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Detroit Ends Quarter With $128 Million In Cash

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View of Detroit from the Greektown Casino parking deck. (WWJ Photo/Mike Campbell)

View of Detroit from the Greektown Casino parking deck. (WWJ Photo/Mike Campbell)

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By COREY WILLIAMS
Associated Press

DETROIT (AP) – Detroit ended September with a positive cash flow, largely because it defaulted on many of its financial obligations while still collecting property taxes, according to a report Wednesday by the bankrupt city’s emergency manager.

In his report to the state treasurer’s office, Kevyn Orr said the city had an unrestricted cash balance of about $128 million for the quarter ending Sept. 30. The bounty mostly was driven by the collection of more than $237 million in summer property taxes, he said.

Orr defaulted on $2.5 billion of the city’s unsecured debt in June, around the time he asked creditors to take pennies on the dollar for debt owed them. An interest-only payment of about $4.3 million was made Oct. 1 on $479 million in secured general obligation bonds as Orr seeks to take the city into the largest municipal bankruptcy in U.S. history.

He said the city continues to pay retiree health care benefits but did not make any contributions to Detroit’s General Retirement System or Police and Fire Retirement System pension funds.

“The financial condition of the city of Detroit continues to be dire,” he wrote in the report.

He filed Detroit’s bankruptcy petition on July 18. The city has at least $18 billion in obligations and can’t meet them all.

A trial on Detroit’s eligibility for bankruptcy is scheduled to begin next Wednesday in U.S. District Court in Detroit.

Orr hopes to complete an adjustment of Detroit’s debt through bankruptcy no later than next September, according to the report.

Meanwhile, Mayor Dave Bing publicly criticized Orr for how the turnaround specialist is attempting to restructure the city. Bing told reporters Wednesday that he and his team have been left out of the process since Orr was hired in March by the state.

“Kevyn came in with an expertise in bankruptcy and we wanted to fix that balance sheet,” Bing said. “We had an agreement that he would focus on that and leave the day-to-day running of the city to the administration. That has not happened.”

Michigan’s emergency manager law gives Orr nearly total control over Detroit’s finances.

Earlier this month, Orr told city business leaders during a Detroit Economic Club luncheon that he believed he and Bing shared a good working relationship.

Bing’s term ends this year. He is not seeking re-election.

MORE: Mayor Bing Unhappy With Work Of Emergency Manager

(© Copyright 2013 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten or redistributed.)

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