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Investment bank Lazard, which advised retiree negotiators during Detroit's bankruptcy, slashed about $3 million off its bill, the Detroit Free Press reported today. The firm's revelation is the first in what is expected to be a series of statements by law firms, financial advisers and consultants about how much they cut their fees in Detroit's historic restructuring. Bankruptcy Judge Steven Rhodes, who retains the power to decide whether the fees were reasonable, had invited bankruptcy professionals to consider revealing how much they reduced their fees before he makes a decision. Collectively, advisers to the city and the retiree committee charged about $170 million in the bankruptcy, which ended in December and will allow Detroit to slash $7 billion in liabilities and reinvest $1.7 billion over 10 years in services. Lazard — which helped negotiate a settlement on pension cuts and retiree health care benefits on behalf of the U.S. government-appointed Official Committee of Retirees — had accumulated a bill of $8.44 million for its work on the case. But it's only charging the city $5.56 million after agreeing to a 37% cut in mediation sessions overseen by U.S. District Chief Judge Gerald Rosen, the chief mediator in the bankruptcy. The city agreed at the beginning of the bankruptcy to pay the retiree committee's costs.

Detroit’s emergence from a record municipal bankruptcy in December heralded a fresh start for a city of 688,700 that had 1.8 million residents in 1950. As boosters work to lure new tax-paying residents, the cost of insurance for an indispensable car lurks as a budget-eater beneath the promise of low-cost housing, Bloomberg News reported today. Detroit, ridden by crime, blight and poverty, has the five most expensive zip codes in the U.S. for auto insurance, according to CarInsurance.com. They produced average annual rates of about $5,000, 29 percent more than the highest average premium in New York City. New York’s median household income of $52,259 is twice Detroit’s, according to the U.S. census.

A small group of Detroit city retirees and active employees have banded together in a long-shot bid to overturn the city's sweeping bankruptcy plan, the Detroit Free Press reported today. The Detroit Active and Retired Employees Association — a recently formed group that is trying to raise a pool of money to fund a legal challenge — appealed the confirmation of the plan of adjustment, the blueprint the city is using to slash debt. The group has a small chance of succeeding in its attempt to derail the city's plan of adjustment, which is already taking effect. U.S. District Judge Bernard Friedman was assigned to hear the appeal.
http://www.freep.com/story/news/local/detroit-bankruptcy/2015/01/08/det…

In related news, the White House is naming a new point person on Detroit to aid the Motor City after its exit from its record-setting chapter 9 bankruptcy, the Detroit News reported yesterday. Cliff Kellogg, a U.S. Treasury official who is director of the Office of State Small Business Credit Initiative, was named on Wednesday by President Barack Obama as the liaison to the city of Detroit. A person briefed on the matter said Kellogg will work closely with Office of Management and Budget director Shaun Donovan on Detroit issues.
http://www.detroitnews.com/story/news/politics/2015/01/07/obama-new-whi…

Lawyers and consultants have 10 days to justify fees charged during Detroit’s landmark bankruptcy case before Bankruptcy Judge Steven Rhodes decides if the bills are reasonable, the Detroit News reported today. Firms representing the city and retirees charged about $170 million and Judge Rhodes is in the process of determining the reasonableness of fees in the biggest and most expensive municipal bankruptcy in U.S. history. On Monday, Rhodes gave the various firms 10 days to defend amounts charged during the case but warned that the comments must be “civil” and “fact-based.”

Of the nearly $1.7 billion that Detroit's post-bankruptcy plan is expected to generate, only about $900 million comes from restructuring the city's debts, while about $483 million comes from projected new revenues and $358 million from cost savings, according to an editorial in yesterday’s Detroit Free Press. "We don't have $1.7 billion in the bank," said former Detroit emergency manager Kevyn Orr, who led the city through bankruptcy. "We think we've made our estimates reasonable." Both raising revenue and cutting costs have proved problematic for generations of Detroit leaders, according to the editorial. Efforts to do either have been hampered by outdated and inefficient technology, union work rules, poorly devised contracts and insufficient resources to undertake a comprehensive overhaul of city service delivery. "It's very fragile," said Sheila Cockrel, a 16-year veteran of the Detroit City Council who is now the president of Crossroads Consulting. "It's too early to tell if the revenue plan is going to be able to come to fruition, but you've got to start somewhere."
http://www.freep.com/story/opinion/columnists/nancy-kaffer/2015/01/04/d…

To read a copy of Bankruptcy Judge Steven Rhodes' final opinion on confirming Detroit’s plan of reorganization, please click here: http://news.abi.org/sites/default/files/Rhodes_FinalOpinionDetroitPlanC…

