Detroit operations to be returned to elected mayor, council

State-appointed manager signed the city over to elected officials after a year and a half of emergency oversight

DETROIT – The day-to-day operations of Detroit’s city government are back in the hands of its elected mayor and city council.

State-appointed emergency manager Kevyn Orr on Thursday signed one of his final orders and relinquished control of the city after 18 months of state oversight.

“The city is more than ready,” Orr told reporters before signing Order 42 putting the nine-member council and Mayor Mike Duggan back in charge of Detroit’s finances, police department and other facets of city government. “This is really a good day for the city. We have a little bit more to go, but this is the right thing to do.”

Orr was appointed in March 2013 to manage Detroit’s troubled finances, and he took the city into the largest municipal bankruptcy in U.S. history. His exit becomes effective if and when federal Judge Steven Rhodes approves the city’s restructuring plan in bankruptcy court. The bankruptcy plan would wipe out $7 billion of Detroit’s $12 billion in long-term, unsecured debt while restructuring city services.

The orderly transition of responsibilities from Orr to the city reflects the continuing co-operation between Detroit and Lansing, Gov. Rick Snyder said in a statement.

“Together, we have confronted problems that have lingered for decades,” Snyder said. “There have been difficult decisions and sacrifices. Hard work is still ahead of us. We remain focused on improving the quality of life for all residents and building a strong and sustainable financial foundation for the city.”

Orr’s contract expires this weekend. He still keeps the title of emergency manager, but his duties primarily will involve shepherding Detroit through the bankruptcy.

“We’ll know where we are a year or two from now and whether it was worth it,” he said of taking Detroit into bankruptcy.

Order 42 returns “democracy back to the city of Detroit,” Duggan said during a press briefing after the council approved its resolution.

Orr, Duggan and councilmembers spent three days hashing out the deal. Sticking points involved financial concerns tied up in bankruptcy court, including a pending bond issue that required the city to have an emergency manager.

“We had a lot of questions,” said Council President Brenda Jones. “We do not want to stand in the way of the bankruptcy proceedings.”

Orr, who gradually has been returning responsibilities to elected officials, is still expected to testify during the bankruptcy trial, which is scheduled to last until mid-October.

He and his team have reached deals that will pay most of the city’s creditors far less than they are owed. An agreement with the state, businesses and foundations keeps pension cuts down while preventing the sale of city-owned artwork to satisfy some of the debt. The restructuring plan also sets aside $1.7 billion to improve police, fire and other city services.

When Orr took over the city was all but broke. Tax revenue was not enough to cover spending and the city’s bills. There was no money to pay off $5.7 billion in retiree health care obligations or $3.5 billion in pension liabilities. City services were poor and an under-manned and under-equipped police force struggled to keep the crime rate down.

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