June 20, 2014 at 1:00 am

Daniel Howes

'Grand bargain' not over till it's over

When Gov. Rick Snyder signs the “grand bargain” legislation Friday amid what’s likely to be a whole lot of smiles and hoopla, there should not be any “Mission Accomplished” banner hanging behind him.

Because it isn’t. The complex deal to bolster underfunded pensions and protect the Detroit Institute of Arts’ collection — funded by foundations, DIA donors and $195 million from state taxpayers — is not done until a majority of the city’s pensioners says it is. And that won’t happen until balloting ends July 11.

Getting there is no sure thing, no matter how strongly the state’s powerbrokers want it to be. Not if disinformation campaigns, meddling creditors and Detroit’s well-chronicled penchant for self-destructive choices culminate in rejection of the equivalent of $816 million in fresh cash for a Chapter 9 bankruptcy still facing an arduous path to confirmation.

Should enough pensioners representing enough debt spurn their leaders’ recommendations, reject the counsel of experts and ignore the advice of Emergency Manager Kevyn Orr to take the deal, Detroit’s historic bankruptcy could be tipped into a chaotic free-for-all. That would benefit bankruptcy lawyers and sharp-elbowed creditors far more than retirees who just want the nightmare to end.

Premature celebration is seldom advisable, be it at Comerica Park with Joe Nathan on the mound, the deck of the U.S.S. Abraham Lincoln or in an Obama speech declaring that “the tide of war is receding” when it clearly is not. It’s no different for a community standing on the precipice of a self-styled grand bargain.

Lots of deals are in place. The trial is set (for now) to begin in August. City employees will begin contributing to a new hybrid pension plan in July. The Legislature’s Detroit rescue package, a remarkable accomplishment of bipartisanship and smart cost-benefit analysis, is set to become law this week.

But the linchpin of the whole deal still is not complete, as the governor, his people and the architect of the grand bargain — Chief U.S. District Judge Gerald Rosen — surely know. Metaphorically spiking the ball before the final whistle is bad optics that risk drawing a penalty from pensioners weighing scary choices.

Celebrating too much too soon (see the DIA’s announcement of $26 million from the hometown automakers) could unleash a pensioner backlash that is delivered in vote totals. A failed vote would sunder the grand bargain, paving the way for some kind of cramdown almost no one wants to see in an election year, much less do.

That’s not all. For as much as the grand bargain represents a historic coalescing of a community long riven by political and geographic discord — city vs. suburb, Republican vs. Democrat, outstate vs. southeast — it also risks producing unintended consequences its funders cannot easily control.

Namely, if charitable and corporate foundations, legislators and DIA donors, can muster the cash for a grand bargain to rescue the museum and bolster city pensions, why can’t a similar coalition reach a grand bargain II to benefit the Detroit Symphony Orchestra and the Michigan Opera Theater, the Charles W. Wright Museum of African American History and Detroit Historical Museum, among others?

Call it the moral hazard of philanthropy. A unique series of circumstances — city ownership of the DIA, massively underfunded and mismanagement pension funds, the largest municipal bankruptcy in American history — spawns an innovative public-private response that prompts others to ask, “Where’s ours?”

The short answer to that question, posed to me by a prominent leader in the cultural community, is that none of those groups is at play in the city’s bankruptcy. They’re either private (the symphony and opera), or their holdings are worth too little for creditors to care.

Still, the grand bargain and its implications loom over other cultural groups not part of it. In a town where raising $100 million from corporations and individual donors (or more than $350 million from foundations) is not as easy as it once was, the grand bargain is poised to stand as a singular achievement that could nonetheless strain support for other groups.

Managing the collateral damage will not be easy or uncomplicated. But it’s preferable to an alternative that would dismember one of the country’s finest art museums at the expense of its city, its cultural heritage and the people who worked for Detroit.

The public-private grand bargain, essentially a down payment on Detroit’s future, is designed to buy the DIA’s freedom with cash earmarked for the city’s pensioners. The deal is too vital to screw up now — or after the balloting concludes next month.

(313) 222-2106
Daniel Howes’ column runs Tuesdays, Thursdays and Fridays.