Detroit's historic bankruptcy, which officially ended earlier this month, cost the city nearly $178 million in fees and expenses for teams of lawyers and consultants, according to a city court filing yesterday, Reuters reported. Jones Day, Detroit's lead law firm for the biggest-ever municipal bankruptcy which was filed by the city in July 2013, billed the most by far, at $57.9 million. The city, which exited bankruptcy on Dec. 10, paid a total of nearly $165 million out of its general fund budget for professional fees for itself and for a court-appointed committee representing Detroit retirees, as well as for a fee examiner, court mediators and experts hired by Bankruptcy Judge Steven Rhodes, the filing showed. That amount was $12 million under the $177 million Detroit had budgeted in its plan to adjust $18 billion of debt and obligations. The city also reported $1.04 million in fees paid out of an enterprise fund and almost $12 million in fees paid by its two pension funds.

Low-income city retirees have until the close of business Wednesday to apply for financial assistance that could soften the blow to their monthly pension checks as a result of Detroit’s bankruptcy, the Detroit News reported today. The state began accepting one-time applications in December for the initiative aimed at supplementing pension payments to qualified retirees affected by the city’s debt-cutting plan. To be considered, a pensioner must be 60 or older and have an income that is at 140 percent of the 2013 federal poverty level. The requirements vary based on the number of dependents, but range from no more than an annual income of $16,338 for a single person to $22,022 for a household of two, and $33,390 for a household of four. The Income Stabilization Fund Program was created as part of the bankruptcy resolution and seeks to prevent eligible retirees from falling below the poverty line as a result of the impending pension cuts. The program allocates $20 million over 14 years for eligible retirees from either of the city’s two pension funds.

Municipal bankruptcy is in Detroit’s rearview mirror, but a new challenge looms: a wave of foreclosure notices for unpaid property taxes, the Wall Street Journal reported yesterday. After years of delay, Wayne County, which includes Detroit, is informing residents in an estimated 35,000 occupied homes that they are delinquent in their city taxes, which could lead to their houses being auctioned off. That could affect about one in seven Detroit residents, or 97,733 people, according to an analysis of Wayne County’s foreclosure list by Detroit-based Loveland Technologies. Experts say homeowners struggling in a recovering job market and saddled by depressed home values make property-tax delinquencies a persistent problem, especially in aging urban cores. National estimates for the amount of property-tax delinquencies are hard to come by, but the National Tax Lien Association pegs the annual total at $14 billion. Advocates fear that a new foreclosure wave would only accelerate decay and vandalism in a city plagued by abandoned houses and hamper its rebound from the financial crisis and its bankruptcy. For residential properties subject to foreclosure in Detroit, the average amount of taxes and fees owed is $7,067. The average assessed value of homes entering into foreclosure this year is $20,930, which might be significantly higher than what they would fetch on the market, according to Sean Jackson, who tracks blight and tax-foreclosure issues for Rock Ventures, an umbrella organization for companies owned by Quicken Loans founder and Detroit booster Dan Gilbert.

A Michigan board yesterday agreed to send nearly $195 million in state funds to Detroit's two retirement systems on Feb. 9 as part of a pivotal deal that helped to end the city's historic bankruptcy, Reuters reported yesterday. Jeremy Sampson, a spokesman for Michigan's Treasury Department, said that the three-member Michigan Settlement Administration Authority took the action after the city's bankruptcy reached certain triggers, including the dismissal of legal claims against the state that were related to the bankruptcy. The state funds are part of the so-called grand bargain, which includes $366 million from philanthropic foundations and $100 million from the Detroit Institute of Arts pledged over 20 years to ease cuts to pensions for Detroit retirees and save artwork from being sold to pay city creditors. The first payments by the foundations and the museum to the retirement systems totaling $23.3 million were made on Dec. 10, the effective date that marked Detroit's exit from the biggest-ever U.S. municipal bankruptcy.

Bankruptcy Judge Steven Rhodes yesterday said that Detroit must reveal later this month the total cost of fees charged by lawyers and consultants as part of the city's bankruptcy case, Crain’s Detroit Business reported today. Judge Rhodes yesterday told the city's attorneys and advisers to submit final invoices within a week. He approved Detroit's historic reorganization in November, and state and city officials declared the bankruptcy over last Wednesday. Fees charged to the city exceed $140 million. Mediators last week reached agreements with all parties on fees, but the judge still needs to approve them. Mediators led by Detroit's chief federal judge, Gerald Rosen, say that their work appears to be over as they played a crucial role in striking deals between Detroit and its many creditors during the bankruptcy.