Detroit Unrolls Its Bankruptcy Blueprint
Quinn Klinefelter |
Friday, February 21, 2014
Detroit officials have filed a blueprint for the city's emergence from the largest municipal bankruptcy in U.S. history. Quinn Klinefelter of WDET reports that unions and others vow to fight the plan.
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It's ALL THINGS CONSIDERED from NPR News. I'm Audie Cornish.
ROBERT SIEGEL, HOST:
And I'm Robert Siegel. Today officials in Detroit filed an important and long-awaited document. It is the blueprint for how the city will try to emerge from the largest municipal bankruptcy in U.S. history. But as Quinn Klinefelter of member station WDET reports, the city's unions and creditors are vowing to fight this proposal tooth and nail.
QUINN KLINEFELTER, BYLINE: It's called a plan of adjustment, Detroit's path towards revitalizing city services and shedding more than $18 billion in long term debt. It trims payments to Wall Street and city retirees while significantly restructuring union contracts and privatizing some city services. That would allow Detroit to invest about a billion-and-a-half dollars in police and fire service, plus rid the city of thousands of blighted buildings.
It's the kind of plan Sandy Baruah with the Detroit Regional Chamber says will lure new business to this cash-strapped city.
SANDY BARUAH: Under the circumstances I think it's the best option that's on the table. It is clear. It provides certainty. And this plan includes a ten-year investment in the resources of the city. And that's hugely important.
KLINEFELTER: The plan relies in part on funding from foundations and the state government to help cover some pension costs, saving the city from having to sell too many assets. But city unions call the plan a gut punch to retirees, most of whom face having their monthly pensions cut by a third. Police and firefighters would see only about a 10 percent cut. The plan also offers creditors who loaned Detroit bond money only about 20 cents on the dollar. And lawyer Leslie Norwood, who represents banks and bondholders says that's not fair.
LESLIE NORWOOD: If investors can't trust municipalities to pay back their general obligation bonds, they'll be less willing to buy their debt or require higher interest rates.
KLINEFELTER: That sets the stage for numerous lawsuits by creditors and city unions in a bankruptcy process with no end yet in sight. For NPR News, I'm Quinn Klinefelter in Detroit. Transcript provided by NPR, Copyright NPR.View this story on npr.org