Detroit reached its first deal with a retired workers group yesterday over pension and health care benefits and was close to a deal with at least one of its pension funds, giving a major boost to the city's plan to exit bankruptcy in October, Reuters reported yesterday. Momentum for the city's plan to adjust its $18 billion debt burden was building after Detroit last week won court approval for a crucial settlement over interest rate swaps and reached an agreement with bond insurance companies over the treatment of voter-approved general obligation bonds. Under the deal with the Retired Detroit Police and Fire Fighters Association announced by bankruptcy court mediators yesterday, pensions for retired police and fire workers would not be decreased, but cost-of-living increases would be cut in half. A separate voluntary employee beneficiary association plan or VEBA will be established for retiree health care, according to a court statement.
http://www.reuters.com/article/2014/04/15/usa-detroit-bankruptcy-idUSL2…
In related news, the Obama administration and state officials are in discussions on a deal that would free up an additional $100 million to soften the blow to Detroit pensioners, the Detroit Free Press reported today. Sources close to the situation said that there have been talks about the federal government supporting a move by the state to give Detroit $100 million in federal money for blight remediation. That, in turn, would free up $100 million of the more than $500 million that Emergency Manager Kevyn Orr planned to spend for blight removal over the next 10 years. Orr could then use that money to reduce pension cuts. The federal funds would come from the Hardest Hit Fund, a $7.6-billion Obama administration effort established in 2010 to help the 18 states most hurt by the housing downturn.
http://www.freep.com/article/20140415/NEWS/304150147/
Make sure to attend next week’s 32nd Annual Spring Meeting in Washington, D.C., that will feature a keynote by Detroit Emergency Manager Kevyn Orr. For more information or to register, please click here: http://www.abiworld.org/ASM14/