Detroit Votes to Take Power Back From Debt Managers

Emergency Financial Manager, Kevyn OrrThe Detroit City Council has unanimously approved a plan to remove emergency manager Kevyn Orr from office and hand day-to-day operational power back to the city council and Mayor Mike Duggan.  Orr will be retained in his current position to oversee the final aspects of the city’s bankruptcy. 

Following the vote, Orr signed his own order restoring power to the elected officials noting that Detroit was “more than ready for the change.”

In a statement following the announcement Mayor Duggan said, “This is really a good day for the city.  We have a little bit more to go, but this is the right thing to do.”

With the city’s bankruptcy winding down, Orr had been gradually restoring power to city officials.  He is expected to testify in the city’s bankruptcy trial, scheduled for mid-October.  If the city’s bankruptcy plan is approved Orr will officially be relieved of his duties.  Orr called the plan, “appropriate to promote the successful transition of city governance from EM back to the mayor and the council so they can provide or cause to be provided necessary governmental services essential to the public health, safety and welfare.”

The plan was hashed out between the parties in the days before the vote:

Orr, Duggan and councilmembers spent the past three days hashing out the deal. Sticking points involved financial concerns tied up in bankruptcy court, such as a pending bond issue that required the city to have an emergency manager or the bond would go into default.

“We had a lot of questions. … None of us are bankruptcy lawyers,” Council President Brenda Jones said.

Orr and his team have reached deals that will pay most of the city’s creditors far less than what they are owed, wiping out $7 billion of Detroit’s $12 billion in long-term, unsecured debt. An agreement with the state, businesses and foundations keeps cuts to retiree pensions down while preventing city-owned artwork from being sold to satisfy some of the debt. The restructuring plan also sets aside $1.7 billion to improve police, fire and other city services.

Despite being the man who implemented the state’s maligned Emergency Financial Managers in the first place, Governor Rick Snyder praised the decision to return power to city officials:

Together, we have confronted problems that have lingered for decades,” said Snyder.. “There have been difficult decisions and sacrifices. Hard work is still ahead of us. We remain focused on improving the quality of life for all residents and building a strong and sustainable financial foundation for the city. Better days are ahead for Detroit — and all of Michigan — as a result of this work and the collaboration that I know will continue.”

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