Obama admin allocates $52 million to Detroit for urban blight removal while pension funds continue to protest bankruptcy
posted at 7:21 pm on August 20, 2013 by Erika Johnsen
The city of Detroit’s various creditors and pension obligations are certainly not going gently into that good night of their municipal bankruptcy filing. After the city’s emergency manager tried for months to get the relevant unions and pension funds to compromise in financial negotiations meant to help the city avert bankruptcy, they pretty much refused to budge — and now they’re doing everything they can think of to continue to challenge the legality of the bankruptcy declaration in the first place. , obviously, and are challenging the city’s right to even do so. Monday was the deadline for filing objections to Detroit’s application for Chapter 9 bankruptcy protection, and file they did. Via Bloomberg:
One of Detroit’s two main unions was the first major creditor to file a formal objection, questioning the math behind emergency manager Kevyn Orr’s controversial decision to consider the city’s pension funds as unsecured creditors that could be forced to face cuts. Many pensioners didn’t just let unions speak on their behalf—they submitted their own, personal objections, often in handwritten notes. The letters say that they depend on the pensions promised to them, that they turned down higher-paying job offers in the past because of the benefits, and that they rely on the pensions to meet their obligations. Here’s a sampling of their pleas to the judge:
• Michael G. Benson said he is a retired employee of the city’s water department and objected “to the use of the retires [sic] pension for any purposes other than retires [sic],” adding that “surely there are other options available to the city.”
• Olivia Gillon, who said she had worked for the city for more than 30 years, wrote: “The City of Detroit has too many assets to be bankrupt. … If the Federal court allows our pension fund to be raided, it will open a flood gate for hundreds of other cities. … Please do not allow representatives of the City of Detroit to take retiree’s pensions and declare pensioners just another creditor.”
Of course, the subjects of Detroit’s many unfunded obligations and liabilities were never going to take the bankruptcy lying down — why would they? The city’s lines of red ink are going to mean a lot of real material pain for a heck of a lot of people who built their life plans around these promises, but thwarting the city’s bankruptcy isn’t going to change the fact that decades of these extravagant and unsustainable promises (the consequences of which they’ve probably underestimated!) have left the city with few workable and zero pain-free options. Let other progressive havens take note.
And no, by the way, the Obama administration is definitely not doing anything to give Detroit a direct bailout, per se — but urban blight removal? There’s federal cash for that, natch.
The city of Detroit will receive more than half of $100 million in newly allocated federal funds to tear down blighted structures.
The city riddled with thousands of abandoned buildings will begin demolishing some of them later this month with the help of $52.2 million in federal money, Gov. Rick Snyder said Tuesday.
“This is excellent news for Detroiters and for improved public safety in the city,” said Bill Nowling, spokesman for Detroit Emergency Manager Kevyn Orr. “These funds will be put to immediate use stabilizing neighborhoods and eradicating blight. Next week the the city, with assistance from the state of Michigan, will begin knocking down blighted structures with these funds.”
Advocates have praised the influx of money as a chance for the financially bankrupt city to clear out eyesores, rid neighborhoods of crime havens and to free up open space for new uses. Sen. Carl Levin, D-Detroit, also has said this redirecting of mortgage aid money for Michigan is an example of how the Obama administration can help aid the city that filed the largest municipal bankruptcy in U.S. history.