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• Moody's raises Detroit’s credit rating one notch from Baa2 to Baa1 with a positive outlook
• Rating agency says Detroit “continues to bolster its financial resiliency and maintain solid operating performance, which will enable it to successfully weather the adverse effects of an economic slowdown, should one occur.”
• Mayor Duggan credits 11-years of sound budget decisions by Detroit City Council and the work of City’s CFOs over the years as major contributors to Detroit’s success
   

The City of Detroit has received its 11th consecutive credit rating upgrade from Moody’s Investment Services, continuing the city’s remarkable financial turnaround. Moody’s one-notch upgrade to Baa1 with a positive outlook from Baa2 comes a year after Detroit returned to investment grade status with a rare two-notch upgrade from the agency. The City’s credit rating bottomed out at Caa3 – also considered “junk bond” status – in June 2013 after the city declared bankruptcy.

Moody's confidence in the City’s financial stability has continued, even in the face of national economic headwinds. In its credit statement issued Friday June 27, 2025, the rating agency praised Detroit for its financial resiliency and operating performance over time as key reasons for the growing confidence:

“Detroit (Baa1 positive) has bolstered its financial resiliency over the past several years and the city's resurgence will likely continue. The city has a track record of solid operating performance, in large part because of its strong governance practices and it maintains robust reserves and low leverage, all of which will help it to weather the adverse effects of an economic slowdown, should one occur. While recent trade uncertainty is negative for the auto sector, the city’s resurgence is unlikely to be materially derailed given the pipeline of major projects that are planned and in construction."

Mayor Duggan thanked Moody’s for the upgrade and applauded the City’s Chief Financial Officers over the last 11 years: John Hill, Dave Massaron, Jay Rising, and newly appointed CFO, Tanya Stoudamire along with Chief Deputy CFO, John Naglick. He also credited 11-years of sound budget decisions by Detroit City Council as a major contributor to Detroit’s success.  

“This is what happens when elected leaders set aside us-versus-them politics and work together,” the Mayor said. “Our CFO team, department heads and City Council all have demonstrated tremendous fiscal discipline over the past 11 years to help bring us to where we are today and to lay a strong foundation for years to come.”

Positive Outlook

Moody’s report indicated its confidence that Detroit will continue to improve. 

"The outlook is positive because of the growing likelihood that the city will build and maintain its financial resiliency in line with higher rated peers and that its renewed tax base and revenue growth will help absorb any costs pressures."

"The city’s tax base has more than doubled in the past five years, fueled by ongoing development and recent appreciation of residential values…. Also, the city adheres to strong governance practices that have enabled it to maintain consistently robust reserves over the past decade, even during periods of heightened uncertainty, like the pandemic."

As alluded to in the Moody’s report, major development continues at a robust pace in the city, creating new jobs and tax base. Ongoing developments under construction include:

• $1.4 Billion Hudson’s Detroit, which will be the new home of GM World headquarters and Michigan’s second-tallest building.
• 600-room riverfront convention center hotel at Water Square, which will allow Detroit to compete for the nation’s premiere conventions and other major events
• $3 billion Destination Grand development, including a new $2 billion Henry Ford Hospital tower, MSU research facility, new mixed-income housing and green space
• Major affordable housing development, including the renovation of the former Fisher Body 21 plant into 400 units of mixed income housing and the restoration of the iconic Lee Plaza into senior affordable housing
• The Development at Cadillac Square, which will activate 3.6 acres of empty land in the heart of downtown into a new entertainment attraction and residential hub, anchored by the Cosm immersive theater now under construction. 

While the report lists future population decline as a potential limiting factor, Census data show the city has gained 7,000 residents in each of the past two annual estimates – reversing a 60-year trend – with Detroit now leading the State of Michigan in population growth and establishing itself as one of America’s 50 fastest growing cities.

Overcoming Doubts of Detroit’s Resilience

Prior to exiting Bankruptcy, a Plan of Adjustment (POA) was agreed upon that would put the City on track to restore basic services, though many doubted whether anything beyond “adequate” could be achieved. A feasibility study of the POA stated, “I do not need to envision that Detroit will become a best in class municipality to determine that the POA is feasible. For Detroit, emerging from essential services failure to adequate and reasonable service delivery will be a success.”

However, the City has exceeded every major expectation of the Plan of Adjustment:

• It was expected that resident employment would decline 0.4% annually, resulting in 8,000 jobs lost from 2014 to 2024. Instead, annual resident job growth has averaged 1.1% and Detroiters have gained 24,000 jobs.
• The POA expected that property values would continue to decline. Instead, property values began rebounding in 2018 and are now 94% higher than 10 years ago.
• The City had to meet a target of 2% growth in income tax revenues annually in order to achieve feasibility, a level that many feared was out of reach. In fact, Detroit’s income taxes have grown 5% annually and cumulatively generated nearly $400 million more than projected over the past 10 years.
• Detroit ended 2013 with a budget deficit and no funds to pay pensions. Nine consecutive years of budget surpluses later, the City built up a $1.2 billion General Fund Balance including $479 million in the Retiree Protection Fund to support the legacy pension payments.

