employment and the Economy.

“We do appear to be emerging from the tunnel that was the most catastrophic period for the Michigan economy in our lifetime,” the report said, adding a caveat: “We won’t be traveling the same route as before, however, after exiting the tunnel.”

Although Boyle said it’s difficult to determine how much Detroit’s emergence from bankruptcy will redefine the city and the state, whatever happens will likely spill beyond Michigan’s borders.

“Detroit is such an extreme case,” Boyle said. “But watching from here out, it should provide an indication of the future for an awful lot of Americans.”

12 August 2013

'Yooper Day' celebrates life in Michigan's Upper Peninsula

Story originally appeared on the Detroit News.

Marquette— Yoopers yoonite.

This weekend is a celebration of everything that makes those who live above the Mighty Mac unique: Delicious pasties, cozy flannel, can’t-miss-it blaze orange and those warm Stormy Kromer hats even President Barack Obama got when he visited this northern city a few years back.

“There’s no doubt the Upper Peninsula is someplace special,” Yooper Day founder Sonny Melvin said. “This is a celebration of the people who make it that way.”

Yoopers from across the country have been talking about the celebration. Some, like Seattle resident Laura Doyle, mentioned on social media sites how she plans to head back to the U.P. and is building her trip around the celebration.

“It’s great to hear about so many people doing that,” Melvin said. “We really want this to turn into an event where you plan on coming home to see those friends and members of your family you haven’t seen in awhile.”

Melvin said the one thing Yooper Day won’t be celebrating is the “goofy” image that has become associated with the people of the Upper Peninsula. There won’t be any “Escanaba in da Moonlight” type references or caricatures being portrayed by the organizers.

“We want this to be something everyone is proud of,” he said. “Think of it as a Fourth of July celebration, but just for Yoopers.”

The celebration of the essence of being a Yooper is being widely anticipated by many. Lina Blair, who moved to Marquette to attend Northern Michigan University and then settled down in the city, said the event celebrates everything she loves about the region.

“Of course the Upper Peninsula and the word ‘Yooper’ mean different things to everyone, but I think what stands out most to me is the sense of ‘getting through it together’ that people in the U.P. feel,” she said.

While Blair embraces the lifestyle, is she really a true Yooper? For some, the only way to claim the title is to have been born in the Upper Peninsula. Even those who moved to the area as children don’t qualify.

But, that doesn’t mean you can’t be accepted.

“There is an ‘honorary’ status,” said Matthew Luttenberger, who lives in Marquette.

Some disagree. To them it’s entirely feasible that being a Yooper is less of a birthright and more of a way of life. There’s no need to be an honorary Yooper if you earn it, or simply live the lifestyle.

“I think it’s a point of pride that people have to claim being born a Yooper, but I also think it’s something you can become if you have the personality traits,” said Lauren VanHamme, who moved to Houghton in September 2012 with her then-boyfriend and decided to stay. She described those who live in the U.P. as laid-back, kind, welcoming and genuine.

Not everyone thinks it has anything to do with a special lifestyle or a birthright. It is, quite simply, the name for a group of people who live in a particular location.

“It means living ‘above the bridge,’” said Rachel Esterline Perkins, who lives in Midland. She’s made the trek multiple times throughout the years to visit family in Escanaba. “The silence (of the Upper Peninsula) is unique — it is so quiet and peaceful.”

Some Yoopers may not be able to attend the event, but Melvin said they have been showing their support nonetheless. He said orders for official Yooper Day apparel, made by Ishpeming’s Jeremy Symons and his company, Yooper Shirts, have been shipping across the country.

Dan Helmer, assistant prosecuting attorney in downstate Kent County on the state’s west side, won’t be able to make it home for the event this year. Next year may be a different story, however — a sentiment shared by many displaced Yoopers.

“I think it’s a great idea,” Helmer said.

“I’m proud to be a Yooper and tell anyone I can about it whenever I get a chance. While I sometimes don’t want the word to get out that the U.P. is such a great place, it’s a great opportunity to bring people in to experience what makes it so great, and have the locals celebrate it, too.”

Marquette will host the first of what Melvin hopes is many yet-to-come Yooper Days. The event is expected to move from city to city each year, bringing with it the dollars from those coming to celebrate.

“We’ve already been approached by several other cities asking what they have to do to become the host next year,” Melvin said.

The idea came to Melvin after he moved to Chicago to open an advertising firm. After living there for awhile, he came to realize just how much he missed the Upper Peninsula.

“You really take it for granted when you live here, but once you move away you quickly realize what a special place it is,” he said.

Melvin said he’s hoping for a great turnout as well as some wonderful Upper Peninsula weather, though he did say he wouldn’t be surprised if a few flakes came down just for the sake of Mother Nature and Heikki Lunta, the Finnish snow god character, getting in on the celebration.

“I guess a little snow would be the perfect way to help celebrate the first-ever Yooper Day,” he said.

Snow in August would be unique for sure, just like so much else about the Upper Peninsula that can’t be duplicated elsewhere.

For instance, “pasties,” said Scott Weber, who was born and raised in the U.P. but now lives in Kentucky.

“Swear to God, you can’t find them anywhere else. Trust me, I’ve looked and I’ve tasted.”

How to rebuild Detroit's middle class

Story originally appeared on the Detroit News.

The story of Detroit's slide into bankruptcy is fundamentally about the massive population flight that emptied the city of the crucial middle class that provided its tax base. Without those middle class families - and the thousands of supporting businesses that benefit from their buying power - Detroit's tax revenues could no longer support its public institutions, essential services and generous pensions.

