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June 24, 2017

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Detroit's prospects rising ahead of next month's bankruptcy trial

DETROIT, Michigan--Detroit neighborhoods are being relit, its vacant homes are being sold off or torn down, its public transportation is cleaner and more often on schedule and the city has renegotiated some burdensome union contracts.

In the little more than a year since state-appointed emergency manager Kevyn Orr made Detroit the largest U.S. city to seek bankruptcy protection, it has experienced a wide range of improvements that will factor into Judge Steven Rhodes' decisions during next month's bankruptcy trial. A major piece of the bankruptcy puzzle could fall into place Monday, with the expected release of the results of a vote by creditors, including more than 30,000 retired and current city workers, on whether to accept millions of dollars in cuts.

When Orr filed for bankruptcy, Detroit's debt then was estimated at US$18 billion, and its revenue streams were too small to keep up with basic city services.

Since then, the city has installed at least 10,000 new streetlights. It's also going after absentee landlords — threatening to take and sell or demolish vacant houses that violate city codes. Eight houses awarded to the city's Land Bank are being put up for auction. Belle Isle, the city's most popular public park, has been put under state control and received a much-needed cleaning.

"Things are being done now that weren't being done," said Detroit barber DeAngelo Smith. "I wouldn't say it would have been as fast if the bankruptcy hadn't been filed."

Some of the most dramatic changes were designed to save the city money and didn't need to wait for the August bankruptcy confirmation trial.

Orr has frozen some benefits for participants in the city's two pension systems and changed the pension plans to reduce future costs for the city. Additionally, the city no longer provides health insurance to retirees.

Deals were reached with unions and retirees on a hybrid pension plan in which current, non-uniformed workers will contribute 4 percent of their salary toward benefits. Current police and firefighters will contribute 6 percent. New police and fire hires will chip in 8 percent of their base salary.

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