CHICAGO - Detroit Mayor-elect Mike Duggan will manage the bankrupt city's day-to-day operations under an agreement with Emergency Manager Kevyn Orr that was announced Thursday.
"There is one goal in Detroit and that is to create a strong, vibrant and solvent city and this agreement will help us achieve that," Orr said in a statement. "Mayor-elect Duggan and I have come up with a way to manage day-to-day operations and the financial restructuring in a collaborative fashion that puts the best interests of all of its 700,000 residents first."
The plan hashed out over the last six weeks establishes clear guidelines giving the mayor responsibility for the city's day-to-day operations, providing for greater collaboration and shared responsibility between the EM and mayor's offices. At the same time, it abides by the state's local government fiscal emergency law that grants specific powers and final decision-making authority to the EM.
Orr will retain management and responsibility for all of the city's finance operations with financial matters relating to day-to-day function of government being managed by Duggan in "close collaboration with Orr."
The city's blight initiative project will report to Duggan, but matters related to the city's proposed bankruptcy restructuring known as the plan of adjustment or compliance with commitments made to the federal government will remain under Orr.
While Orr will continue to navigate the city's restructuring path, Duggan can propose alternatives that meet or exceed stated restructuring objectives, under the agreement.
Duggan will have responsibility for all non-civil service appointments within the executive branch of city government, but they are subject to Orr's approval. Orr will retain oversight of the Detroit Police Department while Duggan have input with regard to public safety strategy and progress.
The agreement states that the mayor "makes no decisions that are inconsistent with or jeopardize the city's plan of adjustment, Chapter 9 case, or financial restructuring." Duggan has advocated against cutting retiree pensions and during the campaign said he would propose an adjustment plan that did not cut them, in contrast to Orr's proposals. The bankruptcy court has also weighed in saying pensions are not automatically protected in bankruptcy.
"This agreement will allow the team I am assembling to impact city services that touch our residents every day. I look forward to making a significant impact in the areas of blight, public lighting and the fire department in 2014," Duggan said.
Orr has said he hopes to propose an adjustment plan next month but it's unclear how bankruptcy court developments might impact the timing. U.S. Bankruptcy Court Judge Steven Rhodes this week temporarily put on hold hearings on the city's proposed debtor-in-possession financing and settlement to terminate interest rate swaps. Orr has called the transaction central to his restructuring plans.
Duggan was elected last month and will take office Jan. 1. He replaces outgoing mayor Dave Bing who had been stripped of much of his power as the city fell into emergency management on its way to Chapter 9. Orr was appointed in March.
Duggan on Thursday named several cabinet members. They include former Detroit Police Chief Ike McKinnon to serve as deputy mayor and state Rep. Lisa Howze to serve as chief of staff.
