The city and insurers of general obligation bonds have reached a settlement, the Detroit Free Press reports this morning. Reporter Nathan Bomey writes the city could officially reveal terms of the settlement as soon as today. In the city’s most recent Disclosure Statement, Emergency Manager Kevyn Orr called for paying 15 cents on the dollar on unsecured bonds, which represent about $538 million of Detroit’s billions of dollars in debt and liabilities.
Attorneys are not supposed to reveal details about the talks, but Free Press sources tell Bomey the settlement has been reached. The deal, if approved by Bankruptcy Judge Steven Rhodes, would make it easier for the city to force a settlement on other creditors, including pensioners.
The debt included $163.5 million in limited-tax obligations and $374.7 million in unlimited-tax obligations. A source familiar with the settlement — which was negotiated by bankruptcy mediators overseen by U.S. District Chief Judge Gerald Rosen — said the unlimited-tax bondholders will be treated better than limited-tax bondholders. The city won the approval of major bond insurers that will be forced to pay bondholders the difference of the full value of their bonds and the price the city pays when it exits bankruptcy.
Meanwhile, The Detroit News reports the city and bond insurers had intensified their negotiations since Bankruptcy Judge Steven Rhodes held a February hearing on insurers’ legal action against the city, a claim filed in November that asserted the city was “illegally diverting voter-approved property taxes to the general fund.” That suit was filed by bond insurers National Public Finance Guarantee Corp., Assured Guaranty Municipal Corp. and Ambac Assurance Corp.
News reporter Chad Livengood writes:
The bond insurers argued the tax revenue had to be segregated and used to repay bondholders who financed capital improvements of recreation, public safety, cultural, health and lighting facilities. … On March 24, attorneys for the three bond insurers and Detroit were ordered to attend a closed-door mediation session by Chief U.S. District Court Judge Gerald Rosen, the lead mediator in the bankruptcy case.
London’s The Guardian newspaper asks “Why does anyone still live in Detroit?” in an article published last week and authored by a native Detroiter now living in New York.
In the first five paragraphs, the article manages to pack in descriptions of the city’s problems with crime, police response, blight, population decline, lack of mass transit, crumbling roads and water infrastructure, lack of grocery stores and retail, and the difficulty of non-motorized transportation.
Whew. That’s an impressive litany of woes jammed into the top of an article, packaged between photos of a tagged abandoned house and a party store’s outside wall advertising liquor, lotto and check cashing.
In the remaining 2,100 words of the piece there is one paragraph devoted to Mayor Mike Duggan’s campaign promises, the city charter change to council elections by district and a description of how Emergency Manager Kevyn Orr has “made blight removal and service provision a priority.” One subsequent paragraph summarizes foundation dollars and other private contributions that could provide some support for improvements. Another few paragraphs describe the goals and challenges of the Detroit Future City plan.
The ‘Live in Osborn’ effort gets some rhetorical love in the article, with a description of improvements planned in that east side neighborhood. The blight removal efforts are as “the easiest answer, though not necessarily the best.”
But the article’s conclusion?
“Perhaps Detroit needs a hero to battle its hydra.”
Detroit Mayor Mike Duggan, Michigan Gov. Rick Snyder and Detroit Emergency Manager Kevyn Orr will be featured speakers at the Detroit Regional Chamber’s Mackinac Policy Conference later this spring.
Here’s what the chamber said in announcing the lineup:
With Detroit’s emergence from bankruptcy critically important to Michigan’s future, Orr will discuss the progress since his appointment in March 2013 and what is needed to position the city for success moving forward. Before his expected departure this fall, Orr will give insight into the short and long-term vision for Detroit’s sustained growth, as well as the blueprint it provides for municipalities around the nation facing similar challenges.
Other speakers in the scheduled May 27-30 event include:
Jim Clifton, chairman and CEO, Gallup Inc.; author, “The Coming Jobs War;” Malcolm Gladwell, author, “David and Goliath;” and Joel Klein, CEO, Educational Division, News Corporation; former chancellor, New York City Department of Education.
A day after the city of Detroit filed its amended Plan of Adjustment and Disclosure Statement, hundreds of retirees, city workers, advocates and other supporters gathered downtown for a demonstration. They closed off Lafayette Boulevard in front of the federal courthouse, circling and chanting slogans including “No justice, no peace. No pensions, no peace.” Several speakers addressed the crowd, urging Emergency Manager Kevyn Orr to not cut pensions as part of the city’s restructuring and emergence from bankruptcy.
The demonstrators also are hoping to convince Bankruptcy Judge Steven Rhodes to better protect pensioners who also are facing increases in their health care costs under the current proposed city restructuring effort.
Attorney Jerome Goldberg was among several speakers. Goldberg has fought to stop home foreclosures in the city, and now represents David Sole, a retired Detroit waterworks employee.
“UBS and Bank of America know: not one penny for the criminal banks. Hands off our pensions. Take it from the banks, not the workers,” Goldberg told the crowd.
Some of the demonstrators say they have filed objections with the bankruptcy court over the city’s proposed restructuring. Others visited a table on the sidewalk at the demonstration where forms and instructions to file were provided. Rhodes will review those submissions, along with other legal challenges, as he considers the feasibility and responsibility to pensioners and other creditors as part of the bankruptcy case. A trial is scheduled for July.
-By WDET’s Sandra Svoboda
@WDETSandra and email@example.com