Kevyn Orr

  • The DIA Post Detroit Bankruptcy? New provisions for funding the museum and pensions

    The city’s new Plan of Adjustment contains some details of private foundation contributions to the $815 million “grand bargain” – the deal that would maintain the Detroit Institute of Arts collections and other assets in charitable trust for the public and protect them from sale to fund pensions.

    The yet-to-be-finalized deal also includes Gov. Rick Snyder’s proposed $350 million over 20 years from the state. Under the deal, private foundations would contribute $373.5 million, including $7.5 million they have already committed to the museum (see below for foundations and amounts pledged). The DIA, according to the Plan, would contribute $100 million:

    The DIA undertakes to secure commitments for contributions of the $100 million (subject to the Present Value Discount) from the business community (and their related foundations), other foundations and individuals. As of the Closing, The DIA shall be responsible for any portion of the $100 million … for which is has not secured commitment from DIA Funders as of the Closing. However, The DIA shall have the right after the Closing to substitute for its obligation to pay any or all of he DIA Deficiency commitments from new DIA Funders or an increased funding commitment from an existing DIA Funder.

    Pensions, under terms of the “grand bargain” would be managed by a new Receivership Transition Review Board that is independent from the city for at least 20 years. The DIA also would establish an “ad-hoc” governance committee with members representing the foundations funding the grand bargain, the city and the state of Michigan.

    Meanwhile, bond insurer Syncora, which holds about $620 million of the city’s $18 billion debt, is seeking to subpoena a massive amount of information related to the museum’s assets, finances and management. No protective orders have yet been filed, nor are hearings scheduled about Syncora’s action.

    If the “grand bargain” goes through under the proposed and most recent Plan of Adjustment, the museum “will provide an array of art programs at no or discounted costs to the residents of the State.” While the Plan doesn’t mandate what those could be, it does suggest that “such programs could include” exhibitions rotating through other Michigan museums and art centers, professional development programs with the Michigan Museums Association, an expansion of the Inside/Out program to place art reproductions in outstate locations, providing discounted art conservation services for other Michigan museums and developing an educational program based on the DIA’s collection that supports National Common Core Standards.

    According to the court documents filed March 31, the “Foundation Funder Intended Funding Amount” plan is:

    Community Foundation for Southeast Michigan $10 million
    William Davidson Foundation $25 million
    The Fred A. and Barbara M. Erb Family Foundation $10 million
    Max M. and Marjorie S. Fisher Foundation $2.5 million*
    Ford Foundation $125 million
    Hudson-Webber Foundation $10 million
    The Kresge Foundation $100 million
    W. K. Kellogg Foundation $40 million
    John S. and James L. Knight Foundation $30 million
    McGregor Fund $6 million
    Charles Stewart Mott Foundation $10 million
    A. Paul and Carol C. Schaap Foundation $5 million*
    Total $373.5 million, less credits to DIA Commitments (*$7.5 million)

    Net Total $366 million


    -By WDET’s Sandra Svoboda

    @WDETSandra and

  • Detroit’s New Disclosure Statement

    Here is the updated Disclosure Statement the city filed today in its bankruptcy case followed by the attached exhibits:


    Amended Disclosure Statement 3.31.2014




    Disclosure Statement Exhibits

  • Detroit’s New Plan of Adjustment

    The city today filed its amended Plan of Adjustment and Disclosure Statement, promising it would again modify the documents by April 14.

    In a statement to media, Emergency Manager Kevyn Orr says “The City continues to make progress with its creditors and retirees and hopes to reach agreement in the near term on a number of outstanding issues. … We believe that the Plan we have proposed, and continue to refine, is feasible and allows the City to reduce its staggering $18 billion in debt and live within its means. The Plan puts the focus back on providing essential public services to the City’s nearly 700,000 residents.”

