LANSING, Mich. — A state panel on Friday approved four bond deals worth up to $1.1 billion that are needed for the city of Detroit to emerge from bankruptcy, plus the sale of city-owned land parcels needed for a new public bridge to Canada.
The Detroit City Council had previously approved the bond deals, which will be used to pay off various creditors who have agreed to the city’s latest plan of adjustment in bankruptcy, provide bankruptcy exit financing and set aside money for creditors’ claims that are still disputed.
The City Council had proposed an alternate plan for the $1.4 million sale to the Land Bank Fast Track Authority of 301 city-owned properties near the site of the proposed New International Trade Crossing. But the Council essentially withdrew that alternative proposal late Thursday, conceding in a letter from Detroit Corporation Counsel Melvin (Butch) Hollowell that their plan was not currently viable.
Although the Michigan Local Emergency Financial Assistance Loan Board — which consists of three state officials appointed by the governor — must approve the bond deals, it is the city, not the state, that is on the hook for paying off the bonds.
“These are the financings we need to settle the bankruptcy,” Detroit Finance Director John Naglick told Tom Saxton of the Treasury Department, Budget Director John Roberts and Mike Zimmer, director of the Department of Licensing and Regulatory Affairs.
On the land sale, the city withdrew a proposal under which some of the proceeds of the deal would be redirected to the southwest Detroit community. But the City Council is continuing to work on a community development plan for the area, Hollowell said in a message to the board read aloud by Naglick.
In Detroit on Friday, meanwhile, a state Treasury Department lawyer told the city’s Financial Advisory Board that officials are preparing for Detroit’s transition out of bankruptcy, with the city under oversight of a nine-member Financial Review Commission that will have the power to reject city contracts, borrowing and spending for 13 years.
The lawyer, Ashley Gelisse, said the new commission is taking shape but the people who will serve on it remain unnamed.