The city of Detroit and the union that represents firefighters have reached a tentative agreement to overhaul the fire department’s 128-year-old promotional system that mayors have tried to overturn for nearly half a century. Writing for Bridge Magazine, a Detroit Journalism Cooperative partner, Bill McGraw explains how revolutionary the agreement is.
Detroit is known by its most unwelcome attributes: It has one of the highest murder and violent crime rates in the country. And it currently is known as the most populous U.S. city to ever seek bankruptcy protection. Can it also enjoy the biggest recovery? In a comprehensive piece, Bridge’s Mike Wilkinson answers questions about the city’s recent past to get a hint at its future: Does the city generate enough money to fix what ails Detroit if billions in debt are cut? Are the city’s costs too high? Does it pay its workers too much? Are pensions too generous? Can the city endure a reduction in both spending and revenue and revive what is by most measures the most dysfunctional large city in America?
As Mayor Mike Duggan works to revitalize Detroit, a Detroit Journalism Cooperative project looks at who’s giving him money. Here’s a new, searchable database of his donors…and the first look at his new “Detroit Progress Fund,” which Duggan says will be different than Mayor Kilpatrick’s civic fund and Gov. Snyder’s controversial NERD fund. It’s original reporting by Bridge Magazine and WDET.
As a backdrop to the news today about an analysis showing the Detroit Institute of Arts collection is valued at up to $4.6 billion, a figure that could fall to $1.1 billion in actual sales if the art was put on the market, NextChapterDetroit.com brings you a bit of history about why and how the museum’s collection has been part of the bankruptcy case this year.
1-The artwork at the Detroit Institute of Arts is the city’s top asset, according to Detroit’s Disclosure Statement, the document designed to provide information to creditors so they can evaluate the city’s restructuring plans. The artwork, while not precisely valued in the May 5 document, was worth more than city-owned land, Belle Isle and the Detroit-Windsor Tunnel.
2-Prior to Emergency Manager Kevyn Orr filing for bankruptcy, Michigan Attorney General Bill Schuette issued an opinion that the artwork was protected from sale and “is held by the City of Detroit in charitable trust for the people of Michigan, and no piece in the collection may thus be sold, conveyed, or transferred to satisfy City debts or obligations.” His opinion has no force of law in federal bankruptcy court.
3-Bond insurer Syncora, who stands to lose nearly $300 million in the case, is one of the creditors that has been advocating for selling art to cover debts. Here’s what Syncora attorney Stephen Hackney said at an April hearing:
“The art has been a sort of noteworthy, highly publicized part of the case, and from our standpoint, a very important part of the case … The city is proposing to address the issues surrounding the art collection in a way, from our standpoint, that yields far less value.”
4-Bankruptcy Judge Steven Rhodes on April 28 granted Syncora’s request to view communication between Schuette and the DIA that preceded his opinion that the art was protected from sale to pay debt. In issuing his ruling from the bench, Rhodes said:
Plainly, the extent to which the art held by the Detroit Institute of Arts should be taken into account in evaluating whether the city’s plan meets the best-interest test of the bankruptcy code is a substantial issue in the case, one that has not been prejudged or determined by the court at all, and, of course, this ruling should not be construed to suggest one way or another how the court will or may rule on that substantive issue of confirmation.
5-In preparation for trial, the city and the DIA hired Artvest Partners, an art investment firm, to “assess the viability and practicality of selling art or otherwise monetizing the collection,” according to Bill Nowling, spokesperson for Detroit emergency manager Kevyn Orr.
6-The Artvest report disputes some of the findings in another report that was commissioned by some of the city’s creditors.
7-Issued today, the Artvest report cost $112,500. (Its author, Michael Plummer, co-founder of the Artvest firm and a former employee at both Christie’s and Sotheby’s, is scheduled to appear as an expert witness during the city’s bankruptcy trial in August.)
8-The report was issued just days after pensioners and other creditors needed to mail their ballots to meet the Friday deadline of the votes being received. Would this information have changed their minds? We’ll never know. As a related noted: The DIA has pledged to raise $100 million toward pension funding as part of the “grand bargain,” the agreement that also has, among other terms, the state paying $195 million and foundations contributing $366 million toward the pension funds.
Among the Artvest report’s findings:
About two-thirds of the DIA’s collection is in four areas that have “fallen out of favor with collectors and that are underperforming their market peak in 2007”. The are: American Art pre-1950, Old Maser and 19th Century European Paintings, and Impressionist and Modern Art.
If the DIA collection were for sale, “few sales would be to other museums, both because other museums are likely to boycott such sales, as well as because funding constraints limit their participation in the marketplace at today’s price levels.”
If the DIA wanted its art auctioned, Sotheby’s and Christie’s might not participate. Sotheby’s parent company was based in Detroit from 1983 to 2006, and had a number of connections to the DIA. Christie’s “received unusually strong negative feedback from both the museum community and the art industry by merely conducting an appraisal.”
