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Detroit bankruptcy plan a 'road map' that may need adjustment -city's CFO
September 4, 2014 / 5:03 PM / 3 years ago

Detroit bankruptcy plan a 'road map' that may need adjustment -city's CFO

DETROIT, Sept 4 (Reuters) - Detroit’s chief financial officer took the stand on Thursday as the first witness in the city’s historic bankruptcy hearing, testifying that while he believed Detroit’s debt adjustment plan can be implemented, it cannot be set in stone.

“Initially, we definitely believe the plan gives us a road map to how we should be operating,” said John Hill, who was appointed CFO last November.

He also said that if revenue falls below projections, changes to the plan will be needed, which would require the approval of an oversight commission created for the post-bankruptcy city under a Michigan law.

“We expect as we move forward we will find differences we will have to adjust to,” Hill testified.

Detroit’s plan to shed about $7 billion of its $18 billion of debt and other obligations and exit the biggest-ever municipal bankruptcy came under fierce attacks this week as hold-out city creditors and others blasted it for skirting state and federal laws and discriminating against certain creditors.

A U.S. Bankruptcy Court hearing to determine if the plan is fair and feasible began on Tuesday with the opening statement from Detroit’s attorney Bruce Bennett, who defended it as the best hope for saving the city.

Hill, the former executive director of Washington, D.C.’s control board of the late 1990s and early 2000s, discussed projects to replace Detroit’s information technology and improve the city’s financial reporting. He also said he was willing to stay on with the city to see the projects through, noting some may take two years to complete.

Earlier on Thursday, attorneys for plan opponents wrapped up their opening statements. The Michigan counties of Oakland, Macomb and Wayne, which receive water and sewer services from Detroit, objected to the city’s proposal to drain $428 million over nine years from the water and sewerage department for “catch-up” pension payments owed by the department to the city’s general retirement system.

Jaye Quadrozzi, an attorney at Young & Associates representing Oakland County, said that taking the money from the already financially shaky department would further erode funding to improve the aging water and sewer system.

Attorneys for two unions - the United Automobile Workers and the American Federation of State, County and Municipal Employees - objected to the plan cutting pensions for workers and retirees from separate municipal corporations, including the city’s library system.

The hearing is scheduled to continue through Oct. 17

Additional reporting by Lisa Lambert in Washington; editing by Matthew Lewis

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