May 27, 2014 at 1:00 am

Detroit's bankruptcy in Mackinac policy conference's spotlight

Orr (Paul Sancya / AP)

Michigan’s business, nonprofit and political leaders will assemble this week for the Detroit Regional Chamber’s annual Mackinac Policy Conference as a path has emerged for the state’s largest city to get out of bankruptcy court later this year.

The improved prospects of Detroit avoiding a major legal showdown with retiree creditor groups represents a reversal of fortunes from a year ago when uncertainty about the Motor City’s financial emergency hung over the conference.

Last year’s Grand Hotel gathering was initially overshadowed by Detroit Emergency Manager Kevyn Orr’s threat that city art might not be safe from Detroit’s creditors in the event of a bankruptcy. The sanctity of public pensions, once thought to be untouchable, also hung in the balance last spring — until a federal judge ruled in December they could be reduced in bankruptcy.

“I think we were all expecting sort of greater public resistance,” said Sandy Baruah, president and CEO of the Detroit Regional Chamber. “We were expecting people in streets, holding signs and things like that, and we had very little of that.”

Ten months after the city filed for bankruptcy, a tenuous deal is in place to protect Detroit’s vast art collection at the Detroit Institute of Arts in exchange for a pool of private and state money pledged toward bolstering city pensions through a so-called “grand bargain” engineered by bankruptcy mediators.

“I don’t know if anybody a year ago would have said that this issue … is going to get resolved in the way it is,” said Hank Cooney, president and CEO of the Plunkett Cooney law firm and chairman of this year’s conference. “That was surprising.”

But the deal needs approval of the Republican-controlled state Senate after House members gave it a green light last week by two-to-one margins for $194.8 million in state money. A majority of pensioners also must vote in favor of the deal before July 11 or the $466 million in private funds over 20 years and state’s lump sum payment could go away — triggering deeper pension cuts.

“I think the speed with which the (bankruptcy) process has gone is remarkable, with the obvious caveat of — we’re not done yet,” said Jeff Guilfoyle, vice president of Public Sector Consultants in Lansing and an independent observer. “(But) it looks like we’re very close to tying a ribbon on the bankruptcy deal.”

The three-day conference will begin Wednesday morning with a forum featuring U.S. Senate candidates Republican Terri Lynn Land and Democrat Gary Peters.

This year’s conference is focused on spurring entrepreneurship, statewide economic transformation and a heightened emphasis on science, math and technological education.

But Detroit’s still unfolding bankruptcy will likely continue to dominate conversations among the 1,600 attendees on the Grand Hotel’s oversized porch and be sprinkled in speeches delivered by a slate of state and national figures.

Gov. Rick Snyder will kick off the conference’s formal start Wednesday afternoon, followed by Detroit Mayor Mike Duggan later in the day. Orr will speak about his restructuring plan Friday morning.

Orr will be followed by a panel discussion on Detroit’s future that features City Council President Brenda Jones and Rip Rapson, president of the Troy-based Kresge Foundation, which has pledged $100 million toward the pensions-for-art deal. House Speaker Jase Bolger, whose Republican-controlled chamber amassed a bipartisan super-majority approval of the Detroit pension aid, also will be on the panel.

Rapson and others said they hope to steer conversations about Detroit’s bankruptcy from the pensions and art to the opportunity Chapter 9 provides for remaking municipal government and improving the quality of life for the city’s estimated 688,701 residents.

“What I’m hoping for at Mackinac is equal consideration of each one of those components,” Rapson said. “Of course, we’re going to talk about the grand bargain.”

Rapson points to the five-year, $100 million investment JPMorgan Chase bank announced last week, this summer’s groundbreaking of the M1 Rail street car project on Woodward Avenue and Duggan’s efforts to remake neighborhoods plagued by blight and broken street lights.

“We are going to be looking at such a different community in five years,” Rapson said.

Macomb County Executive Mark Hackel, whose county is locked in a battle with the city over the future of Detroit’s Water and Sewerage Department, hopes the city’s troubles don’t overshadow long-term vision planning.

“We want to start moving the conversation in a different direction to prepare for when Detroit comes out of this bankruptcy to market ourselves better,” Hackel said. “I’m trying to change the conversation.”

The Mackinac conference, Rapson added, is “a launch point for a very different trajectory.”
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