DALLAS -- The results of Detroit’s mayoral primary on Tuesday pit incumbent Mike Duggan against a young challenger with family ties to the city's past.

Duggan, who led Detroit through its exit from Chapter 9 bankruptcy, will face state Sen. Coleman Young II in November.

Duggan got 67% of the primary vote, to 26% for Young, with the remaining votes scattered among six candidates. The top two advance to the Nov. 7 general election.

Duggan announced his bid for re-election on Feb. 4, promising to build on the economic progress since the city's bankruptcy case came to an end in 2014. While under state emergency management, Detroit filed for bankruptcy with Gov. Rick Snyder’s support in July 2013. The city had a battered tax base and could not deliver adequate services. In bankruptcy, it shed about $7 billion of its $18 billion in debt and retirement obligations and turned a $133 million deficit into surpluses for the last two years.


Detroit Mayor Mike Duggan at the Detroit Economic Club in September 2015.
Incumbent Mike Duggan led Detroit's mayoral primary Tuesday. He will face Coleman Young II in the November general election. Bloomberg

Duggan's challenger, son of the late Coleman Young, the city's mayor for 20 years in the 70s, 80s and 90s, says the recovery under Duggan has largely focused on a downtown revitalization while leaving other neighborhoods to struggle.

Duggan has acknowledged in his bid for a second term that there's much more to be done in fixing the city and he's announced several plans aimed at investing in neighborhoods.

“Sen. Young was raising the challenge of almost any city: how does one way weigh neighborhoods versus downtown economic development?” municipal finance expert Frank Shafroth wrote on his George Mason University Municipal Sustainability Project blog.

Earlier this year the city reported ending fiscal 2016 with a $63 million surplus and with two deficit-free budgets in a row, the city is on the path to exit Financial Review Commission oversight.

Detroit must record three consecutive years of deficit-free budgets to win release from oversight by the Detroit Financial Review Commission under terms established as part of its exit from Chapter 9 in December 2014. The city projects a $51 million surplus in the current fiscal year that ends June 30.

The city’s recovery has seen major development in the downtown area. The latest project sees the city borrowing $34.5 million to finance facilities the Detroit Pistons basketball team needs to make a move to the Little Caesars Arena, which opens in September. The new arena was originally conceived as a home for the Detroit Red Wings hockey franchise.

The city plans to capture the school operating tax that is used to service $250 million of bonds DDA bonds previously issued for the arena project in addition to the $34.5 million of additional bonds the city planned to issue for the Pistons relocation.

As part of the Pistons deal, the city council has negotiated that taxes paid by Detroit Pistons players, employees, and visiting NBA players could fund neighborhood improvements across Detroit. The taxes would generate a projected $1.3 million annually for Detroit’s Neighborhood Improvement Fund.

The city’s demolition effort enhanced by approximately $130 million in federal funding is focused on demolishing or selling its entire backlog of 30,000 houses in five years. This, wrote Shafroth, “is a key step to help boost Detroit’s neighborhoods after years of decline—and, critically, to raise assessed property values.” The federal funding came under scrutiny in 2015 in the wake of rising costs and bidding concerns. Young’s campaign has called to have a special prosecutor investigate the program.

Last month the Detroit city council signed off on a $48 million deal paving the way for the sale of city-owned land and streets in the pathway of the new Gordie Howe International Bridge. The deal provides support to residents living near the Delray neighborhood where the bridge will be located.

Pension ills still remain a concern for the Detroit but the city is building up a cushion by assigning a portion of its fund balance to help cover a big jump in payments scheduled in 2024.

An April letter from the Chicago Federal Reserve reported that while the city has made great strides in recovery other challenges remained for the city’s economy “…such as improving schools, access to affordable housing, and neighborhood safety, as well as creating a better regional transit system,” the letter said.

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.