    Here is the Plan:


    Amended Plan of Adjustment 3.31.2014

  • In Bankruptcy, it’s all about Bankruptcy: City Council approves hockey stadium deal

    In a 5-4 vote, the Detroit City Council today approved a five-year lease agreement with Olympic Entertainment for the Joe Louis Arena and parking structure. The deal is expected to bring $5.2 million to the city in cable fees, rent and other payments during the next five years. The Detroit News reports:

    The new lease — which replaces the original 1978 agreement that expired July 1, 2010 — calls for rent of $1 million a year. Olympia Entertainment — part of the Detroit business empire owned by Mike and Marian Ilitch — also will pay the city about $100,000 a year for police fees.

    While the City Council approved the deal, it was the city’s bankruptcy lawyers who negotiated it, the Detroit Free Press reports. One of them addressed concerns that the cable fees were too low, given previous estimates they could total tens of millions of dollars:

    A lawyer for Jones Day, however, told the council today that the estimate was exaggerated, and he questioned the city’s chances of winning a lawsuit to recover the cable TV money. … Councilwoman Mary Sheffield, who voted against the lease, said Detroit is not getting enough out of the deal, considering it is in the midst of the country’s largest ever municipal bankruptcy. “We are bankrupt,” she said after today’s meeting. “We are continually cutting from the working class people when there could be a $50 million to $80 million revenue,” she said.

    Detroit Emergency Manager Kevyn Orr was a partner at Jones Day before resigning to accept the Detroit post a year ago.

    Council President Brenda Jones, and members Scott Benson, Raquel Castaneda-Lopez and Mary Sheffield voted against the proposal. Castaneda-Lopez wanted to eliminate from the lease a non-compete clause that prohibits the city from using Joe Louis Arena for events after the Red Wings leave. Her request was not granted.



    By in Kevyn Orr, WDET
  • Detroit details $179 million investment plan

    Plans for more cops and firefighters, vehicles for them, additional money for park upgrades and blight removal, city employee training and several technology upgrades. That’s what the city proposes if a $120 million loan is approved, according to a court filing Friday.

    The Detroit Free Press reports:

     The city listed $179 million in near-term investment needs for its beleaguered public safety, antiquated record-keeping systems and blight removal in response to creditor complaints that Detroit wasn’t detailing how it would spend the fresh debt from London-based Barclays, which must be approved by Judge Steven Rhodes.

    In the court filing (see below for document), the city proposed how it would use the loan proceeds, including:

    • $36.2 million for the police department, specifically for fleet vehicles, construction of new precincts and a training facility, IT upgrades, hiring and equipment purchases;
    • $35.6 million for residential blight removal;
    • $28.5 million for the fire department including vehicle purchase and maintenance, facility repairs and maintenance, IT upgrades and hiring;
    • $25.4 million to the finance department for hiring and IT upgrades;
    • $24.8 million for the general services department to be used for park upgrades and ground maintenance fleet replacement, citywide facility improvements, and repairs and increased staffing;
    • $5.1 million to demolish the Herman Kiefer building;
    • $4.5 million for facility consolidation and hiring in the planning and development department;
    • $3.4 million for city employee training;
    • $2.7 million for transportation facility improvements and service costs;
    • $3.2 million for recreation facilities repair and maintenance, and parks and recreation facility improvements;
    • $1.6 million for more legal staff;
    • $800,000 for the elections department to cover deferred maintenance and improvements;
    • $600,000 for human resources staff.

    3.28.14 City of Detroit Post Petition Financing

  • Orr on DWSD: The EM speaks to the Chronicle

    Detroit’s Emergency Manager Kevyn Orr sat down with the Michigan Chronicle, one of the state’s leading African-American newspapers. In a wide-ranging interview, Orr and Publisher Bankole Thompson discussed the Detroit Water and Sewerage Department, specifically what happened with negotiations to create a regional authority, how that proposal collapsed and how privatizing the department might work.

    Here’s one exchange:

    Michigan Chronicle: Can you explain what you meant by leasing as an option?

    Kevyn Orr: We were going to create an authority, which would essentially lease the department and operate it and pay the city a lease payment. That would be $47 million a year. Our county partners don’t want to do that. That’s fine. So we are going to move away from the lease concept more to a contract. There are operating contractors out there who would bring greater efficiency to the system. That’s what they do. We would also entertain requests for information about an outright purchase.