News Story

• 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.