Kevyn Orr's last attempt to save Detroit from bankruptcyStaff writer ▼ |
The money would be used to improve services in the city deeply in debt. Detroit spends approximately 40% of its income from taxes on legacy costs, while other U.S. cities spend 20% or less,in average, on such costs. But, there's more; those costs will rise to 65% by 2017. The problem is there's is not enough money for city services because the money is spent on legacy costs.
To make things worse, Detroit owes $20 billion to creditors. At a meeting with creditors and labor union representatives, emergency manager Kevyn Orr presented his plan focusing on deep cuts in payments owed to contractors, creditors, and municipal retirees. The plan is huge, more than 100 pages, but Mr. Orr cut the long story short: the plan addresses the needs of the city first, and creditors second, he said.
At a meeting with journalists, Mr. Orr and two of his key consultants, Jones Day attorney Bruce Bennett and Ken Buckfire, said discussions have begun with suburban counties about creating a regional authority to government the Detroit Water and Sewer Department and the goal is, of course, to generate payments to the city.
Detroit emergency manager wants to attack blight, and the rest of the $1.25 billion in new investments will be spent on upgrading the city's old information systems, more streetlights, more police on the street, and on the upgrade of public safety equipment. All that should make living a bit easier and right now Detroit need people who want to live, work - and spend - here.
Mr. Orr's plan can be slightly changed, he said, but that's the plan he will propose in a bankruptcy filing if all creditors don't agree outside court. And they should accept a big cuts if they want city to survive. Mr. Orr stressed that there is time for negotiation but he wants short talk because Detroit is going toward the largest municipal bankruptcy in U.S. history. ■