04.29.14

One More Lap.  According to U.S. Chief Judge Gerald Rosen’s mediation team, Detroit has reached a new five-year agreement with 14 of its unions, including AFSCME — the city’s largest union — in an agreement that covers 3,500 of the Motor City’s approximately 10,000 current workers: “The (collective bargaining agreement) terms between the city and the coalition unions are fair and balanced…They provide security for union workers and, at the same time, provide an economically feasible agreement for the city as it emerges from bankruptcy.” Nevertheless, the agreements must be approved by members and also must be approved by U.S. Bankruptcy Judge Steven Rhodes. Continue reading

04.24.14

One More Lap.  Detroit Chief Financial Officer John Hill yesterday, speaking at a conference in the Windy City, warned that the Motor City’s post-bankruptcy future is “absolutely critical and that right now is a big question mark.” That is, as the outlines of a final plan of adjustment that would permit U.S. Bankruptcy Judge Steven Rhodes to approve the city’s exit from the largest municipal bankruptcy in U.S. history as early as October 1st looms, both Judge Rhodes and city leaders are beginning to focus on the State and Local Trend Gap—and what it will take for Detroit to realize a sustainable future. Judge Rhodes, in the wake of his appointments Monday of two fiscal experts, is clearly concerned; Governor Rick Snyder has mentioned the possibility of a control board similar to one used for New York City’s fiscal crisis in the 1970s—conveniently with Judge Rhodes’ selection this week of former New York Lieutenant Governor Richard Ravitch, who played a critical role in preventing New York City from seeking federal bankruptcy protection and recovering. Continue reading

04.23.14

In some ways, the bankruptcy is like a jigsaw puzzle, where a thousand little pieces have to fall into place before the big picture can take shape. ~ Stephen Henderson, The Detroit Free Press

One More Lap.  U.S. Bankruptcy Judge Steven Rhodes yesterday appointed Martha Kopacz (please see court order below) to serve as: “The [U.S. Bankruptcy] Court’s expert witness [who] shall investigate and reach a conclusion on:

  • (a) Whether the City’s plan is feasible as required by 11 U.S.C. § 943(b)(7); and
  • (b) Whether the assumptions that underlie the City’s cash flow projections and forecasts regarding its revenues, expenses and plan payments are reasonable.

Judge Rhodes, who described the unprecedented appointment as temporary, made the $595/hour appointment of Martha Kopacz of Philadelphia-based Phoenix Management Services just four days after interviewing five candidates in his courtroom. She estimated her fees would cost “about seven figures.” In addition, Judge Rhodes asked Richard Ravitch, the former Lieutenant Governor of New York and Co-Chair with Paul Volcker of the State Budget Crisis Task Force to serve as a consultant on municipal finance issues and viability of the city’s debt-cutting plan. Mr. Ravitch will not ask for payment. The Judge has described the unique role as one to assist him in assessing the feasibility of Detroit’s proposed plan of adjustment, including reviewing the city’s financial assumptions and projections. Continue reading

04.22.14

In some ways, the bankruptcy is like a jigsaw puzzle, where a thousand little pieces have to fall into place before the big picture can take shape. ~ Stephen Henderson, The Detroit Free Press

One More Lap. U.S. Treasury Secretary Jacob Lew will travel to the Motor City Thursday and Friday this week. While he will not be bringing cash or a new urban policy, he will travel with some hope of wrapping up discussions with regard to redirecting federal foreclosure relief funds to be invested in blight removal—a critical step towards the long-term sustainability of Detroit. Continue reading

04.18.14

One More Lap. The Detroit Police and Fire Retirement Board yesterday voted unanimously to endorse Kevyn Orr’s revised plan of adjustment proposal to eliminate proposed reductions to post-retirement pension benefits, but modify future cost-of-living or COLA adjustments. The approval, coming one day after Detroit’s General Retirement System endorsed a similar proposed agreement which would sharply reduce the city’s proposed reductions to civilian retirees’ pension, remains to be final until individual active and retired Detroit workers vote on the plan in the coming months. Under the proposed agreement, retirement benefits would be reduced by 4.5 percent. Continue reading

04.17.14

One More Lap. Following perhaps the most extraordinary week of its bankruptcy, the Motor City this morning heads to federal bankruptcy court to request Judge Steven Rhodes’ certification of its electronically revised plan of adjustment and disclosure plans—both submitted last night in the wake of yesterday’s developments. Detroit will ask the federal court to find the documents to be sufficient and accurate, as well as understandable. Should the court approve, that would set the stage for a vote by the city’s 170,000+ creditors beginning on Mayday. Last night’s eleventh hour submittal came on the heels of the 7-0 vote yesterday by the board of the Detroit General Retirement System (GRS) to endorse a retirement pension agreement that would cut pension checks for non-uniformed city workers and retirees by 4.5% and eliminate cost-of-living adjustment increases to retirement benefits. Continue reading

04.16.14

One More Lap. Just hours after Chief U.S. Judge Gerald Rosen, the Motor City bankruptcy mediator selected by U.S. Bankruptcy Judge Steven Rhodes, announced that that the Detroit Police and Fire Fighters Association had agreed to support Emergency Manager’s revised plan of adjustment, negotiators for Detroit pension boards agreed late yesterday to retiree benefit cuts that were dramatically reduced from those initially proposed: “This settlement agreement was reached after intensive negotiating sessions over the past several months in which the parties’ interests were fully and vigorously represented by counsel and all issues robustly negotiated.” Continue reading