Detroit bankruptcy plan hinges on votes from pensioners, workers
Dubbed the "Grand Bargain," the plan will see philanthropists and the state pony up nearly US$500 million to help Detroit climb out of bankruptcy without selling its art collection
DETROIT—An effort by deep-pocketed philanthropists to save the bankrupt city of Detroit’s art treasures began with a chance meeting last year and nears a culmination June 20 when Michigan Gov. Rick Snyder authorizes millions in state help.
But that work could be for naught if the city’s pensioners and workers—who are nearing a deadline for an historic vote on Detroit’s plan to get out of bankruptcy—reject what has been dubbed the “Grand Bargain.”
“It is really not in our hands,” said Rip Rapson, president of the Kresge Foundation, which has pledged $100 million toward the plan. “We fully understand that the pensioners have to make very hard decisions as to whether this is something they can support.”
The state’s contribution of $195 million, along with $366 million from foundations and a $100 million pledge from the Detroit Institute of Arts, would replace hundreds of millions being cut from retiree pensions, while stopping bond insurers and other creditors from forcing the sell-off of city-owned art such as Van Gogh’s “Self Portrait.” The money would come over 20 years, placing the value at about $816 million.
As part of the deal, the artwork will go into a charitable trust.
Retirees and city workers have until July 11 to vote, which is included in state-appointed emergency manager Kevyn Orr’s plan for Detroit’s restructuring. The city filed for the largest municipal bankruptcy in history last summer, and a trial on the restructuring is set for August. Orr has said he hopes to have Detroit out of bankruptcy by the end of this summer.
In May, Orr said early ballots showed workers and retirees supporting the plan by about two to one. His spokesman, Bill Nowling, said Thursday that they cannot release detailed numbers, but “are encouraged by the voting activity.”
Retiree Mary Highgate, who plans to return her ballot July 1, believes Orr’s plan will proceed regardless of the vote result.
“Everybody I know is voting ‘no’ because we don’t trust them,” said Highgate, 69. “I’m voting No! No! No!”
The financial contributions from the foundations, state and museum also mean little to her because Highgate doubts that concern for retirees is the true motivation.
“All they care about is the art,” she said. “Do you really think they care about the little people? Have they ever?”