State Financial Review Commission approves waiver of active oversight

Just prior to today’s announcement, CFO Tanya Stoudemire met with members of the State Financial Review Commission, which was put in place following the City’s exit from bankruptcy in 2014 to monitor the City’s budgeting and financial practices.  For a period of three years following the City’s emergence from bankruptcy, all City budgets and major contracts had to be approved by the FRC.  

At today's meeting the FRC approved a resolution to continue to waive active oversight. This means the FRC will remain in a period of decreased oversight, as long as the City continues deficit-free budgets and complies with other financial requirements.

“Receiving this waiver is one more indication of the City’s strong financial management practices and a validation that the FRC, like Moody’s, expects them to continue,” said Stoudemire.

• City’s revenue outlook steadily improves as income tax growth continues along with City efforts to spur economic opportunity and growth for residents
• The September recurring General Fund revenue estimates total $1.38 billion in the 2024-2025 Fiscal Year, up $52.3 million from the February 2024 conference estimates 
• Forecast: payroll jobs, number of employed residents grow while growth in Detroit resident wages outpace the State’s

On September 9, the City of Detroit held its regular biannual Revenue Estimating Conference to receive an update on the Detroit economic outlook and to approve revised economic and revenue forecasts for the remainder of fiscal year 2025 and for fiscal years 2026 through 2029. State law requires the City to hold independent revenue conferences in September and February each fiscal year to set the total amount available for its annual budget and four-year financial plan.

Revenue outlook continues to improve

The Detroit Economic Outlook for 2023-2029, released Friday, predicts the City’s economy will continue to see steady growth, along with higher wages and a growing labor force. The forecast is prepared by the City of Detroit University Economic Analysis Partnership, which is a collaboration of economic researchers from the City, Wayne State University, Michigan State University, and the Research Seminar in Quantitative Economics (RSQE) at the University of Michigan.

The City’s revenue outlook is also steadily improving as income tax growth continues along with City efforts to spur economic opportunity and growth for Detroiters. For the September Revenue Conference, participants have revised revenue estimates for the recurring General Fund moderately upward to $52.3 million for the 2024 – 2025 fiscal year based on stronger internet gaming activity, continued economic growth, and State revenue sharing increases.  Sustained growth in income taxes continue to lead revenue growth in future years, in line with the Detroit economic forecast. 

“The moderate steady growth projected for Detroit’s economy is reflected in the growth in our revised revenue forecast. Our focus will continue, as in prior years, to assure fiscal stability through balanced budgets that protect Detroit’s ability to fund its obligations while further improving the quality of life for Detroiters,” said Jay Rising, Chief Financial Officer, City of Detroit.

Forecast: payroll jobs, number of employed residents grow while Detroit wages outpace the State

According to the outlook, the City’s economy will continue to improve with steady growth in payroll jobs, wages and the labor force. “We expect our forecast of continued employment growth, falling unemployment, and a return to growing real incomes to translate into ongoing, if gradual, progress toward more inclusive prosperity for Detroit residents over the next five years,” said Gabriel Ehrlich, Director, University of Michigan Research Seminar in Quantitative Economics and lead author of the forecast.

The RSQE report also stated “wage growth adjusted for Detroit CPI (Consumer Price Index) inflation averages 1.0 percent per year from 2024 to 2029 at Detroit establishments, while wage growth for employed Detroiters averages 1.4 percent per year. Both of those rates outpace the real wage growth we are forecasting statewide, which averages 0.6 percent per year in that time.”

Additional highlights in the forecast:

• Economic recovery for Detroit continued through late 2023 and early 2024 despite high interest rates and workers’ strikes in three major industries
• The City’s labor force is expected to include nearly 8,400 more people in 2024 than in 2022
• Despite a growing labor force, Detroit’s unemployment rate ticks down to 7.6 percent next year before falling to 6.9 percent by 2028–29.

The forecast predicted positive developments for Detroit households earning less than $55,301 noting “our analysis found that the economic fortunes of Detroit’s households improved from 2018 to 2022. The share of residents living in lower-income households edged down slightly, while the economic circumstances of Detroit’s children improved more quickly than nationwide.”

These improvements come after investments which the Duggan administration in partnership with City Council have made over the past several years, creating programs like Learn to Earn, Skills for Life and more recently JumpStart, all of which combined offer education, career and job training skills that lead to higher-wage jobs for Detroiters.  

Revenue Estimating Conference Results

The Revenue Conference reported FY2025 General Fund recurring revenues projected at $1.38 billion for the current fiscal year ending June 30, 2025, up nearly $53 million (3.9%) from the previous conference estimate in February 2024. The increase is driven by our growing income and property tax base and increases in internet gaming activity. The FY2025 revenue estimates also include an additional $30.7 million of non-recurring revenues, primarily from short-term investment earnings.

