DETROIT (AP) — Detroit is eligible to shed billions indebt in the largest public bankruptcy in
U.S. history, a judge saidTuesday in a long-awaited decision that now shifts the case toward howthe city
will accomplish that task.Judge Steven Rhodes turneddown objections from unions, pension funds and retirees,
which, likeother creditors, could lose under any plan to solve $18 billion inlong-term liabilities.But that
plan isn’t on the judge’s deskyet. The issue for Rhodes, who presided over a nine-day trial, waswhether
Detroit met specific conditions under federal law to stay inbankruptcy court and turn its finances around
after years ofmismanagement, chronic population loss and collapse of the middle class.Thecity has argued
that it needs bankruptcy protection for the sake ofbeleaguered residents suffering from poor services such
as slow tononexistent police response, darkened streetlights and erratic garbagepickup — a concern mentioned
by the judge during the trial."Thisonce proud and prosperous city can’t pay its debts. It’s insolvent.
It’seligible for bankruptcy," Rhodes said in announcing his decision. "Atthe same time, it also
has an opportunity for a fresh start."Beforethe July filing, nearly 40 cents of every dollar collected
by Detroitwas used to pay debt, a figure that could rise to 65 cents withoutrelief through bankruptcy,
according to the city.Emergencymanager Kevyn Orr, who had testified the city’s current conditions
are"unacceptable," release a statement praising the judge’s ruling andpledging to "press
ahead with the ongoing revitalization of Detroit."Rhodes said Tuesday that Detroit has a proud
history."Thecity of Detroit was once a hard-working, diverse, vital city, the homeof the automobile
industry, proud of its nickname the Motor City," hesaid. But he then recited a laundry list of
Detroit’s warts:double-digit unemployment, "catastrophic" debt deals, thousands ofvacant homes,
dilapidated public safety vehicles and waves of populationloss.Detroit no longer has the resources to
provide critical services, the judge said, adding: "The city needs help."Rhodes’decision is a
critical milestone. He said pensions, like any contract,can be cut, adding that a provision in the Michigan
Constitutionprotecting public pensions isn’t a bulletproof shield in a bankruptcy.Thecity says pension funds
are short by $3.5 billion. Anxious retireesdrawing less than $20,000 a year have appeared in court and put
ananguished face on the case. Despite his finding, Rhodes cautionedeveryone that he won’t automatically
approve pension cuts that could bepart of Detroit’s eventual plan to get out of bankruptcy.Thereare other
wrinkles. Art possibly worth billions at the Detroit Instituteof Arts could be part of a solution for
creditors, as well as the saleof a water department that serves much of southeastern Michigan. Orroffered
just pennies on every dollar owed during meetings with creditorsbefore bankruptcy.Behind closed doors,
mediators, led by anotherjudge, have been meeting with Orr’s team and creditors for weeks toexplore possible
settlements.Much of the trial, which ended Nov.8, focused on whether Orr’s team had "good-faith"
negotiations withcreditors before the filing, a key step for a local government to beeligible for Chapter 9.
Orr said four weeks were plenty, but unions andpension funds said there never were serious across-the-table
talks.Minutesafter the ruling, a lawyer for the city’s largest union, said she wouldpursue an appeal at the
6th U.S. Circuit Court of Appeals inCincinnati. City officials got "absolutely everything" in
Rhodes’decision, she told reporters."It’s a huge loss for the city ofDetroit," said Sharon Levine,
an attorney for the American Federation ofState, County and Municipal Employees, which represents half the
city’sworkers.Opponents want to go directly to a federal appeals courtin Cincinnati, bypassing the usual
procedure of having a U.S. DistrictCourt judge hear the case.Orr, a bankruptcy expert, was appointedin March
under a Michigan law that allows a governor to send a managerto distressed cities, townships or school
districts. A manager hasextraordinary powers to reshape local finances without interference fromelected
officials. But by July, Orr and Gov. Rick Snyder decidedbankruptcy was Detroit’s best option.Detroit, a
manufacturing hubthat offered good-paying, blue-collar jobs, peaked at 1.8 millionresidents in 1950 but has
lost more than a million since then. Taxrevenue in a city that is larger in square miles than Manhattan,
Bostonand San Francisco combined can’t reliably cover pensions, retiree healthinsurance and buckets of debt
sold to keep the budget afloat.Donorshave written checks for new police cars and ambulances. A new agencyhas
been created to revive tens of thousands of streetlights that aredim or simply broken after years of
vandalism and mismanagement.Whiledowntown and Midtown are experiencing a rebirth, even apartments withfew
vacancies, many traditional neighborhoods are scarred with blightand burned-out bungalows.Besides financial
challenges, Detroithas an unflattering reputation as a dangerous place. In early November,five people were
killed in two unrelated shootings just a few daysapart. Police Chief James Craig, who arrived last summer,
said he wasalmost carjacked in an unmarked car.The case occurs at a time of ahistoric political transition.
Former hospital executive Mike Duggantakes over as mayor in January, the third mayor since Kwame
Kilpatrickquit in a scandal in 2008 and the first white mayor in largely blackDetroit since the 1970s.Orr,
the emergency manager, is in chargeat least through next fall, although he’s expected to give Duggan moreof
a role at city hall than the current mayor, Dave Bing, who has littleinfluence in daily operations.___Follow
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