Judge Puts Detroit Bankruptcy Ruling On Paper: ‘The City Needs Help’
DETROIT (WWJ/AP) - Two days later, a judge is elaborating on his decision to let Detroit stay in bankruptcy by releasing an opinion of more than 140 pages.
Federal bankruptcy Judge Steven Rhodes made his historic ruling from the bench Tuesday. But he also promised to give a written opinion, a key step in a case that will be appealed.
Rhodes starts his opinion Thursday with a quote from the U.S. Constitution that says Congress has the power to set the bankruptcy rules across the U.S. He says federal law trumps a provision in the Michigan Constitution that protects public pensions.
In his opinion, the judge notes that 110 parties filed objections to the city’s eligibility.
In a section titled, “Introduction to the Facts,” the judge writes:
“The City of Detroit was once a hardworking, diverse, vital city, the home of the automobile industry, proud of its nickname – the ‘Motor City.’ It was rightfully known as the birthplace of the American automobile industry. In 1952, at the height of its prosperity and prestige, it had a population of approximately 1,850,000 residents. In 1950, Detroit was building half of the world’s cars.
“The evidence before the Court establishes that for decades, however, the City of Detroit has experienced dwindling population, employment, and revenues. This has led to decaying infrastructure, excessive borrowing, mounting crime rates, spreading blight, and a deteriorating quality of life.
“The City no longer has the resources to provide its residents with the basic police, fire and emergency medical services that its residents need for their basic health and safety. Moreover, the City’s governmental operations are wasteful and inefficient. Its equipment, especially its streetlights and its technology, and much of its fire and police equipment, is obsolete.
“To reverse this decline in basic services, to attract new residents and businesses, and to revitalize and reinvigorate itself, the City needs help.”
Rhodes says the pensions of Detroit retirees are just like other contracts that can be broken in bankruptcy. Detroit says pensions are underfunded by $3.5 billion. Unions and pension funds are appealing.
(TM and © Copyright 2013 CBS Radio Inc. and its relevant subsidiaries. CBS RADIO and EYE Logo TM and Copyright 2013 CBS Broadcasting Inc. Used under license. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.)