Kevyn Orr talks privatization, pensions, DIA art at forum
Kevyn Orr talks frequently with Governor Snyder, considers himself a “technocrat,” and says everything — including the Detroit Institute of Arts — is “on the table” in Detroit’s bankruptcy.
Orr addressed questions about the bankruptcy, city pensions, and the city’s progression through Chapter 9 municipal bankruptcy at a Detroit Economic Club forum Thursday.
Some of the highlights:
· Privatization of city services. Orr indicated, as he has in the past, that Detroit’s trash removal services will be turned over to private contractors. Public lighting and some blight removal efforts have also brought in the private sector, which Orr says can often do a better job for a lower price. “We want to look at privatization in terms of providing services, upgrading services… and in some cases, hiring the same workers” to the job, Orr said.
· In bankruptcy, “everything is on the table.” Orr said that includes DIA artwork. “At the end of the day, I’m a receiver, and I have a fiduciary responsibility to account for all of the assets of the city of Detroit.” Of the museum’s 66,000 pieces, Orr said 35,000 are “free and clear,” meaning they’re city property with no limitation on selling them.
Citing the city’s “obligation” to pay off its creditors, Orr said he’s hopeful the the DIA’s operators can “come up with a solution that makes sense both for the city and for the creditors” — but if not, he’ll need to develop one himself. Asked whether there was a way for the DIA to monetize its assets without selling them off, Orr said “yes.” But he wouldn’t elaborate, saying he’s deferring to the DIA to “save themselves.”
· City pensions. Orr said that dealing with Detroit’s unfunded pension liabilities — he pegs that number at $3.5 billion, though others disagree — is “one of the more difficult aspects of my job.” He said he sympathizes with pensioners who fear cuts are coming, but insisted: “This is an emergency. This is a crisis. I’ve got to address all of these very difficult issues.” And he blamed pension funds mismanagement for getting to this point. “With pensions, the issue isn’t really what I’m doing … it’s what’s already been done.”
· Paying pricey consultants while city is in bankruptcy. Orr acknowledged that anger over the city paying big money to private consultants ($62 million, by the most recent count) is “an understandable emotional response.” But he said they need to “find the best people” to get Detroit through bankruptcy and restructuring, and said that even if they end up costing the city more than $100 million, that’s just a small slice of Detroit’s $12 billion in unsecured debt.
· Bankruptcy timeline. Orr said he’s confident the city will prevail at an eligibility trial later this month. That’s when the bankruptcy court will finally decide whether Detroit does, in fact, meet all the criteria to go through municipal bankruptcy. If that happens, Orr said they’re moving straight ahead, and will present a “plan of adjustments” (the city’s roadmap for how to get through the bankruptcy) by the end of year. “I already feel like we’re running out of time,” Orr said.
· Relationship with the governor. Orr said he, Governor Snyder and State Treasurer Andy Dillon talk on “a regular basis.” He said he does feel he ultimately answers to them — he said he views himself as a "technocrat" — but they’ve shown him “a great deal of deference” when it comes to doing his job.