Detroit’s civilian and police-and-fire retirees overwhelmingly voted to approve cuts to their benefits in connection with the city’s bankruptcy “grand bargain,” the Detroit Free Press reported. The deal, which secures the Detroit Institute of Arts (DIA) collection by spinning the museum off as an entity fully independent from the city, comes with a $100 million pledge from the DIA and a $195 contribution from the State of Michigan.
Though the city’s bondholders have balked at approving the deal, the yes vote from the pensioners is, according to the Free Press, “a significant win” for the DIA and the donors that have rallied to contribute to its $100 million burden. The cuts accepted by the pensioners, with yes votes of 82% (police-and-fire) and 73% (civilian), were modest:
Civilian pensioners accepted 4.5% cuts to their monthly checks, an elimination in annual cost-of-living-adjustment (COLA) increases and a claw back of excessive annuity payments. Police and fire pensioners accepted no cuts to their monthly checks and a reduction in COLA from 2.25% to 1%.
The committee representing the pensioners had in April subpoenaed the DIA, requesting a more extensive evaluation of its collection; earlier this month, Artvest Partners submitted to the city their assessment of the collection along with their response to the Christie’s valuation from December 2013. The New York–based art finance advisory firm cautioned that selling the collection at its nominal value would likely be impossible, and cast doubt on the feasibility of the non-sale alternatives proposed by Christie’s.
The city’s Chapter 9 bankruptcy, the largest municipal insolvency in American history, is now headed to an August 14 confirmation trial for approval.
“The city’s got to be happy … Kevyn Orr’s got to be having a little celebration tonight. It’s not over yet. They’ve got to go to court and have another fight. But the big pieces are falling into place. This is exactly what Judge Rhodes is going to want to see,” University of Michigan bankruptcy law professor John Pottow told the paper.