By Steve Neavling
July 13 (Reuters) - On the night of July 4, some Detroit residents watched fireworks, and others just watched fires, more than a dozen in a space of two hours.
The Independence Day blazes marked the latest flare up of a longtime scourge in Detroit - arson.
It is a problem that has festered in the city for decades and has persisted even as the population declined. With the city now teetering on the verge of bankruptcy, the futile struggle to contain arson is an insistent reminder of the depths of Detroit's decline.
"It's not safe here. It's a war zone," Terrence Coleman, a 52-year-old resident, said as embers from a blaze on Detroit's east side rained down on him. "This whole neighborhood is going to burn down one day, I'm afraid."
As firefighters attacked flames raging in two adjacent vacant houses, they called for backup equipment that never came. Five blazes had broken out in 25 minutes, all suspected arsons, and the Detroit Fire Department, where budget cuts have led to a crippling shortage of equipment and manpower, could provide no extra help.
In the next two hours, at least 10 more suspicious fires broke out, leaving skeleton crews to battle the blazes.
In Detroit, arsons are so frequent - about 5,000 estimated last year by the Detroit Fire Department - that authorities can only investigate about one of every five suspicious fire cases, Fire Commissioner Don Austin said.
Detroit has a legacy of troubles with arson. Hundreds of blazes were set during riots in late July 1967 that followed a police raid on an unlicensed, after-hours bar. For more than 30 years, "Devils Night" fires on the night before Halloween numbered in the hundreds, peaking at around 800 in the mid-1980s.
In recent years, arsons connected to Halloween have declined, in part due to the city's reduced population. Even so, the total number of arsons each year has changed little since the 5,100 fires set in 2000.
The city is fighting those fires with far fewer resources than in the past. Mayor Dave Bing reduced the fire department's $184 million budget by 20 percent last year. A third of the fire companies were shut, firefighter wages were cut by 10 percent, and rigs quickly went into disrepair.
In a city that averages about 14 arsons a day, there are only 11 arson investigators, down from more than 20 in 2009.
"A fire is not determined to be arson until an arson investigator makes that determination," Austin told Reuters. "Arson investigators are investigating the scene of only 20 percent of all fires."
Arsons are more prevalent in aging Rust Belt cities than in other parts of the country, but Detroit is in a class of its own. Last year, arson fires caused nearly $200 million in property damage in Detroit - more than the losses in the industrial cities of Buffalo, Pittsburgh, St. Louis, Cincinnati and Milwaukee combined.
With more than 80,000 abandoned buildings spread across 139 square miles, Detroit is fertile ground for arsonists. Homes that could never sell on the market are burned allegedly for insurance money, and people tired of abandoned buildings torch them, according to fire investigators. Thrill-seekers toss Molotov cocktails at vacant structures in drive-by arsons.
There is no quick fix in sight. But arson vexes the city so deeply that Kevyn Orr, the emergency manager appointed by the Michigan governor to fix Detroit's decrepit finances, has said he needs to act to address the rash of fires, too.
Orr said he plans to use some of the money saved by halting payments to creditors for improvements to fire technology and vehicle upgrades. He also said the city has a 50/50 chance of a bankruptcy filing, a decision he is expected to reach as soon as this month.
Just before taking office in March, Orr told Reuters that fire and other public safety issues would be his top priority. "We can't waste time finding solutions," he said. "Everyone deserves to feel safe in their homes."
Even so, fire union officials have complained that Orr has not held substantive, one-on-one discussions with them yet. And Orr's actions so far have not assuaged their concern that the fire department is understaffed and ill-equipped.
"We're in a crisis and one fire way from a disaster," warned Dan McNamara, president of the Detroit Fire Fighters Association, who represents 917 active members. "The city can't continue to operate like this."
Arson has a serious impact on the city's social fabric. Property values plummet, neighborhood cores burn out, and residents flee at alarming rates, urban affairs experts said. Detroit's population decline in the last decade was steeper than any other major American city.
"It's another reason people are getting out of the neighborhoods as fast as possible," said demographer Kurt Metzger, director of Data Driven Detroit, a data analysis organization. "People are having a difficult time hanging on to some sense of neighborhood. Kids are walking past dangerous, burned-out homes on their way to school."
The high arson rate does more than leave its scars on downtown neighborhoods. It also spells trouble for homeowners and businesses throughout the city and beyond, industry experts said.
"Insurance fraud, including arson, hikes up insurance premiums paid by consumers by 10 percent," said Peter Kuhnmuench, executive director of the Insurance Institute of Michigan. "When nearly 30 percent of all fires are arson or suspected arson in this state, there is a hit to policyholders' wallets."
Reuters studied online insurance quotes on five $100,000 homes in several Detroit neighborhoods and found the premiums were at least three times higher than the quotes for $100,000 homes in suburban neighborhoods.
The National Association of Insurance Commissioners on its website states that homeowner insurance rates vary by location and largely are determined by the prevalence of crime, the quality of the fire department and the availability of fire hydrants.
"Arson definitely has a big impact on insurance rates and everyone in the community," said Angie Rinock, spokeswoman for State Farm Fire and Casualty Co in Michigan.
Detroit homeowner Harold Davis lives on a block with four burned-out houses. But homeowner insurance has become so expensive - $3,000 a year in a neighborhood where houses recently have sold for around $5,000-he dropped his coverage.
"It's only a matter of time before someone burns down this whole block," Davis, 65, told Reuters. "I can't blame the insurance companies."
Detroit arsonists are rarely caught. Nationally, about 20 percent of intentionally set fires lead to arrests, according to FBI data. In Detroit, investigators solved only 100 of the 5,000 arson cases in 2011, the last year for which records are available, city records show.
Insurance companies have responded by devoting more resources to the city. State Farm is one of several companies that have assigned its own investigators and arson dogs to Detroit.
A documentary about Detroit's fire epidemic, "Burn," received critical acclaim last year for exploring the crisis through the eyes of firefighters.
"Arson is a form of self-expression in a place where you can't express yourself," Brenna Sanchez, co-producer/director of "Burn," told Reuters.
Sanchez said she sees little hope for solving the arson epidemic until Orr begins making progress on other Detroit problems. "Kevyn Orr cannot improve the situation until people stop feeling desperate," she said. "It's a question of improving the quality of life of residents."