Bankruptcy Plan Faces Key Vote By Michigan State Committee
Send a link to a friend
[May 21, 2014]
(Reuters) - Detroit's plan to deal
with $18 billion of debt so it can exit municipal bankruptcy faces a
crucial test on Wednesday, when a panel of Michigan state lawmakers
votes on legislation, opposed by some conservatives, to provide state
funding for the city.
A special Michigan House committee on Detroit's Recovery and
Michigan's Future began hearings last week on a package of bills
authorizing a $195 million lump sum contribution by the state, and
creating of an oversight commission for the city.
The state's contribution is a key component of a so-called grand
bargain that includes $466 million pledged by philanthropic
foundations and the Detroit Institute of Arts to help ease pension
cuts for city retirees and avoid a sale of artwork to pay creditors.
But Americans for Prosperity-Michigan, a conservative group backed
by billionaire industrialists Charles and David Koch, is revving up
a campaign against using state money to help Detroit.
Scott Hagerstrom, the state director of the group, said Detroit,
already the top city recipient of state revenue sharing, should be
selling assets such as art rather than looking to Michigan for a
"We want to make sure citizens are fully aware of where their
legislators stand on this legislation," he said.
Meanwhile, U.S. Bankruptcy Court-appointed mediators announced late
on Monday that the Michigan Building and Construction Trades Council
will also participate in the debt adjustment plan by making material
contributions for retiree healthcare costs.
"It is hoped that other labor organizations will soon come to the
table and support this effort to assist Detroit's retirees in
meeting their health care costs," they said in a statement.
The mediators noted that all the contributions were contingent on
each other. Without the money from the grand bargain, pension cuts
to retired Detroit workers would increase and could force some to
seek state assistance.
Michigan Republican House Speaker Jase Bolger has been pushing for
monetary participation in Detroit's debt plan by public labor
"Speaker Bolger supports Chief Judge Rosen in his call for more
unions to come to the table as we work to resolve Detroit's
bankruptcy and the big picture of how that is going to happen comes
into focus," his spokesman Ari Adler said on Tuesday.
[to top of second column]
U.S. District Judge Gerald Rosen is the chief mediator in Detroit's
municipal bankruptcy case, the largest in U.S. history.
At the House committee's hearing on Tuesday, Detroit Mayor Mike
Duggan and City Council President Brenda Jones asked the committee
to allow the city's council to appoint a representative to the
planned seven-member oversight commission.
Under the initial legislation, the governor of Michigan and mayor of
Detroit would serve on the commission, with state officials or state
appointees making up the remaining members.
Duggan also presented the House committee with an update on efforts
to deal with blighted properties and build new housing, noting that
a major bank would be making an announcement.
The Detroit Free Press reported on Tuesday that JP Morgan Chase
plans to invest $100 million in the city over five years to spur
redevelopment, blight removal, and job training. The bank will also
make money available for home loans.
A Chase spokesman would only say the bank will hold an event in
Detroit on Wednesday.
(Reporting By Karen Pierog. Editing by Andre Grenon)
[© 2014 Thomson Reuters. All rights
Copyright 2014 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.