February 18, 2014 at 4:37 pm

Detroit's operating officer 'hoping' debt-cutting plan will be filed as early as Wednesday

Gary Brown (Todd McInturf / Detroit News)

Detroit— The city’s chief operating officer suggested Tuesday that Detroit may file its debt-cutting plan of adjustment Wednesday in federal bankruptcy court, but later said it was more of a hope than a statement of fact.

Gary Brown made the initial statement during a City Council committee meeting when asked about Emergency Manager Kevyn Orr’s efforts to secure a so-called “quality of life” loan to finance improvements to city services.

“I can assure you that when we see the plan of adjustment tomorrow that those dollars are fairly well allocated to the main quality of life issues that we have in the city,” Brown told council President Brenda Jones.

But Orr spokesman Bill Nowling would not confirm Brown’s comments, emphasizing that Brown is “not involved in drafting” the reorganization plan as a member of Mayor Mike Duggan’s staff. Brown was originally hired by Orr but recently was shifted to the mayor’s staff.

Under Orr and Duggan’s power-sharing agreement, Duggan is running most city departments while Orr navigates the city through the largest municipal bankruptcy in U.S. history.

“The official statement out of the emergency’s manager is it will be filed this week,” Nowling told The Detroit News on Tuesday. “We’ve said that consistently, and we’re sticking to it.”

When asked after the committee meeting if the plan of adjustment would be filed Wednesday, Brown told reporters: “I’m hoping that it’s coming tomorrow, but I’m not writing it.”

Orr’s highly anticipated reorganization plan is expected to prescribe deep cuts in city debt owed to banks, bondholders, retirees and other creditors. Last Monday, a city attorney told Rhodes during a court hearing that the plan would be filed this week sometime.

City Council members asked Brown about the status of a $120 million quality of life loan Orr had sought to upgrade city computers and make improvements to public safety.

The loan was tied to another $165 million loan Orr wanted to get to pay off a costly pension-related debt to UBS AG and Bank of America.

In a Jan. 16 ruling from the bench, U.S. Bankruptcy Judge Steven Rhodes rejected the $165 million settlement with the two big banks as too generous but told city attorneys they could pursue the separate $120 million quality of life loan from Barclays or another lender.

But Brown told council members that Rhodes “has shot them all down,” and negotiations are currently in progress.

Brown made the remarks during discussion about a waste disposal contract.

Brown is a former deputy police chief and City Council member who is paid $225,000 a year. Orr appointed Brown to the chief operating officer post last year, but he moved over to Duggan’s supervision when Duggan assumed the mayor’s office in January.

cferretti@detroitnews.com
(313) 222-2069