June 5, 2014 at 5:07 pm

Council votes to transfer DIA assets to trust

The nine-bill package calls for an up-front payment of $195 million from the state as well as $366 million from 12 foundations and $100 million from the DIA over 20 years. (Daniel Mears / The Detroit News)

Detroit — The City Council on Thursday voted to support Emergency Manager Kevyn Orr’s plan to transfer assets of the Detroit Institute of Arts to an irrevocable trust in exchange for $661 million in aid for city pensions.

The council’s 8-0 vote in special session, with Raquel Castaneda-Lopez absent, came two days after the Michigan Senate approved millions of dollars in state aid for Detroit’s bankruptcy. The nine-bill package, which awaits Gov. Rick Snyder’s signature, calls for an up-front payment of $195 million from the state as well as $366 million from 12 foundations and $100 million from the DIA over 20 years.

“Approving that term sheet helps to pave the way for us to save the majority of the pensions,” Councilwoman Saunteel Jenkins said after the meeting, noting it spares all uniform officers from pension cuts and lessens pension reductions for general retirees.

“It’s very important for us to make them as whole, or as close to whole, as possible.”

Detroit’s Corporation Counsel Melvin Hollowell said the term sheet approved by the panel confirmed what’s already laid out in the city’s bankruptcy Plan of Adjustment.

“Everybody recognizes the fact that we want to make sure our pensioners are made as whole as possible,” he said. “You work your whole life and you want to make sure that is protected. I think that was foremost in the minds of those who voted for it.”

Now that members have approved the resolution, Orr will enter an order that will be forwarded to U.S. Bankruptcy Judge Steven Rhodes. Parties involved will attend a closing no later than Dec. 31 to effectuate the protection of the art in a public trust, he added.

Hollowell said the agreement says the art will be held in perpetuity in the city for the benefit of the people of Detroit, the region and the state.

Councilman Scott Benson said discussions will continue about opportunities to have the art potentially transferred back to the city in future decades.

“Protecting the art is huge,” Benson said. “The fact that the city is losing assets doesn’t excite me, but we also have to look at the bigger picture with this.”

City Council President Pro Tem George Cushingberry Jr., added: “None of us want to see the pensioners lose anything.”

President Brenda Jones declined to comment after Thursday’s meeting.

The legislative bill package also imposes post-bankruptcy state oversight for the city.

The council on Thursday also voted unanimously to approve Orr’s triennial budget.

The budget, which is based on the bankruptcy plan, proposes $937 million for the 2014-15 fiscal year, $922 million for 2015-16 and a projected $927 million for 2016-17. The current 2013-14 fiscal year budget that ends June 30 was about $966 million.

Fiscal staffers said the council did elect to move $270,000 from the police operations budget in the current fiscal year to its own budget so the panel could administer the funding for citizen CB patrol in city neighborhoods.

The city’s 10-year plan to adjust its debt outlines $1.4 billion for restructuring initiatives. It also includes a plan to hire about 600 employees, primarily for its police and fire departments, officials said.

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