If the city sold art through an auction house outside of Christie’s or Sotheby’s, it could expect to lose 20-40 percent of potential selling prices.
Another issue raised in the report is the authenticity of some of the pieces. The DIA has works that are thought to be Modiglianis but have not been validated by the art worlds’ most trusted sources. And also, according to the report, the authenticity of some of the Old Masters paintings could be challenged during a review of them before a sale.
The iconic Diego Rivera murals would have little value if moved. According to the Artvest report, cutting them off the walls would seriously damage them.
A sale of the art, especially if ordered through a court decision related to settling debt, could result in “formidable legal obstacles and prolonged litigation.” Some of those obstacles, according to the report, are: items would need free and clear title to be sold, and the threat of future litigation could prevent that; it’s likely the Michigan Attorney General would take legal steps to prevent the sale, based on his opinion from last year; the heirs of DIA donors would be likely to “pursue every legal option necessary to stop or delay the sale of any of the art, potentially leading to years of litigation.”
The potential impact of selling the most valuable works would “deprive the museum of its core attraction, drastically reduce attendance and related revenues, drive away potential donors of future gifts and endowments, and in all likelihood, ultimately for the closure of the DIA due to a loss of economic sustainability, resulting in a full liquidation.”
-By WDET’s Sandra Svoboda
@WDETSandra and firstname.lastname@example.org
A federal appeals court plans to hear arguments later this month on the eligibility of Detroit’s bankruptcy filing, according to court documents. The hearing in front of the Sixth Circuit Court of Appeals in Cincinnati will be held just two weeks before the confirmation hearing on the Plan of Adjustment is scheduled to begin in bankruptcy court in Detroit.
Here’s the story:
After Bankruptcy Judge Steven Rhodes ruled last year that Detroit’s bankruptcy case could go forward, several groups representing employees and retirees appealed his decision to the Sixth Circuit. In February, that court ruled the appeal could proceed but refused to expedite it as the attorneys had asked. Now the court says it will hold arguments on the issue July 30.
Each side will have one hour to argue before a three-judge panel, the court wrote.
The city has asked the arguments on the appeal be postponed if pensioners vote in favor of the city’s Plan of Adjustment. Votes are due July 11, and the city plans to report votes to the bankruptcy court by Monday, July 21, city spokesman Bill Nowling said earlier this week. City lawyers repeated that plan in their request for the postponement of eligibility arguments.
According to terms reached in negotiations and in the “Grand Bargain,” if the two classes of pensioners — police/fire and non-uniform — vote in favor of the plan, they agree not to pursue pending litigation, such as the appeal of the bankruptcy eligibility. Several employee groups who are parties to the appeal have reached agreements with the city as part of the bankruptcy negotiation and have agreed to support the Plan of Adjustment. These include the Police and Fire Retirement System; the General Retirement System; the Official Committee of Retirees; American Federation of State, County and Municipal Employees Council 25; Retired Detroit Police and Fire Fighters Association, the Detroit Retired City Employees Association, the Detroit Police Command Officers Association and the International Union, UAW.
But the Retired Police Member Association, the Detroit Fire Fighters Association and the Detroit Police Officers Association — have not reached agreements with the city in the bankruptcy and are also parties to the eligibility appeal.
-By WDET’s Sandra Svoboda
@WDETSandra and email@example.com
At the beginning of the year, newly elected Mayor Mike Duggan said to watch what happens in six months. The media partners of the Detroit Journalism Cooperative did just that, examining how the city is functioning while in bankruptcy and how the leadership of Mayor Duggan is impacting services and neighborhoods.
Next Chapter Detroit posted the DJC’s coverage of the mayor’s first six months in office as it was released…and now brings this compilation of all the partners’ work:
We start with a look at the mayor himself. Here’s a profile by Michigan Radio’s Lester Graham. Also Bridge Magazine’s Mike Wilkinson looked at Mayor Duggan’s penchant for creating his own performance measures, both how they’re defined and reported.
Benchmarks from Bridge
After this introductory piece, Bridge magazine published a series of stories looking at how well Mayor Duggan is meeting certain benchmarks, some of which he set for himself, at the beginning of his term. They are:
City Services, written by Michigan Radio’s Lester Graham Jobs, written by Rich Haglund Livability, written by Nancy Derringer Public Safety, written by Michigan Radio’s Sarah Hulett Public Transportation, video by Hailey Zureich and John Zyski Schools, written by Michigan Radio’s Sarah Cwiek
The Craig Fahle Show
Craig hosted guests for several segments to talk about aspect of the mayor’s work and the Detroit Journalism Cooperative coverage. He was joined by Bridge Magazine’s Nancy Derringer, Michigan Radio’s Lester Graham and WDET/Next Chapter Detroit’s Sandra Svoboda to discuss what the mayor has — and hasn’t — done.
