detroit bankruptcy | Pension360

Detroit Retiree Committee Explains Decision to Support Pension Cuts

When Detroit initially announced its plans to cut back worker pensions earlier this year, the Detroit Retiree Committee took a hard line: the cuts were unconstitutional and the Committee wouldn’t support them.

But the Committee eventually backed down, and retirees easily approved the pension cuts at the ballot box.

What caused the Committee to reverse course? Today, during testimony at Detroit’s bankruptcy trial, we got a glimpse of the behind-the-scenes decision-making that led to the change in sentiment. From the Detroit Free Press:

“Part of the test of whether Detroit’s plan would be successful was whether Detroit could be able to revitalize itself,” [Committee member Ron] Bloom said. “Anything we put forward, we had to feel in good faith was consistent with Detroit being able to revitalize itself.

“The city was dysfunctional. We didn’t like what they had to say often, but we felt their commitment to revitalization was sincere.”

[…]

The Retiree Committee agreed to endorse the plan ahead of a July vote by retirees. Retirees and workers voted in support of the plan.

Early on, the committee “had a pretty vigorous disagreement with how we thought the case should go,” Bloom said, adding that the retirees were never treated like favored insiders among the city’s creditors.

But as realities of the case set in, and it became clear pension cuts could be worse if retirees rejected the plan, the committee decided to back the plan.

“We believe that we received enough,” Bloom testified.

The restructuring plan, eventually endorsed by the Committee and approved by retirees, eliminated COLA increases and cut pensions by 4.5 percent.

Photo Credit: Mikerussell – Own work. Licensed under Creative Commons Attribution-Share Alike 3.0 via Wikimedia Commons

Moody’s: Undoing Retiree Cuts Would Spell Bankruptcy For Flint

Detroit isn’t the only Michigan city having a hard time financially. Flint, a smaller but similarly distressed city, has toyed with the idea of bankruptcy for months.

The city cut retiree benefits in an attempt to improve its fiscal condition, but a lawsuit over those cuts is waiting in the wings.

Moody’s has now said that the city is unlikely to face bankruptcy – but if retirees win their lawsuit against the city, that outlook could change. From Michigan Live:

Flint and Detroit have many similarities, but bankruptcy isn’t likely to be among them, according to an analyst with Moody’s Investors Service.

David Levett, writing in the Sept. 11 issue of U.S. Public Finance Weekly Credit Outlook, says Flint is unlikely to follow Detroit’s path into bankruptcy in the near term, especially if the courts allow the city to keep benefit cuts to retirees in place.

[…]

Earlier this year, Earley himself raised the possibility of bankruptcy for Flint if it loses a lawsuit filed by city retirees, which seeks to maintain the health benefits that workers retired with.

Levett’s analysis credits Flint’s emergency managers with having “substantially improved financial operations with dramatic changes, including restructuring pension benefits, outsourcing services, eliminating 20 percent of the city’s workforce and reducing total employee compensation equivalent to 20 percent of wages.”

He says Flint’s financial progress “would be derailed” if cuts to retiree benefits are overturned.

“The city would face substantial financial pressure should the benefit cuts not stand, increasing the likelihood of a bankruptcy filing … If the city ultimately loses the challenge, annual expenditures would increase by $5 million, equivalent to 8 percent of 2013 revenues,” the report says.

Flint Councilman Joshua Freeman was not so optimistic. In an email to Michigan Live, he said he sees “no clear path forward that does not include bankruptcy”.

Michigan To Sell Record Number of Bonds to Finance Pension Shortfalls

640px-Kalamazoo — Kalamazoo is just one Michigan city considering a historic bond offering to cover pension obligations.

It’s a strategy that’s becoming increasingly common—municipalities, straddled with outstanding pension obligations, issue bonds to cover near-term funding shortfalls.

In a particularly risky iteration of the practice, cities and states will take the proceeds from selling the bonds and re-invest them into the market.

That’s exactly what Michigan is gearing up to do, according to Bloomberg:

The Detroit suburb of Macomb County plans a $270 million sale of municipal debt, its biggest ever, to finance retiree health-care costs, while Kalamazoo is considering a historic $100 million bond offer for similar expenses. Bloomfield Hills plans to borrow a record $17 million for pensions. The law allowing the practice expires Dec. 31.

