August 15, 2014 at 3:22 pm

Detroit bankruptcy expert bills city more than $300,000 for services

Detroit — A court-appointed bankruptcy expert filed a new invoice Friday, charging the city nearly $313,000 in professional service fees for her firm’s efforts to evaluate Detroit’s debt-cutting plan.

The bill, filed in U.S. Bankruptcy Court by Martha Kopacz, of Philadelphia-based Phoenix Management Services, outlines the services and expenses for her five-member team for the month of June.

The latest tab is in addition to an $101,000 invoice Kopacz previously filed for nine days’ worth of work in late April after being appointed by U.S. Bankruptcy Judge Steven Rhodes.

Rhodes brought Kopacz in to assess the feasibility of Detroit’s proposed plan to restructuring its debt and to review Detroit’s financial assumptions and projections.

Kopacz, in the invoice, is seeking about $93,000 for her 157 hours of work. The senior managing director has an hourly rate of $595 and has estimated her fees would cost “about seven figures.”

The firm has given the city a 10 percent discount on professional fees, according to court filings.

In all, lawyers and consultants working on the municipal bankruptcy case billed taxpayers more than $36.3 million in fees and expenses for the first six months of work after Detroit filed bankruptcy in July of 2013.

Kopacz is expected to testify under oath in the upcoming trial about the city’s bankruptcy plan.

Rhodes this week set an Aug. 27 deadline for Kopacz to file any “necessary and appropriate” additions to a 226-page report she issued last month. The trial is slated to begin on Aug. 29.

In the review, Kopacz concluded that the city’s bankruptcy plan is feasible, but noted Detroit needs more municipal workers and commitment from its leadership to carry out the massive restructuring.

The city currently employes more than 9,000 people and, through its restructuring, intends to add about 700 new positions.

“I believe the success, or failure, of Detroit's revitalization will hinge on the people employed by the city and the officials elected by the residents in the coming years,” Kopacz wrote in the report, noting that based on Detroit’s “lack of even modest technology,” the average skill level of city workers is “low and outdated.”

The detailed review also identified a number of areas where improvements could increase the feasibility of the city’s plan.

Among them, she’s called for a “scorecard” to track implementation of the city's planned $1.7 billion in restructuring and reinvestment initiatives, as well as an integrated plan that outlines initiatives and deferrals by department and fund.

Kopacz also recommended an accountability model that calls for the city's chief financial officer to report to an oversight board, rather than Detroit Mayor Mike Duggan.

The report also points out that there’s no “cash in the bank” to fund the city’s reinvestment efforts. The funds, Kopacz wrote, will come from Duggan and departmental leaders delivering services as “economically and efficiently” as the plan forecasts.

"I can say, unequivocally, that without the positive and capable leadership of Mayor Duggan and the constructive relationship between the City Council and the mayor, I would be unable to opine that the plan, as currently proposed, is feasible," she wrote.

CFerretti@detroitnews.com