$85 million to be paid of $288 million currently owed. That’s the latest agreement (posted below) reached between attorneys for the city of Detroit and two investment banks over the interest rate swaps debt related to the city’s pensions funds.
Bankruptcy Judge Steven Rhodes in the last few months has twice rejected agreements of $230 million and $165 million, sending attorneys back to the mediation room. They emerged on Monday, proverbially, and the city filed a motion asking that Rhodes approve the latest arrangement with UBS AG and Bank of America Merrill Lynch. The deal also includes the banks forgoing casino tax revenues that the city had pledged as collateral in 2009 to avoid defaulting on pension debt payments.
The $85 million is not quite 30 cents on the dollar of the current $288 million obligation.
With Detroit’s debt reportedly totaling $18 billion, the city has millions of dollars in debt restructuring remaining to resolve. But the UBS-Bank of America deal is significant. First, it frees up for the city about $15 million in monthly casino taxes that had been tied to the pension interest swap deal. Second, it sets a benchmark for other negotiations — and eventual settlements — with the city’s other 100,000-plus creditors.
Here’s a roundup of news stories about the deal:
Detroit Free Press: Detroit reaches deal…millions saved by taxpayers
Detroit News: New debt deal could save Detroit $201 million
Even in bankruptcy, Detroit has millions of dollars in state and federal money to tear down blighted buildings and clear up vacant lots. Some unspent money has even been found in the city’s own accounts. Scott Woolsey, executive director of the Michigan State Housing Development Authority, discussed how the funds will be spent and what difference they could make in Detroit.
“As soon as the weather breaks, you’re going to see a lot of homes come down,” Woolsey says. “You’re going to see a pretty massive effort in terms of demolition and vacant lot cleanups across the city.”
If there was one theme at the Detroit Regional Chamber’s local policy conference, it was optimism: Detroiters are an optimistic bunch. In discussions ranging from national urban policy to blight, from neighborhood needs to regionalization’s realities, almost everyone at the conference reflected hope, faith and optimism. No one thinks Detroit’s path out of bankruptcy and potential recovery will be easy, but they do think it’s possible.
Here’s the Chamber’s email recap about the event:
Buzz Around City’s Next Chapter Palpable at 2014 Detroit Policy Conference
Approximately 800 attendees came together for the Detroit Regional Chamber’s 2014 Detroit Policy Conference to focus on Detroit’s next chapter. Bringing nationally renowned keynotes and nearly 40 of the region’s most dynamic leaders to the forefront of Detroit revitalization discussions, the Conference sparked dynamic dialogue on the future of The Motor City’s business landscape. The day started with a video featuring Detroit leaders depicted in the September/October Detroitermagazine and concluded with a reception with the new City Council.The Conference featured The Detroit Experience in the ballroom, where exhibitors highlighted the organizations and initiatives contributing to Detroit’s transformation as well as onsite broadcasts from WJR’s Frank Beckmann Show andDetroit Public Television’s MiWeek. The Chamber would like to thank platinum sponsors, MotorCity Casino Hotel andOpportunity Detroit. For a full list of sponsors, click here.
Urban Artist Candy Chang Illustrates the Effectiveness of Art to Solidify a Community
A city’s buildings and structures can serve a greater purpose than visual effects – they can enhance togetherness in a community and empower residents. That was the picture painted by Candy Chang, senior TED fellow and urban artist and designer.Chang discussed the power of creativity in public spaces in the nourishment of peoples’ personal well-being. By introducing various projects from throughout her career, such as her “Before I die, I want to…” initiative, Chang illustrated to attendees the impact of simple, anonymous projects. Artwork has the ability to unite strangers and provide everyone with a voice to strengthen communities. To view video of Chang’s presentation, click here.
Chamber Announces Partnership with Startgrid, NEI Grant to Launch Entrepreneurial Program
The Chamber announced its partnership with Startgrid in launching a collaborative community for entrepreneurs to come together to test, share and grow ideas that will change the world. The launch came with the news of a $100,000 grant from the New Economy Initiative to support the effort.To introduce Startgrid, Chamber CEO Sandy Baruah was joined on stage by Peter Gardner, CEO of Startgrid; Benjamin Erulkar, vice president of economic development – new development strategies at the Chamber; and Dave Egner, executive director of the NEI. Startgrid offers businesses a place to develop ideas among people who understand entrepreneurship, collaborate with trusted experts and friends to build ventures, and meet people who can help expand ideas. To learn more about the program, click here.
Shaping the Future: Despite Challenges, Detroit Has Resources to Write Strong Next Chapter
There isn’t a city in the country poised for growth and comeback like Detroit. That was the inspirational message gleaned from the Conference’s closing panel discussion, “Shaping the Future: Detroit’s Next Chapter.”The panel emphasized the importance of placing an equal premium on business startups as well as existing companies, and the notion that, while politics is key, the “business as usual” approach should no longer be a part of the city’s governance. Despite the challenges that lie ahead, panelists agreed that Detroit has the resources to write an impressive next chapter over the course of five years and beyond. The panelists wereDave Egner, executive director of NEI; Don Graves, executive director of President’s Council on Jobs and Competitiveness;Dan Kinkead, director of projects of Detroit Future City; andThomas Sugrue, David Boies professor of history and sociology. The discussion was moderated by Christy McDonald, anchor of DPTV’s MiWeek. To view clips from this session, click here.