U.S. states and cities are struggling with how to pay for promises to workers after the recession ravaged their finances. Yet few communities see debt as the answer — sales of revenue-backed pension bonds have tallied $356 million this year, data compiled by Bloomberg show. Interest rates close to five-decade lows are making it more attractive to pursue the risky strategy of investing borrowed funds in financial markets.

“We can’t afford to wait,” said Peter Provenzano, Macomb County finance director. “Timing the market is difficult. You could sit on the sidelines and miss out on an opportunity.”

It’s a risky strategy that’s been covered many times before, perhaps best by the Center for Retirement Research’s recent brief.

The gist: If a city is going to re-invest proceeds from issued debt, they better hope the market produces returns that exceed the cost of servicing the debt.

The problem is, most cities that turn to this practice are already in dire straits fiscally. If the bet doesn’t pay off, it leaves cities even worse off.

At least one Michigan city is shying away from the practice: Grand Rapids.

“The best way to have odds in your favor is to do this when stock prices are depressed,” Scott Buhrer, the city’s chief financial officer, told Bloomberg. “We’re in the latter stage of a bull market.”

Photo: “Kalamazoo” by User Mxobe on en.wikipedia – own-work. Licensed under Public domain via Wikimedia Commons

Detroit Creditor Accuses “Agenda-Driven” Bankruptcy Mediators Of Favoring Pensioners

Another chapter has been written in the bitter fight between Detroit and one of its largest creditors, Syncora. The bond insurer has the city’s bankruptcy mediators of blatantly favoring pensioners while pushing most of the pain of the bankruptcy onto the city’s creditors.

Syncora said in a court filing today that Detroit’s grand bargain deal was “the product of agenda-driven, conflicted mediators who colluded with certain interested parties to benefit select favored creditors to the gross detriment of disfavored creditors and, remarkably, the City itself.”

Syncora feel they are being treated unfairly in Detroit’s bankruptcy. As part of the grand bargain, public pensioners had to accept significant cuts to their benefits. But the cuts weren’t as significant as they could have been.

But much steeper cuts are being enforced elsewhere, including on Detroit’s bondholders, of which Syncora is one.

In addition to being a bondholder, Syncora insures hundreds of millions of dollars worth of pension obligation certificates of participation (COPs) issued by Detroit. Those instruments became worthless when the city declared bankruptcy.

As part of the city’s bankruptcy proceedings, Syncora stands to lose between 90 percent and 100 percent of its investment—all told, around $250 million, including the money they’ll have to pay to clients for whom Syncora had guaranteed payment from Detroit bonds. More from the Detroit Free-Press:

Bond insurer Syncora — which could lose hundreds of millions in the bankruptcy — argued that Judge Steven Rhodes must reject the city’s sweeping restructuring plan because of the “naked favoritism” of lead bankruptcy mediator Gerald Rosen and mediator Eugene Driker.

The accusations thrust the mediators into the middle of a fight between the city and Syncora that has become so bitter that Rhodes ordered the city to stop using war analogies to describe the insurer’s actions.

Rosen and Driker negotiated terms of the grand bargain, which allows the city to reduce pension cuts and transfers the DIA to a charitable trust. They helped solicit donations from nonprofit foundations, which pledged $366 million over 20 years, and convinced the DIA to contribute $100 million over 20 years from its own donors. The state of Michigan then agreed to contribute $195 million in upfront cash to the deal, which must be approved by Rhodes.

In its filing, Syncora cited several public statements by Rosen, including his statement at a press conference that the grand bargain is “about Detroit’s retirees who have given decades and decades of their lives devoted to Detroit.”

Syncora argued that Driker should have disqualified himself from mediating the grand bargain since his wife is a former member of the DIA’s board of directors.

Rosen and Driker did not immediately respond to requests seeking comment.

For a breakdown of Detroit’s plans to repay various creditors, see Pension360’s coverage here.

Oral Arguments by Pension Funds and Unions Pushed Back in Detroit Bankruptcy Hearing

When Detroit first raised the issue of cutting pension benefits for the city’s workers, unions and pension funds balked at the idea.

So when a Detroit bankruptcy court ruled that the city could indeed cut pension benefits as part of bankruptcy proceedings, several parties immediately filed appeals, including two public employee unions and one pension fund. They wanted their day in court; a chance to stand in front of a judge and make their arguments face-to-face.

