The votes came in fast, furiously and unexpectedly positive.
The Senate passed a nine-bill package nearly unanimously, squaring the circle on Detroit’s "Grand Bargain."
All that is left to do is have Gov. Rick Snyder sign the legislation in the next 24-48 hours. He will and happily said so while waving his bill signing pen at a news conference this afternoon and breaking with his tradition of not discussing legislation he intends to sign until he actually does the deed. He was quite excited about the day’s events.
This was a process he controversially set in motion months ago. He agreed to work with federal mediator Judge Gerald Rosen on the Grand Bargain that would pump nearly a billion dollars into Detroit’s bankruptcy. The nation’s largest charitable foundations with names we all know -- Ford, Kresge and Skillman -- are chipping in $400 million-plus. The Detroit Institute of Arts will pony up $100 million and the governor agreed to have the state shoulder $195 million. The Republican legislature choked on that number early on, noting it was an election year and getting outstate votes would be more than difficult if not well-nigh impossible. Detroit Emergency Manager Kevyn Orr admits he’s had a lot of sleepless nights pondering whether the Michigan Legislature would back the governor.
There were some nasty politics played along the way. House Speaker Jase Bolger did his level best to ball up the works by insisting unions contribute cash to the Grand Bargain and would not allow a vote unless that happened. A couple of unions did pledge a few dollars which gave him his political cover and the House passed an 11-bill package with impressively high numbers. Part of those votes led to another Bolger-engineered project meant to prevent the DIA from renewing its regional millage in 2020. It passed, the House. Today, it went down in flames because the Senate did not want to tell local communities they could not vote on a question like funding the arts. Bolger took a bow today at the big news conference anyway.
Federal Judge Gerald Rosen spent a lot of time in Lansing recently and he was here today as well working on legislators, explaining all of the corners of the deal and trying to make the last ditch effort to garner support. He succeeded and was so happy about the success that he broke with the usual protocol and actually stood up and spoke at this afternoon’s news conference. He called it an historic day in the state of Michigan because there is unity around the notion that "so goes Detroit, so goes the fortunes of the entire state." He also announced another bit of healthcare funding coming into the Grand Bargain, pushing the total the dollar total closer to one billion dollars. Senate Majority Leader Randy Richardville said this is all about pensioners and making them whole. He added it’s also good common sense.
You see, the state could have ended up spending $3 billion to shore up Detroit without this $195 million into the Grand Bargain. There-in lays the real deal here. In Lansing, for all of the teeth gnashing about “another Detroit bailout," the cold reality that the small price paid now will surely be a better deal than the massive financial mess that would greet them later if the bankruptcy isn’t settled within the bargain.
Now you may wonder why everyone is so married to the Grand Bargain and why it matters. Well, Kevyn Orr gave us the best answer to the question in an interview tonight. Municipal Bankruptcy Law makes it very clear creditors cannot be treated differently or, more to the point, unfairly discriminated against. The bondholder insurers -- such as Syncora -- are battling tooth and nail, screaming about the Grand Bargain, demanding the judge sell off the DIA art so they can get something resembling a good deal in the city’s historic bankruptcy. They say the city’s pensioners are being made whole or nearly so with the Grand Bargain, which is unfair to them.
Well, it is the city’s position that because this money comes with strings attached, because it is being set up so the city might not get it if conditions aren’t met, the Grand Bargain is operating like a family trust. Orr says the Grand Bargain is simple municipal estate planning and, much like with a trust, no one has a right to interfere. Thus, the bondholders will be left holding the bag in this bankruptcy. This is why they pay lawyers the big money in such cases. They come up with work-arounds like this one that will, they hope, pass legal muster. Orr says this will allow for the Grand Bargain to make the pensioners whole and the city to cram down on the bondholders and their insurers. Judge Steven Rhodes will be the final arbiter but so far has seemed amenable to most of what Judge Rosen has done with the Grand Bargain.
Now there is one overarching thought that comes up looking back at the circuitous route the city has taken to get here. Remember Malik Shabazz swearing he would burn the city down before he would let the state come in with oversight and emergency management? You know, that chorus of naysayers who were certain there was a takeover coming that would leave the city broken, dying and destitute? OK, where are these people tonight? Where are the ferocious protests of how the city, and in particular its pensioners, is getting a raw deal from “outsiders?"
The city of Detroit elected Kwame Kilpatrick not once, but twice. It gave him carte blanche to plunder the city. He was flying around on investors’ money to play golf and get his beloved day spa messages in places like Bermuda while plundering the city’s general pension. This was egregious behavior that the city brought on itself. There really has been at least a generation of bad financial management that ignored the obvious financial troubles, kicked the can down the road and when it came time to pay the piper for the greed, stupidity and pay to play atmosphere what happened?
Yes, the state put the city into bankruptcy but it was also the state that looked the other way and figured out a way to put in hundreds of millions of dollars to right Detroit’s ship. There is serious work being done on city street lights, blight and the water department [which is an entirely different and important part of this story] and all the other things the city needs to prosper in the future.
So where are the naysayers distrusting “the suburbs” tonight? The city has not been “stolen” as was the rallying cry; it’s starting over, ever so slowly with nearly a clean balance sheet and a tip of the cap toward the importance the city holds in Michigan no matter its financial condition. Detroit is on the road now to taking on the shape of a city with the possibility of a comeback. Nothing is assured. But, clearly, the predictions of doom, gloom and oppression ring hollow.
While it is clear no one is operating out of true altruism, the pathway to a better city has been cleared with a grand gesture.