Thanks to a federal judge and several foundations, the DIA and Detroit retirees' pensions may go unharmed in the city's bankruptcy. (John T. Greilick / The Detroit News)
Detroit is going through bleak times, struggling to manage bankruptcy while restoring services and security, and uncertain what the future holds. But we can’t say the city doesn’t have friends.
To the contrary.
In perhaps the most remarkable displays of philanthropy Detroit has ever experienced, a coalition of local and national charitable foundations has come up with $330 million — so far — to spare the Detroit Institute of Arts and the pensions of public employees from the creditors howling at the city’s door.
The deal was brokered by Gerald Rosen, chief judge of the federal district court in Detroit, and if it holds together it should pave the way for Detroit to move through bankruptcy without enduring much of the pain that was predicted when this process began.
Ultimately, the foundations hope to raise $500 million — the amount Emergency Manager Kevyn Orr says he needs to settle with holders of the city’s debt. Private donors are the next focus, but ultimately to close the gap the state may have to put up significant funds. In an interview with The Detroit News last month, Gov. Rick Snyder indicated he would push for that under the right circumstances.
Otherwise revenues to resolve the city’s insolvency would most likely come from selling the art of the DIA collection and slashing pensions.
A climactic contribution would be a worthwhile investment for the state, if it hastens the exit from bankruptcy. And it should. In addition, the DIA must be considered a public resource that adds value to the entire state.
Labor unions and the public pension funds, which have been the most difficult group to negotiate with so far, should recognize this deal as a life raft. They may still have to sacrifice, but not nearly as severely as anticipated.
Other creditors should understand that since Rosen is the architect of the solution, the court views it as the “grand bargain” necessary to head off long and expensive legal fights and allow the bankruptcy to wrap up fairly quickly.
The foundations that form the working group include the Community Foundation for Southeast Michigan, William Davidson Foundation, Fred A. and Barbara M. Erb Family Foundation, Ford Foundation, Hudson-Webber Foundation, Kresge Foundation, John S. and James L. Knight Foundation, McGregor Fund, and Charles Stewart Mott Foundation.
All have long-time ties to Detroit, and have supported many initiatives in the past. The coalition pledges that the money they are dedicating to help resolve the bankruptcy will not detract from their normal giving to the city. That’san impressive commitement and we applaud it.
Everyone with a stake in the bankruptcy should see this deal as a statement by Detroiters and their friends that the city will not allow itself to be stripped bare of its most treasured public assets, nor will it renege on the commitment made to retirees.