That day was supposed to be Wednesday. But there will be no appeals heard that day, as the Appeals Court in question has postponed the oral arguments that were previously scheduled to be given by the Detroit Fire Fighters Association, Detroit Police Officers Association, the city’s two pension funds and the Retired Detroit Police Members Association.

The groups were going to argue that Detroit is ineligible for bankruptcy because Michigan law does not allow a city to file for bankruptcy. From Detroit News:

A federal appeals court Tuesday canceled oral arguments for two public safety unions, a retiree group and the city’s pension funds, which were trying to overturn the city’s eligibility for bankruptcy and its ability to slash pensions.

The cancellation comes one day before the groups were scheduled to deliver arguments in the U.S. 6th Circuit Court of Appeals in Cincinnati, Ohio, and following a request to delay the hearing by a city bankruptcy lawyer, who cited ongoing negotiations. The groups impacted by the cancellation are the Detroit Fire Fighters Association, Detroit Police Officers Association, the city’s two pension funds and the Retired Detroit Police Members Association.

Oral argument was set for 1:30 p.m. Wednesday and posed one last legal obstacle that could derail an Aug. 14 trial to determine whether Detroit can shed $7 billion in debt and emerge from the biggest municipal bankruptcy in U.S. history. Legal experts, however, believe appeals from pension funds, unions and retiree groups will fail and the bankruptcy case will continue to trial next month.

Robert Gordon, a lead attorney for Detroit’s retirement systems, said the appellate court’s clerk’s office called attorneys involved late Monday and informed them of the cancellation.

A spokeswoman for the Retired Detroit Police Members Association confirmed Tuesday morning the group had struck a deal with the city late Monday night to avoid Wednesday’s planned hearing. That group has argued Michigan’s emergency manager law is unconstitutional because of its similarities to a previous law voters repealed in November 2012.

Detroit has settled with most of its creditors as part of its bankruptcy proceedings. But there has been one notable holdout: Syncora Guarantee Inc, which is facing millions of dollars in potential losses due to the drastic decline in value of the Detroit bonds the corporation holds.

Photo: “DavidStottsitsamongDetroittowers” by Mikerussell – Own work. Licensed under Creative Commons

Could Detroit-Style Cuts Come to California?

Pension benefits, once thought safe, now stand on shakier footing than they ever have. Detroit’s citizens live in a state where pensions are protected by the Constitution, but that didn’t matter when a bankruptcy judge ruled that the city could cut worker pensions as part of its bankruptcy restructuring plan.

California workers are now wondering what this all means for them—particularly the workers in the bankrupt cities of Stockton and San Bernardino. The state heavily protects its pension benefits, present and future.

Still, the question on everyone’s mind is: Could Detroit-style pension cuts come to California? Ed Mendel explored that question in a post today on CalPensions:

U.S. Bankruptcy Judge Steven Rhodes, acting earlier than expected, ruled last December that Detroit pensions can be cut, even though the Michigan constitution says pensions are a “contractual obligation” that can’t be “diminished or impaired.”

The ruling that federal bankruptcy law allowing contract impairment overrides state law was appealed by unions. But the early ruling, along with potential loss of “grand bargain” financial aid, may have added to fear of deep pension cuts, influencing the vote.

A cut of 4.5 percent in active and retired general worker pensions and the elimination of cost-of-living adjustments was approved by 73 percent of voters. Leaving police and firefighter pensions intact but trimming their COLAs from 2.25 to 1 percent was approved by 82 percent.

In a brief supporting the appeal of Judge Rhodes’ ruling, CalPERS argued, among other things, that Detroit has a city-run plan and that an “arm of the state” like CalPERS cannot under federal bankruptcy law be impaired in a municipal bankruptcy.

The judge handling the Stockton case, U.S. Bankruptcy Judge Christopher Klein, has said one of his options is ruling on the general issue of whether CalPERS pensions can be cut without necessarily finding that Stockton pensions should be cut.

CalPERS filed the brief in question shortly after the Detroit ruling. The premise of CalPERS argument was that the Detroit ruling didn’t apply to them because Detroit is a city, while CalPERS operates on the state level.

But as Mendel points out, there are a few key similarities between Detroit‘s bankruptcy and those of California. From CalPensions:

Although differing on pensions, the Detroit and Stockton plans to exit bankruptcy are similar on retiree health care. Detroit announced last week that a 90 percent cut in retiree health care was approved by 88 percent of voters.

