Aerial view of Lafayette Park in downtown Detroit, The Renaissance Center and the Detroit River on June 14, 2012. / Romain Blanquart, Detroit Free Press
DETROIT -- Detroit emergency manager Kevyn Orr says it would be "catastrophic" for the city if Judge Steven Rhodes doesn't sign off on Orr's plan of adjustment in the federal bankruptcy proceedings.
The city "would have to go back to the drawing board," Orr said Thursday, in a wide-ranging interview about finances, crime, gentrification and his future.
Orr, sitting in the city hall suite he has occupied longer than Mayor Mike Duggan, said his plan of adjustment has a Plan B "that would cut pensions" and lose the more than $800 million pledged from foundations, the State of Michigan and other institutions to save the city's art museum and soften the blow of the proposed bankruptcy settlement to pensioners' checks.
The alternate plan would also scuttle the city's plans to buy back water department bonds and refinance them, saving $241 million over 27 years.
Orr said nearly everything that was made vulnerable by Detroit's insolvency could be in jeopardy again if his wide-ranging plans to restructure debt and reorganize city operations are rejected.
Chief among the victims would be city pensions, which he says he cannot save without the plan of adjustment. There's also the Detroit Institute of Arts' collection.
And there's the water and sewerage department. Orr said one of his greatest concerns is what a ruling against the city might mean for its rising reputation among investors.
"We're trying to deal with the balance sheet of the department to make it healthier so we can continue to treat 1,310 million gallons of water and sewage a day. And we did that ... with a tender which exceeded our expectations. We got 93% of what we were after ... and we got a lower rate than we had ever expected.
"Remember, just seven months ago we were rated junk," he said. "We're now rated investment grade. It's never been done before. And the average citizen doesn't understand that aspect of it. They're saying ratings and bond ratings? Who cares? Here's my bill.
"But what it means is the 73 water main breaks that we had in the first week of January, we can now start putting money away to meet the capital improvement plan that the dept adopted in December. It's going to spend billions of dollars over the next 10 to 20 years to improve this system. What it means is we can get better credit without paying high interest rates."
That means the city can make vital repairs on the water and sewer system. The last capital improvements were deferred because the department had to pay off $540 million in interest rate swaps, Orr said.
"That was money that could have gone into the system but was used for risky financial schemes," he said. "That's why we're staying away from risky financial schemes. So instead of having a half billion dollars ... we were managing to the emergency. Now we can manage to strategic planning."
That might make it easier, he said, in current mediation discussions about a regional water authority.
He declined to discuss details but said if the department can show it can manage itself, it will show it's "behaving the way a regulated enterprise should, and we're a good bet to both lend money and do business with."
Becoming a sound and trusted enterprise also makes it easier to get funding to do other things, including fight crime - something Orr pointed to as another success.
"One of the things I promised the chief was that he could restructure the department," he said, adding that success is measured in arrests.
"The chief has been able to roll out a community policing program. â?¦ It's a relationship. It's not just suppression and the old-line STRESS," he said, referring to a decades-old police program that was much maligned for its treatment of residents. "Now, it's customer service.
"We haven't had one glitch," he said. "In fact, the past six high-profile cases, (including) the beating of Mr. (Steven) Utash, the murder of the young lady in the rug, the CVS shooting, they were solved within 24 to 72 hours of happening. No other major city police force can say that."
Some critics say there is an underlying rage in some neighborhoods that a single incident could ignite, but Orr says it hasn't happened yet.
He had a similar response regarding criticisms that the new Detroit is a town within a town, or what a recent Bridge magazine article, called the 7.2 - the 7.2 square miles that make up the downtown and Midtown neighborhoods that have gotten so much attention and development and publicity in the past two years. As developers move in, many are moving older and poorer residents out.
"There's no target on the poor or seniors," Orr said, adding that Detroit must have a mix of residents to survive and thrive.
"Cities have to balance the needs for all citizens versus a need for revenue so that you can treat water, so that you can have a police force that responds ... so you can open the 60 parks you have closed and keep kids off the street and reduce crimes."
He said he welcomed anyone to come up with a solution for rebuilding the city's tax base without revenue.
Orr didn't decline to discuss much, except specific court strategy and the water department mediation. There was one other thing: the public schools.
He said he admired models to rebuild schools that are being tried in New Orleans and Washington, D.C.
"I am aware that for the city to continue to expand, it's got to get a grip on this issue of education," he said. "But right now, my pig ain't in that field."
He agrees with the mayor that Detroit should work to gain population.
"My view is Detroit is a big city no matter what happens," he said. "Should you have aspirations to grow? Sure. If you don't, you're accepting the status quo. And you should always try to exceed your grasp. That's what progress is: pushing forward. ... The immediate thing is let's do the things we need to do now, and the growth will take care of itself. You're taking care of the core functions. If you build it, they will come."
Read the original story: Orr: Rejecting bankruptcy plan would be 'catastrophic'