DETROIT - The 'Grand Bargain' Apporved

"Behind Detroit’s ‘grand bargain’ to emerge from bankruptcy" PBS NewsHour 11/7/2014

Excerpt

JUDY WOODRUFF (NewsHour):  Nearly 16 months after Detroit filed for bankruptcy, a federal judge approved an unprecedented and complex plan today that would bring the city out of bankruptcy and is designed to give it a fresh start.

The plan allows Detroit to shed $7 billion of debt, reinvest more than a billion dollars into neglected public service, cut pensions of general city retirees, and cut payments to bondholders.

Hari Sreenivasan has more on the story.

HARI SREENIVASAN (NewsHour):  One crucial component of the plan that came together in the past few months is a so-called grand bargain.  It allows the city to accept more than $800 million from nonprofit foundations, the state and others over two decades.  That deal protects the city from selling a noted art collection at the Detroit Institute of Arts and reduces the size of pension cuts.

The Ford Foundation has donated the most money to the grand bargain, $125 million in all.

Its president, Darren Walker joins me now.

Thanks for being with us.

So, my first question is, what are nonprofit foundations doing in what seems like a bankruptcy bailout?

DARREN WALKER, Ford Foundation:  Well, we’re not in the business of solving bankruptcies, but we do solve big problems and work with leaders at the city level and the community level, public and private sectors, to help solve community problems.

And this is one example of a group of foundations coming together at the behest of Judge Gerald Rosen to help solve this challenge.

HARI SREENIVASAN:  So, is this a template for other cities that might be in financial straits?

DARREN WALKER:  This is not a template for other cities, but there are many lessons here.

This was a complicated $20 billion bankruptcy with thousands of creditors and many contested issues.  But our focus, which was on saving the Detroit Institute of the Arts and ameliorating the situation for the workers of the city, particularly those retirees under the pension fund, were — that was what we were able to help accomplish.

But this doesn’t mean that other cities are going to look to foundations to solve their bankruptcy issues.  This is not a template for that.