DETROIT (WWJ/AP) – The city of Detroit is spending a lot of money trying to work its way through bankruptcy.
Records obtained by the Detroit News show that Conway MacKenzie, the consulting company hired to turn around city operations, billed Detroit $288,671 for work completed by 11 staffers over a two-week period in July.
The tab includes billing $275 an hour for a 22-year-old financial analyst who graduated from college last year. Hourly rates for other staffers were as much as $495, according to the report.
The office of Detroit’s state-appointed Emergency Manager Kevyn Orr said the hourly amounts were negotiated by the city as flat rates within job classifications to save money.
Orr’s spokesman Bill Nowling said Conway MacKenzie actually gave the city a 25 percent discount on its rates. Nowling also said the state is paying half of Conway MacKenzie’s bill.
“Detroit has more than five decades of administrative neglect and deferred maintenance. The money being spent on the city’s restructuring professionals is an investment in improving city services,” Nowling said in an email to the Detroit News.
Under their agreement with the city, Conway MacKenzie could bill Detroit up to $400,000 every two weeks. Nowling said Orr is monitoring all contracts to ensure Detroit is receiving “value for the money it spends.”
The restructuring effort began before Detroit’s bankruptcy filing.
In filing for Chapter 9 bankruptcy in federal court, Orr said Detroit is insolvent, unable to pay off debt that his restructuring team says could reach $20 billion. He has stopped paying on $2.5 billion in bonds, using that money to pump up struggling and underfunded city services. He also asked city creditors and Detroit’s two pension funds to accept pennies on the dollar in money owed them.
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