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Detroit's new czar faces deep decay of city's neighborhoods

By Steve Neavling and Bernie Woodall

DETROIT (Reuters) - When the state-imposed manager of Detroit, Kevyn Orr, starts the job on Monday he will wade into a city of crumbling neighborhoods where police fail to respond to some calls, arson fires burn out of control and residents scour charred buildings for scrap metal to sell.

Except for the business district and a cultural area including a university, museum and some theaters, the city of Detroit, population 700,000, is in bad shape.

Orr, a Washington, D.C.-based bankruptcy lawyer, will have the official title of "Emergency Financial Manager." But his remit as an unelected administrator will range far beyond money.

His top priority on Day 1 will be improving public safety.

"We have to gain the public's trust, and to do that, we have to show progress with fire and police services," Orr told Reuters in an interview last week.

This could be what one former Detroit police chief called a "Herculean task" for Orr, recruited by Michigan's Republican Governor Rick Snyder to fix Detroit because of his "very successful career in restructuring and bankruptcy."

Orr's most notable career achievement to date was as a top lawyer in the restructuring of Detroit-area carmaker Chrysler.

Orr said he thinks the stories of Detroit's demise "are over-rated in my opinion." "The city center is a lot better than people thought," he said, and he hopes he can push that recovery momentum out to the neighborhoods.

As he travels a sprawling city larger than Boston, San Francisco and Manhattan combined, he will encounter the realities of Detroit's long downward slide.

On September 1, a 36-year-old man walked into a Detroit fire station, admitted he shot four people and asked to be arrested. But officers never showed, so the suspect eventually went to a nearby police station and was detained.

"Due to patrols being busy handling high priority runs, no units were dispatched," police said in a statement at the time.

The number of the city's uniformed police officers has fallen from 3,070 in 2000 to 2,000 today, according to city figures. This has left the department so understaffed officers cannot get to some crimes, even violent ones.

Mayor Dave Bing reluctantly reduced the department's budget by 20 percent last year, and pay for police and firefighters was cut 10 percent because there was no money to pay them.

The number of murders per 100,000 people in Detroit in 2012 was around 10 times the national average, according to U.S. government statistics. Homicides rose 9 percent last year.

Detroit Fire Department records show the city has an average of 30 fires daily, most of them suspected arson. Fire department union president, Dan McNamara, said the culprits usually get away with it because of a shortage of arson investigators.

In one case on March 11, Larry Davis, 62, nervously watched a blaze that fire officials said was intentionally set, as it spread to three houses behind his home because the city did not have enough firefighters to respond quickly.

"It's a joke," Davis said as he watched people scouring the charred houses for scrap metal soon after firefighters left. "It's like we're forgotten out here. You can't get the police to come here. And now this?"

'CAN'T BE A DICTATOR'

While he has the authority to replace the city's police chief, who has been the interim chief for months, and fire chief, Orr said he has no immediate plans to do so.

He said he wants to learn from people who have already studied public safety issues in Detroit before talking about specific plans. He wants to use staff more efficiently and see if technological innovations can help.

Ralph Godbee, Detroit's police chief from 2010 to 2012, who resigned over allegations of a sexual relationship with a female law enforcement subordinate, said it will be extremely difficult to make quick improvements the public will notice.

"He's got a Herculean task, especially given the time he has," Godbee said. "You may get some efficiencies, but they are not going to be substantial. There has to be more police officers on the street."

Orr is optimistic he will finish his work in Detroit within 18 months. And he will have one important lever Mayor Bing doesn't have: one of his sweeping powers will be the ability to change agreements with Detroit's 48 unions.

The police union, for example, has resisted putting more cops on the street in part out of fear that desk jobs will be turned over to civilians and eliminate police jobs.

Detroit City Council President Pro Tem Gary Brown, the city's former deputy police chief, said Orr will be able to unilaterally change work rules to force more police out on the streets.

But Orr will have to show quick results without throwing much money at the problems. The city that gave birth to the auto industry is running a budget deficit of about $100 million this fiscal year and has long-term debt and liabilities totaling some $14 billion, according to a state report.

Orr has said his goal is to avoid taking Detroit to bankruptcy court, which would be the biggest municipal bankruptcy in U.S. history.

In an interview last week, Governor Snyder agreed that to solve the city's financial crisis, Orr will have to establish credibility by making early improvements that will be recognized by residents.

"It won't happen overnight, but it will happen when you start showing success," Snyder told Reuters.

Richard Levin, a restructuring attorney with Cravath, Swaine & Moore in New York, said Orr will have to draw on powers of persuasion to pull it off. "You can't be a dictator," Levin said. You've got to be a consensus-builder, a real politician."

(Editing by Greg McCune; Mary Milliken and Todd Eastham)

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