MACKINAC ISLAND, Mich. (AP) — Detroit’s emergency manager
warned Friday that a complex package of nearly $1 billion in possible
aid for the bankrupt city could unravel unless city employees and
retirees approve a pension deal.
Kevyn Orr said $195 million in
upfront state money still has to be approved by state senators —
possibly next week — and he worries city workers and retirees voting on a
related deal to cut their pensions by up to 4.5 percent will make a
"protest vote" or be influenced by creditors such as bond insurers
trying to undermine the agreement with "misinformation."
The state
funds, the equivalent of $350 million spread over 20 years, would be
joined with $466 million in commitments from 12 foundations and the
Detroit Institute of Arts to shore up the city’s two retirement systems
while the city-owned art museum and its assets would be transferred to a
private nonprofit. Roughly 30,000 retirees and city employees are in
the midst of a 2-monthlong vote on the pension and art deal.
"Please,
be careful. … We have $816 million we did not have a year ago, almost
$1 billion coming across the transom. If you vote no and that money
goes away, we are talking about severe cuts," Orr said during a speech
at the Mackinac Policy Conference, the Detroit Regional Chamber’s annual
meeting for more than 1,500 business, political and civic leaders.
The
crux of his proposed restructuring plan is a collection of settlements
among stakeholders and creditors, he said. The agreements would
disappear if the outside money does not come through.
"I’d ask
you, those of you who have an opportunity to speak on this issue, to
talk with them, to please explain to them: ‘This is not a game. This is
not a time for protest votes. This is very serious business that could
result in people getting pushed to the poverty rolls and people
unfortunately experiencing a much reduced quality of life and ability to
survive for some people.’"
Bond insurers have pointed to the art
collection — which includes Van Gogh’s "Self Portrait" — as a possible
billion-dollar source of cash in the 10-month-old bankruptcy case. But
Orr said if the city made $2 billion to $4 billion selling art, the
proceeds would be spread among all creditors holding $12 billion in
unsecured debt — a worse deal for pensioners, he said.
Orr also warned that no one should take a pending summer trial on Detroit’s plan to emerge from
bankruptcy for granted.
"It is going to be a running gun battle, but we’ll get through it," he said.
Orr
was appointed by the state to lead the city in March 2013. He and Gov.
Rick Snyder decided to file the largest-ever U.S. municipal bankruptcy
last July, and Orr’s appointment ends in September.
Early ballots from city workers and retired workers show they are supporting the plan at about 2 to 1,
Orr told reporters.
"I
think a lot of people are waiting until they see if the Senate funding
comes in so the whole $816 million is there and I think we’ll see
voting. I just want to make sure they have accurate information," he
said.
The $195 million bankruptcy legislation won bipartisan
approval in the Republican-led House last week and is up for
consideration in the GOP-controlled Senate before the Legislature breaks
for the summer on June 12. Oakland County Executive L. Brooks Patterson
has been lobbying suburban Detroit senators over his concerns about the
bankruptcy exit plan’s call for regionalizing Detroit’s water
department.
Snyder said Friday that the water issue should not be
tied to the art and pension rescue, and could be settled outside of the
bankruptcy case, an argument Detroit Mayor Mike Duggan has made as well.
"I
don’t think it should be a sticking point to getting the grand bargain
(legislation) done. We should get the grand bargain done," Snyder said.