Duggan, council ready to take city's reins

The city's debt-cutting plan is in place. Now, it's up to the mayor and the City Council to carry it out.

Detroit's elected officials are optimistic about Detroit's future post-bankruptcy, but say the road will be long and won't come without challenges.

U.S. Bankruptcy Judge Steven Rhodes has approved a plan that allows the city to shed $7 billion in debt and pump $1.7 billion into restructuring and city services over the next decade. Once the plan is effective, it will mark the end of the emergency manager's tenure in Detroit and restore all powers to Mayor Mike Duggan and the City Council.

City officials took an initial step toward self-governance in September with a council-approved resolution that returned power to Detroit's elected leadership, but kept Kevyn Orr in place to tend to bankruptcy-related duties.

Duggan said the city's leadership is united and many projects outlined in the plan are underway. Among them, the "massive" overhaul of Detroit's technology, human resources and finance department operations, he said.

"We've got an administration, we're establishing a culture and we're executing," Duggan told The Detroit News in an interview. "Every month that we're here and the management team is a month more mature, that execution will hopefully get better."

The mayor is confident in the city's ability to carry out the restructuring plan, but acknowledges the monumental task won't come easy.

Duggan pointed to progress made as the bankruptcy case was litigated, but has said that services are about 10 percent of where they need to be. He's also noted that the city's reinvestment plan is "tight," will take years and carries risks.

"It's going to be a challenge, but I believe I can deliver — with the team that we've got here and with the City Council — the kind of services people expect," Duggan said.

Most council members voted in support of key agreements in the plan, including settlements with two of Detroit's most aggressive creditors, exit financing and plans for a regional water authority.

President Brenda Jones and Duggan testified for the city at trial in support of the plan, but Jones has sent some mixed signals, voting against a couple of the measures.

The council is also in the midst of a shake-up with the surprise resignation of at-large member Saunteel Jenkins and a plea deal in a drunken driving case for member Scott Benson that carries a penalty of up to 93 days in jail.

Among his priorities, Duggan is working with Police Chief James Craig to implement a community-based violence reduction plan that he says is long overdue.

But even with Orr's removal, officials in Detroit won't have free rein. They must operate under the triennial budget outlined in the debt-cutting plan as well as a financial oversight board, noted second-term Councilman Andre Spivey.

"There are some things that we just cannot touch and there's some things that we have to do," Spivey said.

"We are bound by a document and rules that have to be implemented because we all have agreed that we should support the plan of adjustment and support the bankruptcy proceedings," he added. "We have to do it. We don't want to find ourselves going backward now that we are out of bankruptcy — with a zero percent balance sheet — and haphazardly do things that are not making the city more efficient."

The nine-member Financial Review Commission is a requirement of a financial aid package approved by the state Legislature to defray cuts to Detroit retiree pensions and shield the Detroit Institute of Arts collection from sale.

The commission, chaired by the state treasurer, held its first meeting Wednesday. Its members also include the director of the Department of Technology, Management and Budget, Duggan, Jones and five appointees of the governor.

Members are responsible for approving the city's four-year financial plan, ensuring compliance with the bankruptcy plan and potentially modifying Detroit's operational budget.

"I see them as an asset and I expect there's going to be times that they vote no," Duggan said. "That's OK. It means I have got to go back and do more work."

Duggan also says his relationship with Jones remains strong, despite their differing views.

Jones cast a "no" vote on plans for the Great Lakes Water Authority and Detroit's critical settlement with its final major holdout creditor, Financial Guaranty Insurance Co.

The deal, which features similar considerations as an agreement with fellow bond insurer Syncora Guarantee Inc., resolves FGIC's $1.1 billion claim against the city over a troubled pension debt backed by former Mayor Kwame Kilpatrick.

The mayor noted that after Jones voted against the FGIC deal, the pair went to a Detroit Lions game and, soon after, patrolled city streets together for Detroit's annual Angels' Night.

"If you are professional, you can disagree on a policy issue. It doesn't mean that you don't have a good personal relationship," he said. "Brenda Jones voted however her conscience told her on FGIC."

Martha Kopacz, appointed by U.S. Bankruptcy Judge Steven Rhodes to evaluate the reasonableness of city's plan, deemed the plan feasible but stressed it will need buy-in from Duggan and the council.

Jones, during a news conference Friday, said she's eager to work with stakeholders and make Detroit "the type of city we can all be proud of."

"We are committed to ensuring this happens by collaborating with the administration, driving for financial and service excellence and ensuring the processes and decisions are fair and transparent," she said.

During her Oct. 6 trial testimony, Jones also vowed to work with colleagues, Duggan and the review commission to execute the plan. Spending allocated in the plan for the city's two biggest challenges — public safety and blight — was "a good start," but won't be enough, she said.

Others, including District 7 Councilman Gabe Leland believe the plan carves out enough funds to bolster services. But said it will come down to budgeting, leadership and "how you use it."

Member Mary Sheffield, who represents Council District 5, said she's concerned about borrowing, namely Detroit's quality of life loan and post-petition financing. She said Detroit must ensure it's positioning itself to repay the money to avoid the practices that drove it into debt in the first place.

"There's a lot of pressure on the council to properly carry out the plan," but "that's what we're here for," she said.

"People are looking at us to make sure that we uphold that plan of adjustment and to make sure that the finances in the city of Detroit are in alignment with that plan," she said.

Duggan said department heads are making progress in the fight against blight, turning on streetlights and improving service delivery. But the mayor remains frustrated in some areas, including the city's inability thus far to deliver a bus system that runs on a public schedule.

He also touted the common priorities of his administration and council members, who for the first time in nearly 100 years were elected primarily by district in last fall's election.

"Because of the district election process, you've got more alignment between the mayor and the council than you've seen in decades," Duggan said.

Sheffield expects disagreements between the legislative and executive branches, but said the relationship doesn't have to be adversarial.

"That's part of the process," she said. "That's how you know that everyone is doing their job.

It's critical that the vision of the mayor and council stay on par, Spivey added.

"We are an example for the world," he said. "We have to get it right. It's under our watch now."

cferretti@detroitnews.com