Both civilian retirees, and police and fire department retirees (by respective margins of 73–27 and 82–18) have voted to back the “Grand Bargain” devised by city emergency manager Kevyn Orr that would minimize pension cuts to just 4.5 percent thanks to a $816 million influx of cash provided by the state and the museum. The deal would free the DIA, transferring ownership of its collection from the city to an independent charitable trust.
“The voting shows strong support for the city’s plan to adjust its debts and for the investment necessary to provide essential services and put Detroit on secure financial footing,” said Orr in a statement. “I want to thank city retirees and active employees who voted for casting aside the rhetoric and making an informed positive decision about their future and the future of the city of Detroit.”
While it’s taken a major step in the right direction (a “no” vote would have imperiled the entire restructuring plan and led to a 27 percent cut to pensions), the plan must still be accepted at a confirmation trial overseen by Judge Steven Rhodes beginning August 14. If Rhodes approves the plan, the largest municipal bankruptcy case in American history could be over as soon as October.
The pieces are also falling into place on the financial side, with the state of Michigan voting to approve $195 million in funding (as reported by artnet News), nonprofit foundations pledging a collective $366 million over 20 years, and a number of organizations chipping in to meet the DIA’s required $100 million contribution (see artnet News report).
The city’s financial creditors argue that the deal is illegal as it does not provide equal satisfaction to all creditors, instead favoring pensioners. They also believe the bargain undervalues the DIA collection, which was recently reappraised at $4.6 billion (see artnet News report), arguing that it should be sold to pay off Detroit’s debt.
“The pensioners are getting the best treatment out of any of the creditors,” Matt Fabian, managing director of Municipal Market Advisors told the Free Press.
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