Detroit’s bankruptcy did not set off a national wave of municipal Chapter 9 filings, but the case continues to draw attention and serve as a warning to cities, villages and townships across the United States to keep their fiscal houses in order. That’s according to Mary Murphy, manager on The Pew Charitable Trusts’ state fiscal health and economic growth project. She was one of the authors of the new report “After Municipal Bankruptcy: Lessons from Detroit and other local governments.” She spoke with WDET’s Sandra Svoboda.
Officials in Puerto Rico are hearing from Detroit’s former bankruptcy judge about how Chapter 9 works and how it allowed Detroit to restructure its debt, including pensions. Now-retired Judge Steven Rhodes is advising the Commonwealth about federal bankruptcy law. With its roughly $70 billion in bond debt and $35 billion in unfunded pension obligations, Puerto Rico has nearly five times the obligations Detroit did when the city filed for bankruptcy two years ago. Rhodes spoke with WDET’s Sandra Svoboda.
Writing in The Detroit News, Detroit’s former emergency manager, Kevyn Orr, is heralding the mediation process used in the bankruptcy case to settle debts with creditors. Sunday is the deadline for a lease agreement as part of the new Great Lakes Water Authority, but as of now, leaders of Macomb, Oakland and Wayne counties have not reached a contract with the city. Read what Orr had to say about mediation in urging that deal to get done.
Emergency Manager Kevyn Orr, Bankruptcy Judge Steven Rhodes and Chief U.S. District Judge Gerald Rosen appeared together to receive awards from Goodwill Industries. The nonprofit agency also honored the 12 foundations that chipped in for the grand bargain. As the men were honored at the lunchtime event, held at the Detroit Athletic Club, they made brief remarks. Here are the highlights:
Orr drew a standing ovation as he took the podium.
“The 21 months that it took us to get through the emergency manager’s term was at times both tumultuous, exulting and, finally, exceptionally rewarding. As I look through the room I see the real, shall we say, heroes of Detroit. It was the people of Detroit that soldiered through a tumultuous and somewhat destabilizing time as we went through the bankruptcy to the end,” Orr said.
Rhodes recognized the team effort involved in the complicated case.
The now-retired judge said he was accepting Goodwill’s award not only for himself, but for all the professionals who acted as a team to move the case, “in 17 months, from its chaotic beginning to its successful conclusion.” He said the smartest thing he did was appoint Rosen as chief mediator, who now “deserves the mass majority of credit for the ultimate success of the case.” After quipping about the moments of tension that they shared during the trial, Rhodes thanked Orr for handling the political and personal challenges of the Grand Bargain with “grace, competence and success.” “As I go around the country and speak about Detroit, people are enthusiastic about its future and rooting for the city,” said Rhodes.
He said unlike most stories, which require heroes and villains, the bankruptcy case only has heroes and heroines. Calling it “one of the most remarkable experiences” of his career, Rosen also said the bankruptcy case was like the “big bang theory” in that it “brought together unrelated people and events colliding to form a great universe that brought new hope to a great city and its people.”
Judge Steven Rhodes says he wishes the court proceedings would have been broadcast live so that the public could have had better access to them. If the media had asked, he says he would have “likely” approved the request. Now retired, Rhodes spoke at a breakfast in Ann Arbor.
Attorneys for the city of Detroit claim the Detroit Police Lieutenants and Sergeants Association violated the terms of Judge Steven Rhodes’s Confirmation Order in the bankruptcy case by seeking the addition of association members’ spouses, who are city retirees, to active association members’ health care plans.
In the motion filed in bankruptcy court this week, the city’s attorneys write that the association “sought more favorable treatment” for the spouses than was provided for in the Plan of Adjustment. According to the plan, city retirees will receive health insurance through a Voluntary Employment Benefit Association, and not through any other city-provided plan. The city’s motion alleges the association has sought to have members’ spouses who are retirees covered under the health care plan of the active association members.
They are asking Judge Thomas Tucker to enter an order enjoining the association from seeking the coverage through the Michigan Employment Security Commission and the state courts.
Tucker replaced Rhodes after he retired earlier this year.
Here’s the motion:
During Detroit’s bankruptcy trial, Martha Kopacz served as the judge’s “expert witness” to help him assess whether the city’s restructuring plan would be feasible for the city after it exited bankruptcy. Now Kopacz is advising the Financial Review Commission. That’s the nine-member panel that includes the mayor, the city council president and several members the governor appoints. Here’s more from WDET.
Detroit exited bankruptcy with a plan to balance city budgets and improve services to residents.
While elected leaders have the responsibility of overseeing those actions, residents can help measure improvements – or declines – in their neighborhoods. They’ll get help learning to do that at two free events presented by Citizen Detroit. Dinner is included.
The “Dinner & Dialogues” are planned for 5 p.m., Wednesday March 25 and April 22 at the International Institute of Metropolitan Detroit, 111 E. Kirby. They are open forums where Detroiters can learn more about how the city’s post-bankruptcy “blueprint,” the Plan of Adjustment, was drafted and how it will be implemented, says Sheila Cockrel, former Detroit city councilwoman who is part of Citizen Detroit, a Wayne State University project aimed at educating and engaging the city’s residents in local government. It’s part of the Forum on Contemporary Issues, run by former WSU President Irvin Reid.
More information on the Dinner & Dialogue event as well as how to register for it can be found here.
“The idea was that regular Detroiters really want to understand the factual basis for the situations that the city was facing,” Cockrel says. “A hallmark of this program would be that we would deal in factual formation but also give people the opportunity to experience the complexity of making decisions.”
At the events, WDET’s Stephen Henderson, host of “Detroit Today,” and Sandra Svoboda, who covered the bankruptcy and blogs at NextChapterDetroit.com, will play the roles of Bankruptcy Judge Steven Rhodes and Martha Kopacz, who was the judge’s “expert witness,” in the case. Working off a script based on her testimony in October, the duo will reenact Rhodes questioning Kopacz in court as part of the bankruptcy confirmation hearing.
“What we’ve done is excerpt the transcript because there’s multiple tiers and layers. It’s way too much information for one session. The part we’re going to focus on are the restructuring initiatives,” Cockrel says. “because that’s the place where, I think, are the things citizens really care about.”
Rhodes chose Kopacz as his expert witness after issuing an order that he was seeking an “expert witness” to assist him in assessing the feasibility of any bankruptcy settlement for the city. In late April, he selected Kopacz, of the Boston-based Phoenix Management Services (a business consulting firm,)
She reviewed the city of Detroit’s legal filings, budget audits and financial projections, and interviewed city officials to determine the feasibility of Detroit implementing its Plan of Adjustment.
In October, Rhodes questioned Kopacz in court about the bankruptcy exit and any suggestions Kopacz may have had. In short, she held a positive outlook on the city’s restructuring as it moved forward, saying the Financial Review Commission (established by Gov. RickSnyder to oversee the city’s finances as Detroit rebuilds) was a step in the right direction and that along with Mayor Mike Duggan should keep the city on track financially.