Craig also spoke with listeners on June 23 to hear their assessments of Duggan’s performance. Generally they think he’s doing a good job — but say the city needs more.
In Mayor Mike Duggan’s first six months in office, one of the biggest difference between him and previous mayors has been his relationship with the City Council: Council member Saunteel Jenkins tells Craig it’s a cordial one that works. “It’s different because the mayor has actively pursued a relationship with council,” she says.
Detroit Public Television
On the television airwaves, DPTV aired two programs with discussions about Mayor Duggan’s first half year. First, the MiWeek team evaluated some of the mayor’s biggest successes and remaining challenges. Then American Black Journal dug into the Blight Removal Task Force, one of Mayor Duggan’s signature efforts.
Every Detroit mayor for decades has talked about blight. One of the biggest problems facing Detroit is the huge number of abandoned houses, buildings, and vacant lots. Here’s a look at what’s changed in how that issue is addressed since Mayor Mike Duggan took office, by Michigan Radio’s Lester Graham.
Graham also reported that one out of every three Detroit households doesn’t have a car. They rely on the bus system. But it’s broken. People at the Rosa Parks Transit Center in downtown Detroit disagree whether it’s gotten any better since Mayor Mike Duggan took over the Detroit Department of Transportation, but officials at the department say they’re working to get more buses on the roads.
Michigan Radio’s Stateside program on June 23 featured Detroit Reporter Sarah Cwiek and Investigative Reporter Lester Graham who talked about Mayor Duggan.“He’s showing some real leadership skills for a guy who has been elected to serve a city with no power,” Graham says on the program. Stateside also hosted a conversation about transportation in the city.
Until recently, almost half the streetlights of Detroit were dark. Thousands of new streetlights are replacing the old broken ones. Michigan Radio’s Lester Graham caught up with one of several crews installing streetlights in neighborhoods around Detroit and discovered fewer, less expensive lights to power and maintain means a big drop in cost.
When elected, Mayor Duggan took over a city run by someone else: state-appointed Emergency Manager Kevyn Orr. Still, Michigan Radio reports that doesn’t mean Duggan has been denied all the rites of passage of the job including the schlep to Lansing to ask the state Legislature for something. Every mayor has to do it. And Duggan had to go to Lansing with a really big ‘ask.’ We’re talking about the $195 million dollar rescue package for his city (that’s right, ‘rescue,’ ‘settlement.’ Just don’t call it a ‘bailout.’)
WDET’s Quinn Klinefelter found some Detroit residents say the initiatives undertaken by the Mayor are producing mixed results as he works to create what he calls a “livable” city – one that attracts new residents and maintains a stable tax base. WDET’s Pat Batcheller looks at efforts to improve the city’s bus system and transportation department.
Mayor Mike Duggan acknowledged one of the single biggest hurdles city residents face when it comes to transportation during his State of the City address in January: the high cost of auto insurance. WDET’s J. Carlisle Larsen takes a look at what the situation is for drivers in the city.
To get a sense of how a candidate plans for success and how they go about implementing such a strategy when elected, WDET’s Travis Wright spoke with former Mayor Dennis Archer. Twenty years ago this week, Archer, a former Michigan Supreme Court Justice was wrapping up his first six months as mayor. When Archer looked back on those crucial first months in 1994, he said it all started when he tapped six University of Michigan professors to help him craft a city improvement plan in 1990.
-By WDET’s Sandra Svoboda
@WDETSandra and firstname.lastname@example.org
This week the media partners of the Detroit Journalism Cooperative are looking at how the city is functioning under bankruptcy and the leadership of Mayor Mike Duggan. At the beginning of the year, Mayor Duggan said to watch what happens in six months. We’ll review the changes throughout this week, but we thought we’d start with a look at the mayor himself. Here’s a profile by Michigan Radio’s Lester Graham.
As executive director of the Congress of Communities, she recently attended a monthly gathering aimed at addressing education issues. During that meeting, she was part of a conversation about what’s changing in Detroit since Emergency Manager Kevyn Orr arrived and declared bankruptcy and Mayor Mike Duggan began focusing on blight removal, lighting installation and garbage collection.
“It seems like since Mayor Duggan has come in, a lot has been happening: garbage is being picked up, lights are being turned on,” Salinas says. “People have this perception that the man came in and all of sudden everything changed. It’s kind of a misperception.”
Salinas says the city’s bankruptcy isn’t something that residents necessarily experience or address in their daily lives beyond living in the conditions that reflect why it was declared. They don’t see how the court machinations, implications of the judge’s ruling or the landmark nature of the “grand bargain” really impact their lives in the city.
“I don’t know that residents really understand what bankruptcy is,” she says. “Their issues are bigger. They’re not thinking about the bankruptcy. Maybe they don’t know what it means, what happened.”