General Fund recurring revenues for FY2026, which begins July 1, 2025, are forecasted at $1.41 billion, an increase of $54 million (4%) over the previous conference estimate in February 2024. The projected increase is led by income taxes and wagering taxes.  The out-year forecasts for FY2027 through FY2029 show continued overall revenue growth of about 2% per year. 

The City will use the estimates approved today to begin developing the City’s FY2026 Budget and FY2026 through FY2029 Four-Year Financial Plan. The conference will meet again to approve revised revenue estimates in February 2025. The voting conference principals are Jay B. Rising, the City’s Chief Financial Officer; Eric Bussis, Chief Economist, Director, Office of Revenue and Tax Analysis, Michigan Department of Treasury; and George A. Fulton, PhD, Director Emeritus, Research Professor Emeritus, Research Seminar in Quantitative Economics (RSQE), Department of Economics, University of Michigan.

• The $46.3 million issuance attracted 13 bidders with the award going to Wells Fargo Bank, National Association 
• Sale capitalizes on Detroit’s return to an investment-grade credit rating earlier this year, having received BBB and Baa2 ratings from S&P and Moody’s respectively  
• The City achieved substantially lower borrowing costs due to higher ratings: the deal priced more than 100 basis points (equal 1 percentage point)  tighter compared to the City’s 2023 UTGO bonds issuance 

Detroit, MI – The City of Detroit’s first bond sale under its new investment grade status was a huge success, generating strong investor demand and attracting 13 bidders. The issuance on Tuesday also marked the first deal post bankruptcy for the City using a competitive sale method, which is when bonds are awarded to the bidder that submits the lowest true interest cost bid. The City’s successful sale of $46.3 million in Unlimited Tax General Obligation (UTGO) bonds underscore confidence in Detroit's financial recovery and investment prospects.  

The bond issued represents the remaining voter-approved UTGO bonds which consisted of $22.0 million for Public Lighting, $11.6 million for Transportation, $9.0 million for Recreation, and $3.7 million for Public Safety and Economic Development. Wells Fargo Bank, National Association who submitted the lowest True Interest Cost bid for the bonds received the award. 

The bond sale success is a result of Detroit’s improving credit rating profile. The improved rating combined with the competitive sale method allowed the City to completely reset its credit spreads at significantly tighter levels with its 10-year bonds selling more than 100 basis points (1 full percentage point equals 100) tighter than the results of the City’s 2023 UTGO bonds that priced almost exactly a year ago.  The lower credit spreads translate to lower borrowing costs and will save the City over $4 million in debt service on these bonds. 

"Today marks another milestone for the City of Detroit as we successfully completed our first competitive bond issuance. This achievement highlights our commitment to fiscal responsibility and prudent financial management; seeking ways to benefit Detroit residents at the lowest possible cost The proceeds from this issuance will be instrumental in advancing key infrastructure projects and supporting essential services that enhance the quality of life for our residents. We are grateful for the confidence shown by investors, reflecting our continued progress and positive economic trajectory,” said, CFO Jay Rising.

The issuance remains aligned with the Mayor’s announcement of lowering the debt millage from 8 mills to 7 mills in 2024 and plans for an additional reduction to 6 mills in 2025. 

Leveraging Detroit’s fresh investment grade rating 

Earlier in 2024 the City of Detroit received rare double-double notch upgrades when Moody’s raised its rating from Ba1 to Baa2 on positive outlook in March and S&P followed with an upgrade from BB+ to BBB. These ratings returned Detroit to investment grade status for the first time since 2009 and marked an incredible financial turnaround from bankruptcy in less than ten years. 

Capitalizing on the strong rating news, the City decided to sell its 2024 bond issuance through a competitive sale process.  The City is very pleased by the number of bids received through the competitive sale process and the significant tightening of credit spreads that resulted in further reducing costs and creating savings for Detroit taxpayers. 

A key measure of success for the bond transaction is the final credit spread on the bonds: lower credit spreads mean lower interest rates and a better deal for the City. Detroit’s rating upgrade was likely the most important factor generating strong investor demand for the 2024 Bonds and delivered the best credit spreads in recent history. The credit spreads ranged from 36-76 basis points (bps) and were 70 bps on the 10-year maturity. By comparison, the 2023 transaction had spreads of 138 to 178 basis points with a spread of 178 bps on the 10-year. The City’s 2021 bond deal had previously been the City’s lowest credit spreads thanks to a particularly strong market. Even in 2021, the spread on the 10-year was 55 bps higher than the current sale at 125 bps. 

Christine Fay, Senior Manager Director at Public Resources Advisory Group, Inc, also added “rates received reflect not only the City’s improved credit ratings but also recognition of the City’s improved economic progress and trajectory,” said Fay.

Residents are the true winners today as the bond sales will allow the City to invest in key areas that improve the quality of life for Detroiters including investments in public lighting, transportation, public safety, recreation and economic development.