Detroit filed a comprehensive plan of 440 pages on Friday in federal court explaining how it will shed billions of dollars of debt and restructure city government as it goes through the largest municipal bankruptcy in U.S. history, according to the Associated Press.
The city released its Chapter 9 bankruptcy "plan of adjustment" detailing offers to more than 100,000 creditors and a "disclosure statement" revealing Emergency Manager Kevyn Orr's plan to dramatically reshape the city's bureaucracy, the AP reported.
The plan is designed to free up cash to improve public safety and other basic services for its 685,000 residents, the AP reported.
The city's goal is to pay less money to Wall Street, retirees and bondholders, which collectively receive about 4 in 10 of the city's sparse general fund dollars, and about $1.5 billion over 10 years to improve public protection and restore services, according to the AP.
Officials proposed 34% cuts to pensions of general city retirees and 10% pension cuts to police and fire retirees, the AP reported. But the cuts would be reduced to 26% and 4% if the city's two independently controlled pension boards agree to support the plan of adjustment.
"My advisers and I have now expended many months in negotiations, including within bankruptcy court-mandated mediations, with all classes of creditors to get to this point, and we are satisfied with the progress made thus far," Orr said in a statement, according to the AP.
"There is still much work in front of all of us to continue the recovery from a decades-long downward spiral. We must move swiftly to emerge from bankruptcy so that the financial distress harming the city can end," Orr said, the AP reported.
Among the improvements the city plans is spending $520 million over six years to remove blight, according to the plan of adjustment, the AP reported. With that cash, the city would demolish about 450 abandoned homes a week, up from a weekly pace of 114 in a city with an estimated 78,000 unsalvageable structures.
About $148 million will be used on technology improvements to rehab Detroit's antiquated IT system and $447 million on major capital improvements including its vehicle fleet and facilities for police and fire services and the city's recreation department, the AP reported.
During the next five years, the plan would invest $114 million more in the police department and an additional $82 million for the fire department, according to the AP.
The city said it would consider outsourcing some services for significant modifications to union contracts, compensation and work rules for active employees, the AP reported.
The plan of adjustment, which could change significantly through negotiations with creditors, must still be approved by U.S. Bankruptcy Judge Steven Rhodes before it is put in place, according to the AP.