The Next Chapter Detroit meeting – from 6 to 8 p.m., Wednesday, June 25 at Urban Neighborhood Initiatives, 8300 Longworth – will help residents understand what’s possible in Detroit’s future and give them ideas about how they can be a part of designing it.
“The bankruptcy has a lot to do with wiping the slate clean and being able to start fresh and new and get new contracts and get rid of contracts or infrastructure in a broken system,” Salinas says. “We’re actually able to take a look and incorporate a new system because basically, through bankruptcy, you can start over.”
One of the anchors of Detroit’s Hispanic community — and of its success — has been the burgeoning small business economy, reports The Latino Press. “Statewide, Latino-owned businesses in 2013 had sales and receipts of almost $4 billion and employed well over 18,000 people. As Detroit negotiates its way to a better economic future, the Latino investment in that effort will be critical to its success.” The state of Latino small businesses could be considered a barometer not only of the health of the Latino community, but of Detroit as well. The Press, a Detroit Journalism Cooperative partner, explores some of the the experiences in this vibrant community.
The “Grand Bargain” gets grander with a $26 million contribution from the Detroit Three automakers toward the Detroit Institute of Arts’ $100 million portion of the deal, officials announced today.
The funds, per terms of the Grand Bargain, will be contributed toward pensions as long as pensioners vote in favor of the city’s Plan of Adjustment. Voting is ongoing with ballots due back by July 11. The deal also includes $195 million of state money, approved by the Legislature and awaiting Gov. Rick Snyder’s signature, and $366 million of foundation funds. The money also protects the museum’s collection from sale to creditors to pay debt.
Gathering in the Rivera Court at the museum, executives from the car companies, leaders of the the Detroit Institute of Arts, Chief U.S. District Judge Gerald Rosen, Detroit Emergency Manager Kevyn Orr, Gov. Snyder and two retirees spoke to the audience and media.
Here’s some of what they had to say:
“This is about the DIA certainly but this is about Detroit, it’s about Michigan, and it’s about our pensioners. We’re all beneficiaries of this wonderful effort,” said Eugene Gargaro, chairman of the board, Detroit Institute of Arts.
“This money is intended to help preserve the cultural identity and the culture heritage that is on display here at the Detroit Institute of Arts. It is also intended to help preserve the pensions of many of the hard-working men and women that have served the city of Detroit for many years and most importantly this contribution is intended to help get the Motor City back on its feet again,” says Reid Bigland, head of U.S. Sales, Chrysler Group, chairman, president and chief executive officer, Chrysler Canada, Inc. and president and chief executive officer Ram Tuck Brand, Chrysler.
“The DIA and the people of Detroit need our help and we are here as we’ve always been to do our part. … We hope our contribution will encourage other companies and organizations to come forward and join us in this effort to revitalize this great city,” says Joe Hinrichs, executive vice president and president, The Americas, Ford Motor Company.
“We are here today to ensure that the Detroit Institute of Arts remains a vibrant cultural pillar within our community. The mark of a great city is of course its cultural institutions. …and GM stands united with so many of others in our community to preserve this historical treasure at this critical time,” says Mark Reuss, executive vice president, Global Product Development, Purchasing and supply chain, and vice chairman, GM Foundation.
“I think it’s important that we stop and recognize something special with our auto companies. If you think back a few years ago, did we think we would see a day when they were stepping up to support this community at this financial level? They were struggling for their survival. …It’s a fragile comeback. Our work is not done yet. We need to follow through. This is an important step. This is an historic step today in making that fragile comeback a reality,” says Gov. Rick Snyder.
“In so many ways you are very much the face, not just of Detroit but all of Michigan…applause … and to have come forward in this way speaks volumes about the commitment that all three of you have to Detroit and to Michigan. Thank you very much. I couldn’t help but think maybe we’re setting the template here in Michigan for how this should be done,” says chief U.S. District Judge Gerald Rosen, who is the chief mediator in the bankruptcy case.
“The ball has started to roll. It is now going to roll full force downhill and pick up even more money or the Grand Bargain,” Shirley Lightsey, president of the Detroit Retired City Employees Association.
“There are very many moving parts that had to be put into place. Most of those have now been put into place and it’s up to the retirees to step up. As I say we are the beneficiaries of nearly a billion dollars that have been contributed to help secure our pensions and reduce the reductions that we would see otherwise,” says Don Taylor, president of the Retired Detroit Police and Firefighters Association.
“As we sit here in this cradle of history and you look around at these great murals, you see depictions of the industrial might of the United States and the effort that it undertook to reach a great outcome and as people keep reminding me because I lose track of it from time to time, we’re in the midst of a great undertaking on behalf of the state, the city and in front of the eyes of the country,”
Detroit Emergency Manager Kevyn Orr.