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Detroit’s emergency financial manager may file a proposed debt-adjustment plan in federal court in about two weeks, an action that would start the final phase in the city’s record $18 billion municipal bankruptcy, Bloomberg News reported today. The manager, Kevyn Orr, has given a copy of the plan to creditors, his spokesman, Bill Nowling, said yesterday. Creditors will have a chance to vote on the proposal once it’s filed in the bankruptcy court and Bankruptcy Judge Steven Rhodes determines it gives enough information. The plan reflects details already presented to creditors who have been negotiating with the city since it filed for bankruptcy in July, Orr said. Judge Rhodes had told the city he wanted it to file a plan by March 1.

Foundations seeking to protect Detroit's public pensions and its art museum in the city's bankruptcy process raised their pledge total to $370 million on Tuesday with the addition of a $40 million commitment from the W.K. Kellogg Foundation, Reuters reported yesterday. A group of U.S. philanthropic foundations announced earlier this month that they were prepared to step in with funding assistance to help preserve the Detroit Institute of Arts' collection and assist in shoring up the cash-strapped city's employee pensions. Michigan Governor Rick Snyder followed up that commitment with a plan he unveiled last week to tap up to $350 million in state funds over 20 years for Detroit retirees.

One of the three main credit rating agencies calls Michigan Governor Rick Snyder’s proposal to use $350 million to defray Detroit municipal pension losses “troubling” and could damage the state’s image with investors, the Detroit News reported today. Fitch Ratings said in a report yesterday that it “believes that the Michigan governor’s recent proposal to contribute $350 million towards Detroit’s unfunded pension liabilities demonstrates continued weak support for bondholder security and repayment stemming from Detroit’s bankruptcy. In Fitch’s opinion, action that suggests pensions’ claim on limited resources should be given priority to that of bondholders could establish a troubling precedent, at least in Michigan and perhaps beyond.” Snyder said last week that his administration is considering whether to borrow $350 million to pump into Detroit’s pension funds or set aside $17.5 million in annual payments for the next 20 years from the state’s tobacco lawsuit settlement fund.

With Detroit's revenue from property taxes expected to come in at only $118.4 million in the current fiscal year, Detroit Mayor Mike Duggan announced a plan yesterday to lower property assessments and taxes this summer, with an eye toward boosting home ownership and, ultimately, tax collections, Reuters reported yesterday. Property taxes for city homeowners would drop by 5 percent to 20 percent following a realignment of the assessment system, according to a statement from Duggan's office. A review of current assessments and actual home sales between Oct. 1, 2011 and Sept. 30, 2013 found some areas of the city were over assessed by at least 20 percent, according to the mayor's statement.

Michigan Attorney General Bill Schuette is urging a federal appeals court to immediately jump into Detroit's bankruptcy and consider whether pensions can be cut, the Associated Press reported yesterday. Schuette said in a court filing yesterday that he backs the bankruptcy case but says he strongly believes reducing pensions would violate the Michigan Constitution. While the case is being appealed, steps are being taken outside the courtroom to come up with additional funding for Detroit’s debt. Several foundations, for instance, have pledged more than $300 million to patch up pension funds and prevent the sale of artwork from the Detroit Institute of Arts. Gov. Rick Snyder is trying to win approval for millions more in state aid.

Flint, Mich., Emergency Manager Darnell Earley said that a lawsuit filed by retirees could force the city into bankruptcy and put pensions and health benefits at risk of cuts, MLive.com reported on Friday. The claim is part of an op-ed Earley sent The Flint Journal following a Jan. 3 decision by the U.S. Sixth Circuit Court of Appeals to reinstate an injunction that prohibits the city from modifying health care for city retirees until a federal lawsuit is decided. Six retirees and the Flint-based United Retired Governmental Employees association filed a lawsuit against the city following a decision in April 2012 by then-emergency manager Michael Brown that would make retirees pay more out of pocket for health coverage. Earley said that reinstating historic health care levels for retirees would cost the city an additional $5 million annually and force the city's unfunded liability for retiree health care to increase to as much as $900,000,000. A bankruptcy proceeding could severely reduce or eliminate health care coverage for retirees and lead to possible pension cuts, Earley said.

As retirees and lawmakers began leveling criticism at Michigan Governor Rick Snyder's plan to use $350 million of state money to reduce cuts in pension benefits for Detroit workers, Snyder set out yesterday to defend the proposal as a way to help ease the impact of the city's bankruptcy on its retired workers, Reuters reported yesterday. The proposal Snyder sketched out on Wednesday would need approval from the Republican-controlled Michigan legislature, where Snyder anticipates challenges from lawmakers who have opposed a "bailout" of the city. Snyder also said he would not release any state funds unless Detroit's unions, workers and retirees agree to halt litigation seeking to challenge Detroit's bankruptcy. Snyder's effort to win support for his plan may face its toughest test from within the ranks of his own party. Republican lawmakers hold a majority in both houses of Michigan's legislature and their leaders joined Snyder when he unveiled his plan on Wednesday. But some lawmakers do not want to see state cash thrown at Detroit's problems. "I don't want to reward a bad actor. It's a bad precedent for the rest of the state," said State Senator Patrick Colbeck, a Republican from Canton, a town west of Detroit. He added that if Detroit gets state money, other Michigan communities should also get a share for their needs.

Michigan Governor Rick Snyder yesterday called for the U.S. government to set aside 50,000 special visas over the next five years to attract highly skilled immigrants to live and work in the bankrupt city of Detroit, Reuters reported yesterday. The proposal by the Republican governor would have to be implemented by the federal government at a time when immigration reform is one of the most contentious political issues. Snyder hopes that a pool of talented workers would encourage companies to bring new jobs by relocating to the financially struggling city, which has seen its population decline to about 700,000 from a peak of 1.8 million in 1950. The EB-2 visas would be aimed at individuals with advanced degrees and exceptional skills in fields such as the auto industry, information technology, healthcare and life sciences, Snyder said.

The White House is not considering a financial bailout for Puerto Rico, where chronic fiscal challenges have raised the specter of a Detroit-like bankruptcy, an Obama administration official said yesterday, Reuters reported. The island's woes have led credit rating agencies to say that they are considering labeling the U.S. territory's general obligation debt as junk bonds. Puerto Rico already pays the highest interest rates of any big municipal bond issuer, but as a U.S. territory, it does not have the ability to file for chapter 9 protection. "The President's Task Force continues to partner with the Commonwealth to strengthen Puerto Rico's economic outlook and to ensure that it is taking advantage of all existing federal resources available to the Commonwealth," said White House spokeswoman Katherine Vargas. "There is no deep federal assistance being contemplated at this time," she said. Puerto Rico has raised taxes, reformed pension systems and cut staff in moves meant to counter chronic budget deficits and an economy in or near recession for eight years.

Bankruptcy Judge Steven Rhodes denied a request from Detroit's creditors to have an official say in valuing the city's art collection and said that he will announce his decision next Tuesday on a request from Detroit retirees to block cuts to their health care, Reuters reported today. Judge Rhodes said he did not have the legal authority to approve the creation of the creditors' committee that would have examined the works of the Detroit Institute of Arts. Judge Rhodes implored the city and its creditors to do their best to negotiate settlements before that deadline.