Urban Expert Thomas Sugrue Challenges Traditional Rhetoric on Detroit RevitalizationTo come up with effective solutions for Detroit’s future, it is imperative that the city’s origins are understood. Thomas Sugrue, David Boies professor of history and sociology at the University of Pennsylvania, made that point to the audience as he delved into the historical circumstances that eventually led to Detroit’s bankruptcy. Sugrue provided general principles to illustrate common misconceptions about urban revitalization and offered solutions for Detroit’s continued transformation. He stressed the importance of a diverse labor market with well-paying and secure jobs, reduced barriers to education and densification of the city. Sugrue encouraged the community to nurture institutions and universities, embrace immigrants, and make exerted regional collaboration efforts as solutions to bolster Detroit’s economic growth. To view video of Sugrue’s presentation, click here.
Wayne State President M. Roy Wilson Touts Economic and Social Benefits of Higher EducationThe social mobility made possible by a college education is the key to a strong middle class, and the gateway to the American Dream. That point was emphasized by Wayne State University President M. Roy Wilson during his keynote address at the Conference. In addition to identifying career advancement and expansive networks as benefits of higher education, Wilson demonstrated the socioeconomic impact that university research can have on a community, including millions of dollars’ worth of economic impact and hundreds of thousands of dollars in state tax revenue.
Wilson spoke of Detroit’s residents and resources playing a role in the city’s transformation, including the impact made by public universities. He urged attendees to use education to change the city; to leverage university resources and unleash them to most effectively attract talent and investment to the region. To view video, click here.
Additional Conference Sessions
Chief Craig, Community Leaders Highlight Community and Re-Invention as Keys to Revitalization of Detroit’s NeighborhoodsSmall Business Growth the Focus of “Breaking the Mold: The Entrepreneur’s Business Plan”Detroit’s Transformation Highlighted in “The Detroit Investment: The Smart Bet”Panelists: Moving Detroit Forward Requires Regional CollaborationLocal Entrepreneurs Discuss Resources Available to Detroit Small BusinessesLeaders Make Business Case for Detroit’s Diverse IndustriesIn the News
WJR: Frank Beckmann interviews Sandy Baruah and Detroit News’ Daniel Howes at the Detroit Policy Conference
Detroit Free Press: “Innovation is path to success, 800 hear at Detroit Policy Conference”Detroit News: Temper optimism for Detroit with reality
Tweets of the Day
@crainsdetroit: #DPC14 speaker @candychang can teach #Detroit a lot, says Crain’s Publisher @Mkramercrain @BeforeIdiewall
@DanaintheD: Panelists seem to agree the question is really, “Why NOT #Detroit?” Uber-supportive business community, engaged youth, innovation. #DPC14
@BrittGuerriero: At Detroit Policy Conference: witnessing the launch of Startgrid –a collaborative platform for entrepreneurs. #DPC14
@AllyMac11: Olympia Entertainment CEO Tom Wilson on the new @DetroitRedWings arena and the city’s future: Big projects beget other big projects. #DPC14
@SkillmanFound: With support of residents. MT @Ingrid_Jacques: @pulte talking about how to tackle blight… He’s shown it’s possible in Brightmoor #DPC14
@JGallagherFreep: New ideas for Detroit: Use vacant land as center for for hydroponic research, urban farming, says @MaggieDeSantis at#DPC14 #freep
@Carolyn_Artman: “The privilege of a lifetime is being who you are.” – Joseph Campbell #DPC14#CandyChangPower PerspectivesVIDEO – John Gallagher: The reinvention of government, the economy and vacant land are reasons to be realistically optimistic about Detroit’s transformation. For full video, click here.
Author of the definitive work about Detroit’s decline, “The Origins of the Urban Crisis: Race and Inequality in Postwar Detroit,” Thomas Sugrue speaks with Craig Fahle. Sugrue will appear at the Detroit Regional Chamber’s Policy Conference Feb. 27. Hear a preview.
At the Conference, Sugrue spoke with our Detroit Journalism Cooperative partner DPTV and the MiWeek team:
If you missed the speech, listen here.
Mayor Mike Duggan laid out what he said is a strong case that change can come quickly for Detroit in the Detroit Free Press.
Mayor Mike Duggan vowed Wednesday that “change in Detroit is real” to fix broken city services, as reported by The Detroit News.
AP tackled the mayor’s “strategic demolition” plan to tear down vacant and fire-damaged homes.
Fox 2′s recap of the speech with video
Channel 7 also filed a separate report about Duggan’s “D Insurance” proposal: a city-run auto insurance program to combat high rates for city resident.
“Hello jobs, goodbye blight.” That’s not the Reuters headline. But here is their story about the speech.
Editorials and Columns:
“Big hopes that Duggan can cure Detroit’s big problems” from the Detroit Free Press.
“Duggan projects action, optimism” from The Detroit News.
Freep Columnist Rochelle Riley writes “The first thing you want to ask Mayor Mike Duggan, after his first State of the City address is: ‘You really think you can do all that stuff you just said?’ The second thing is: How can I help?”