Judge Klein ruled in 2012 that retiree health care can be cut in bankruptcy, acknowledging the result may be “tragic hardships” for some. A Stockton retiree health care debt of $544 million was reduced to a one-time payment of $5.1 million.

Another similarity is that the Detroit and Stockton “plans of adjustment” to cut debt and exit bankruptcy face challenges from bondholders. Making little or no reduction in massive pension debt, but deep cuts in bond payments, is said to be unfair.

What happens in California will have a ripple effect across the country as cities nationwide are increasingly weighing the prospect of going through municipal bankruptcy proceedings. The judges presiding over these cases will be wading in uncharted waters—and their word will be law. Pension360 will be following subsequent developments closely.

The Cities Scaling Back Pension Benefits Are The Same Ones Upgrading Their Sports Stadiums

Cash-strapped cities around the country have two things in common: one, they are slashing pension costs by scaling back benefits. Two, they are spending tens of millions of dollars on building and subsidizing sports stadiums. David Sirota has more on this interesting juxtaposition:

In Chicago, Mayor Rahm Emanuel recently passed a $55 million cut to municipal workers’ pensions. At the same time, he has promoted a plan to spend $55 million of taxpayer money on a hotel project that is part of a larger stadium redevelopment plan for Depaul University.

In Miami, Bloomberg News reports that the city “approved a $19 million subsidy for the professional basketball arena” and then six weeks later “began considering a plan to cut as many as 700 (librarian) positions, including a fifth of the library staff and more than 300 police.”

In Arizona, the Phoenix Business Journal reports that regional governments in that state have spent $1.5 billion “on sports stadiums, arenas and pro teams” since the mid-1990s. At the same time, legislators are considering proposals to cut public pension benefits, while voters in Phoenix may face a pension-cutting ballot initiative in November.

In Jacksonville, Florida, officials have not fully funded the pension system leading to a recent credit downgrade by Moody’s. At the same time, city officials just approved a $63 million plan to upgrade EverBank Field.

In New Jersey, Gov. Chris Christie is trying to block a planned $2.4 billion payment to the pension system, at the same time his administration has spent a record $4 billion on economic development subsidies and tax breaks to corporations. That includes an $82 million subsidy for the construction of a practice facility for the Philadelphia 76ers

In Louisville, Kentucky, up to $265 million in state and local tax revenues were used to finance the construction of the KFC Yum! Center, which opened in 2010. Only a few years later, Kentucky legislators enacted major cuts to the state’s pension system.

Is there an economic basis for these decisions? Sports stadiums are typically considered an economic boon for the long-term business they bring to certain areas, not to mention the jobs created during construction. But a few studies negate the notion that stadiums are economically sound investments for cities. More from David Sirota:

The officials promoting these twin policies argue that boosting stadium development effectively promotes broad economic growth. But many calculations rely on controversial and dubious assumptions that have been widely challenged.

A landmark 1997 Brookings Institution study by sports economist Andrew Zimbalist concluded that “a new sports facility has an extremely small (perhaps even negative) effect on overall economic activity and employment” and that few facilities “have earned anything approaching a reasonable return on investment” for taxpayers.

That finding was confirmed by University of Maryland and University of Alberta researchers, whose 2008 review of major academic research found that “sports subsidies cannot be justified on the grounds of local economic development.” In addition, a 2012 Bloomberg News analysis found that taxpayers have lost $4 billion on such subsidies since the mid-1980s.

At the same time, cuts to pension contributions are rarely described by public officials as negative for local economic growth, though economic data suggests otherwise. An analysis by the Washington, D.C.-based National Institute on Retirement Security notes that spending resulting from pension payments had “a total economic impact of more than $941.2 billion” and “supported more than 6.1 million American jobs” in 2012.

The timing is particularly bad in Detroit; the day voters approved a measure to cut their pensions was incidentally the same day the Detroit Red Wings unveiled their plan for a new, taxpayer-funded stadium.

Detroit Deal Leaves Pension Protection in Legal Limbo

Municipal bankruptcies are increasingly becoming a reality in the United States, and it’s changing what we know about how—and to what extent—state laws protect pension benefits.

Detroit made big waves this week when its citizens voted to cut their own pensions. But if they had not approved the ballot measure, the city would have tried to cut their benefits by even greater margins. The fact that this took place in a state with stringent legal protections for pension benefits is making observers elsewhere wonder if a new precedent has been set. From NPR:

Pension benefits already earned have always been sacrosanct, protected by federal law and, often, state constitutions. Retirees could rest easy, knowing their money couldn’t be touched.