The key to rebuilding a post-bankruptcy Detroit is restoring a business and residential environment attractive to the middle class.

That task will be formidable. The atrophy of Motown's middle class is not just the result of declining auto employment but of decades of bad public policy. Today, Detroit is America's poorest city, with median family income of just $25,193 -- half the national medium of $50,054.

Flight of the black middle class

While Detroit has historically suffered from racial division, the loss of its middle class knows no color. All families and business owners demand safety, services and schools.

As Detroit's homicide rate consistently hovers over 40 per 100,000 residents and its public schools declined, Detroit's African American population has followed whites and other ethnic groups to the suburbs. Over the last decade, the city's population declined by 25 percent, to 714,00 from 951,500, with the black middle class accounting for the biggest exodus. Kurt Metzger, director of Data Driven Detroit, says middle class black families reporting income between $35,000 and $150,000 declined to 74,104 from 112,101 between 1999 and 2011, a staggering drop of 34 percent (in contrast, the number of white middle class families in Detroit actually rose from 5,217 to 8,906).

Where did those families go? To Macomb and Oakland counties, where their (lower) taxes buy better safety and services. In the last decade, the black population in Macomb County more than tripled to 72,723 while Oakland's African-American population rose 36 percent to 164,078.

Safety is job one

How does Detroit get them back? Begin by investing in new police chief James Craig's data-driven crime-tracking systems and more police on the streets -- the same formula that brought New York City under control in the 1990s.

The hollowing out of Detroit's middle class hasn't just shriveled city revenue. It has also skewed elected leaders away from kitchen table issues and toward narrow special interests. And it has dried up business investment. The evidence is across the city's 138 square miles, where major retailers are scarce.

Until Meijer and Whole Foods opened stores in the last month, not a single national grocery chain had a Detroit location. There is not a covered mall in town and only the Renaissance Center houses a cineplex. Rebuild Detroit's middle class and these businesses -- and the millions in revenue they bring to city coffers -- will follow.

Detroit leaders must also rebuild the middle class from within by encouraging policies that promote family and discourage welfare dependence. According to research by scholars Charles Murray of the American Enterprise Institute and Robert Rector of the Heritage Foundation, welfare spending has crippled once intact lower-income families by rewarding out-of-wedlock births. Today, 80 percent of Detroit children are born outside of marriage, says Rector, a crisis that drives every city pathology from poor education to crime to poverty. Nationally, the New York Times finds that 60 percent of black high school dropouts have done prison time.

"According to the U.S. Census, the poverty rate for single parents with children in the United States in 2009 was 37.1 percent," writes Rector. "The rate for married couples with children was 6.8 percent. Being raised in a married family reduced a child's probability of living in poverty by about 82 percent."

Downtown tech foundation

But the key to rebuilding Detroit's middle class may begin not with families, but with young college graduates and immigrants. Thanks to the efforts of entrepreneurs like Peter Karmanos, Cindy Pasky and Dan Gilbert, thousands of new technology employees have flooded the city in the last few years to work in Detroit's growing business core between the waterfront and Midtown. Many of these employees are single and drawn to an urban environment with pro sports teams, restaurants and nightlife.

If the city can provide them safety, they will stay, spending their money at local venues, attracting restaurant and apartment development like other tech hubs in Boston and Salt Lake City.

"Our 11,000-plus team members embrace the chance to live, work and play in the city's urban core," says Matt Cullen, president and CEO of Rock Ventures, the umbrella company over Gilbert's downtown real estate and Quicken Loans empire.

"We can help put Detroit's economy on the right track and on the map as 'the place to be' for new and growing digital businesses," Cullen said.

As they marry and have children, however, these employees' horizons will broaden to Detroit's neighborhoods and schools.

After years of population exodus, Detroit neighborhoods are a bargain hunter's dream. But city leaders must provide the schools and services essential for families to make the investment.

No matter how successful Detroit's Chapter 9 reorganization, it will not prosper without middle class growth.

The time to reverse that trend starts now.

05 August 2013

Michigan Reflections: Where, exactly, does Up North begin, anyway?

Opinion Article in Detroit Free Press
By: Peter Gavrilovich

Michigan Reflections: Where, exactly, does Up North begin, anyway?

You've got your robin (official state bird), white pine (tree), apple blossom (flower) and, of course, Up North (state redundancy).

But where, exactly, does Up North begin? And, yes, I know it can be the official state of mind. I suspect for some folks, Up North is any place to kick back away from the metropolis.

When I was a kid, Utica was Up North.

Over the years, I've done some sort of almost scientific research and have concluded that Up North is after you cross the Pentwater/Pinconning line.

This is an east/west marker that runs between Pentwater on Lake Michigan (a charming community) and Pinconning on Saginaw Bay (think cheese).

If you head Up North on I-75, the line is roughly at mile marker 181. In west Michigan, it's a handful of miles south of U.S. 10.

Observe (at least from the eastern Michigan perspective):
  • South of the line, the land is flat and farmy -- might as well be Ohio.
  • North of the line, things begin to change. Soon the fields fade and the land is festooned with conifers, maples and oak.
  • South of the line, the traffic seems more diverse -- that is, there are actually cars among the trucks pulling boats and off-road vehicles.
  • North of the line, fewer cars.
Feel free to toss in your own Up North beginning, and e-mail your thoughts to opinion@freepress.com. I know lots of you will say the Zilwaukee Bridge or Clare -- and you'd be correct, because the state redundancy doesn't have an official beginning.

Just don't try to sell me on Utica. I wasn't born yesterday.

Is there a place, a moment or an experience in your life that is quintessentially Michigan? Send your Michigan Reflection to opinion@freepress.com.