Detroit will borrow $350 million to pay off debts, boost services
The city of Detroit will borrow $350 million to help it through bankruptcy and restructuring.
Emergency manager Kevyn Orr announced the deal with the British financial giant Barclays Friday.
The bulk of the money—about $230 million—will go toward paying off some banks the city made bad deals with years ago. Orr has reached agreements to pay off most of those debts, which involved interest rate swaps on city pension debt.
The remainder of the money will go toward restructuring and improving city services. “It provides us with some right-now cash that we can pump back into city services,” said Orr spokesman Bill Nowling.
The Detroit City Council will get to vote on the loan package, but ultimate approval rests with a state emergency financial assistance loan board.
Federal bankruptcy judge Steven Rhodes will also need to approve the deal, as well as the proposed settlement with the banks.