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Here is How Detroit’s Plan To Restructure Its Debt Will Affect Residents

GeorgetteMillerLaw.com > Bankruptcy  > Here is How Detroit’s Plan To Restructure Its Debt Will Affect Residents

Here is How Detroit’s Plan To Restructure Its Debt Will Affect Residents

DETROIT (AP) — Detroit’s emergency manager, Kevyn Orr, filed a plan Friday for restructuring the city’s $18 billion debt as it begins to emerge from the largest municipal bankruptcy in U.S. history. A look at the plan’s effects on key people and places:

NEIGHBORHOODS: The plan calls for the city to spend $1.5 billion over 10 years to remove blighted properties, upgrade public-safety equipment and technology and make other improvements. When the city filed for bankruptcy in July, it reported having 78,000 abandoned and blighted residential buildings — roughly 20 percent of the housing stock. The number of problem properties continues to rise because of vacancy and fires, and it contributes to crime, particularly arson. About 60 percent of the roughly 12,000 fires in the city each year occur in those buildings.

PENSIONERS: Detroit’s police and fire retirees would receive at least 90 percent of their pensions after elimination of cost-of-living allowances. General retirees would receive at least 70 percent of their pensions.

CREDITORS: Unsecured creditors would take a big hit, receiving about 20 percent of their claims.

DETROIT INSTITUTE OF ARTS: Prized city-owned art would be saved from the auction block. The city would transfer assets to a new corporation, to be held in a charitable trust and kept within the city. In exchange, Detroit would get millions to bolster its two underfunded pension plans, one for police and firefighters, the other for general city workers. A group of foundations with ties to the museum will raise $365 million for the pension plans, and the DIA Corp. will commit to raising another $100 million from donors. In addition, Gov. Rick Snyder is seeking $350 million from the state to add to the fund.

CITY WORKERS: Detroit continues to reduce the size of its government and its spending on employees. More than 2,700 city jobs have been eliminated since 2011, leaving the city with about 9,560 workers as of last summer. The city announced this week that garbage pickup will be privatized. Orr also has proposed turning the water and sewer department over to a regional authority, but that has not been completely embraced by suburban communities. Health benefits for employees also are being cut back.

The Associated Press (2014 February 22) Here’s How Detroit’s Plan To Restructure Its Debt Will Affect Residents. Retrieved on March 30, 2014 From HuffingtonPost.com