The in Detroit by retired city workers to cut their own benefits by 4.5 percent calls all that into question.

“Detroit has raised it as a possibility,” says Daniel DiSalvo, a political scientist at City College of New York who studies public sector labor issues. “I don’t think that most people, maybe with the exception of some unions, think pensions are inviolable.”

With several other cases pending, it’s not at all clear whether federal bankruptcy law trumps traditional pension protections. Pensions continue to have strong legal protection, and there’s not going to be any great rush among states and cities to test whether cutting benefits for current retirees is something that will necessarily fly with the courts.

But the vote in Detroit does suggest that at least some pensioners might have to give up more than they ever expected.

And it won’t be too long until the possibility of more pension cuts are raised elsewhere in Michigan. Flint is considering filing for bankruptcy, as well. From Money News:

Flint, the birthplace of General Motors that once had 200,000 residents, has also endured a spectacular drop in population and factory jobs and a corresponding rise in property abandonment, much like its insolvent big brother an hour’s drive south.

If a judge rules against Flint’s effort to cut its retiree health care benefits, the city is expected to join about a dozen cities or counties that have sought help from the courts since the start of the recession.

“If we don’t get any relief in the courts … we are headed over the same cliff as Detroit,” said Darnell Earley, the emergency manager appointed by Gov. Rick Snyder to manage Flint’s finances. “We can’t even sustain the budget we have if we have to put more money into health care” for city workers.

And, if Flint follows a similar path to Detroit after declaring bankruptcy, it could mean pension benefits are the first thing on the chopping block.

This will all become a bit clearer when Detroit bankruptcy judge Steven Rhodes makes his ruling on the city’s restructuring plan. That won’t come until sometime in September.

Detroit’s Pension-Slashing Plan Passed, But Creditors Remain the City’s Biggest Obstacle

When Detroit bankruptcy judge Steven Rhodes considers whether to approve the city’s sweeping debt-cutting plan, he will take into strong consideration what the city’s voters had to say. He’ll see that Detroit’s pension holders overwhelmingly approved the ballot measure today which cut pension benefits and cost-of-living-adjustments, among other things.

But he’ll also see the discontent coming from another group receiving much less media attention: Detroit’s creditors. Those include banks, hedge funds, individual investors and average Detroit citizens who hold the city’s bonds, which have become worthless. Some of these bondholders are going to be paid back in full, but others won’t; Detroit is offering as little as 10 cents on the dollar to investors who own certain bond classes.

Needless to say, the owners of those bonds aren’t happy. And they expressed that discontent by voting “no” on the ballot measure that passed today. Still, Judge Rhodes will consider their opinions when ruling whether Detroit’s restructuring plan is legal.

There are twelve classes of bonds, and the Detroit Free Press has a fantastic breakdown of how those classes voted and their unique situations. You can read the whole thing here, but here are some of the more interesting ones:

Class 1: Water and sewer bondholders

Who owns or controls this debt? Major bond insurers, individuals and financial giants such as Black Rock

What they’re owed: $5.8 billion

The city’s offer: 100%

Back story: This debt is secured, which means it’s protected from cuts. Nonetheless, mediation talks between the city and the bondholders have tarried without a settlement. Why? Because the city is trying to replace the bonds without paying all future interest.

How they voted: 119 sub-classes of bondholders voted no, while 32 voted yes.

Classes 2-4, 6: Secured general obligation bonds, other secured claims, U.S. Housing and Urban Development loans, parking bonds

Who owns or controls this debt? A variety of investors (Classes 2-3, 6); Uncle Sam (Class 4)

What they’re owed: $494 million (Classes 2-3); $90 million (Class 4); $8 million (Class 6)

The city’s offer: 100%

Back story: This debt has rock-solid legal standing and the city can’t get out of it.

How they voted: These creditors don’t vote because they are receiving full payment.

Class 7: Limited-tax general obligation bonds

Who owns or controls this debt? Ambac Assurance and Black Rock control most of it, with Syncora holding a smaller amount.

What they’re owed: $164 million

The city’s offer: 34%

Back story: Black Rock and Ambac agreed to a tentative settlement, but all of the terms have not been released.

