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Friday, July 26, 2013

If Detroit Went Bankrupt, Why Is Philadelphia Paying?

An empty field north of Detroit's downtown, Oct. 24, 2012. (Carlos Osorio/AP)

An empty field north of Detroit’s downtown, Oct. 24, 2012. (Carlos Osorio/AP)

When Detroit filed for bankruptcy last week, city comptrollers and treasurers around the country held their collective breaths. That’s because cities, it turns out, don’t file for bankruptcy in a vacuum.

Philadelphia is already feeling the effects of Detroit’s bankruptcy.

That city will pay hundreds of thousands of dollars in additional interest costs over the next 20 years because the interest rate on Philly’s new $197 million bond offering is going up a quarter percent.

We talk to WHYY senior reporter Dave Davies about why that’s happening, and what — if anything — cities can do to insulate themselves from future fiscal woes.

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