DETROIT (AP) — National and local foundations have
committed more than $330 million toward the pensions for Detroit’s
public workers in an effort to stave off the sale of city owned-pieces
as part of a historic bankruptcy, mediators said Monday.
Other
foundations were expected to soon announce their participation in a plan
to help solve two of the bigger issues facing the insolvent city.
Nearly 130 individuals also have contributed to a fund established with a
Detroit-area community foundation, said the mediators, a group of
attorneys and current and retired judges.
Federal Judge Gerald
Rosen, the chief mediator between the city and its creditors, has asked
foundations and others to raise $500 million to protect pieces in the
Detroit Institute of Arts while assisting pensioners who are expected to
lose some benefits in the city’s restructuring.
In separate
statements sent Monday, both the mediators and the foundations said
assisting retirees while also preserving art would help lead to a
"balanced settlement."
Spokeswoman Sara Wurfel said Monday that
Gov. Rick Snyder considered the announcement "positive news." But she
was noncommittal on whether Michigan would contribute money as well,
saying that "would be in partnership with the Legislature" and require
negotiations.
Detroit became the largest U.S. city to enter bankruptcy on Dec. 3 when Judge Steven Rhodes approved the
city’s petition.
State-appointed
emergency manager Kevyn Orr has said Detroit has at least $18 billion
in debt. Of that amount, about $3.5 billion is unfunded pension
liabilities.
He warned DIA officials last spring that artwork
owned by the city could be considered assets and might be vulnerable to
sale if Detroit went into bankruptcy.
According to an appraisal
ordered by Orr and completed late last year by New York-based
Christie’s, about 2,800 paintings, sculptures and other pieces owned by
Detroit are collectively worth between $454 million to $867 million.
They represent about 5 percent of the museum’s estimated 66,000-work
collection.
Their plan "offers an important opportunity to help
Detroit find much needed solutions to its unique challenges," the
foundations said Monday in a statement.
The group includes the high-powered Ford, Hudson-Webber, Kresge and Knight foundations.
The
DIA pieces likely will be part of Orr’s plan of adjustment for the
city’s restructuring. Also part of that plan will be a renegotiated
settlement with UBS and Bank of America Merrill Lynch over pension debt.
Closing arguments on the $165 million deal reached last month were being held Monday in bankruptcy court.

The
city pledged casino tax revenue in 2009 as collateral to avoid
defaulting on pension debt payments. The swaps allowed Detroit to get
fixed interest rates on pension bonds with the banks.
An initial $220 million payoff was reached, but Rhodes ordered the city to renegotiate.
"There
is no question the settlement is extremely beneficial to the city,"
Merrill Lynch lawyer Mark Ellenberg told Rhodes Monday. "The city pushed
us to the lowest number we would ever accept."
Rhodes still has to approve the new deal.
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