How they voted: Bondholders representing 99.8% of the claims and the votes rejected the plan — likely because the settlement has not been finalized.

Class 8: Unlimited-tax general obligation bonds

Who owns or controls this debt? The lion’s share is controlled by bond insurers Assured, Ambac and National Public Finance Guarantee.

What they’re owed: $388 million

The city’s offer: 74%

Back story: The bond insurers agreed to a deal to allow the city to divert 26% of their debt to low-income retirees who face pension cuts. But this deal will face legal challenges during the trial.

How they voted: 87% of bondholders representing 97% of the debt voted “yes” to approve the deal.

Class 9: Pension obligation certificates of participation (COPs)

Who owns or controls this debt? Syncora and FGIC insured the debt, which is mostly owned by European banks and five major hedge funds that recently acquired about half of it

What they’re owed: $1.473 billion

The city’s offer: 0% to 10%

Back story: The fiercest fight in the bankruptcy is here. Syncora and FGIC argue they are being unfairly treated and have pushed for the City of Detroit to consider selling Detroit Institute of Arts treasures to pay their debts. The hedge funds have also objected to the city’s proposal.

How they voted: It was an emphatic “no,” with not a single “yes” vote.

Class 10: Police and Fire Retirement System pensions

Who owns or controls this debt? Police and fire retirees and active uniform employees who are vested in their pensions

What they’re owed: $1.25 billion in unfunded future pension promises

The city’s offer: 100% payment of their monthly pension checks and a reduction in annual cost-of-living adjustment (COLA) increases from 2.25% to 1%.

Back story: The U.S. government-appointed Official Committee of Retirees, a major retiree association and the pension board representing the police and fire retirees reached a deal with the city to recommend a “yes” vote. With a “yes” vote by Classes 10 and 11, the city would agree to transfer the DIA to an independent charitable trust in exchange for foundation, state and DIA donations directed toward pensions.

How they voted: 82% of police and fire pensioners representing 82% of the debt voted “yes” to support the deal.

Class 14: Other unsecured claims

Who owns or controls this debt? A variety of creditors, including people who sued the city and won settlements, as well as city vendors that had contracts canceled

What they’re owed: An estimated $150 million

The city’s offer: 10% to 13%

Where they stand: This group of creditors is not well coordinated, but it includes a major Macomb County water claim expected to vote no.

How they voted: This class voted no by a 53-47% margin in number and by a 61-39% margin in total claims.

There are two ways this could play out:

1) Detroit reaches a settlement with creditors, likely paying them around 10 cents on the dollar for many of their bonds.

And, if a settlement can’t be reached:

2) Judge Rhodes will determine whether to force the creditors to accept cuts.

The trial starts next month, but likely won’t be finished until September.

Detroit Voters Pass Pension Cuts By A Landslide

The long-awaited news has finally come: Detroit’s pension holders have approved a ballot measure that cuts their pension benefits as part of the city’s bankruptcy plan. There was much speculation about whether the measure would pass. In the end, though, it wasn’t even close. The Wall Street Journal had the final tally:

The official count, filed late Monday night, showed 82% of those eligible for a police or fire pension who voted supported the plan. Roughly 73% of other retirees and employees with pension benefits who voted favored the plan. Voting lasted through early July.
The voting margins from pension holders were seen as an endorsement for the city’s plan to confront an estimated $18 billion in long-term obligations.
“The voting shows strong support for the City’s plan to adjust its debts and for the investment necessary to provide essential services and put Detroit on secure financial footing,” Detroit Emergency Manager Kevyn Orr said.
Despite the critical nature of the vote, a sizable chunk of those eligible sat out. About 59% of police and firefighter pension holders and 42% of other pension holders cast ballots, according to the city’s legal filing.

Need a recap of what exactly the “yes” vote means? Here’s an explanation from Click On Detroit:

General retirees would get a 4.5 percent pension cut and lose annual inflation adjustments. Retired police officers and firefighters would lose a portion of their annual cost-of-living raise.
Ballot approval of the pension changes triggers an extraordinary $816 million bailout from the state of Michigan, foundations and the Detroit Institute of Arts. The money would prevent the sale of city-owned art and avoid deeper pension cuts. The judge, however, still must agree.

That last line is key: the city’s bankruptcy judge still has to OK the plan. But it was always assumed that if voters passed it, the judge would too.

To read the official declaration released by the bankruptcy court, click here.

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