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>> HI THERE AND THANKS FOR JOINING US FOR MIWEEK.
I'M CHRISTY MCDONALD. TONIGHT, A POSSIBLE DEAL
TO HELP SETTLE DETROIT'S BANKRUPTCY.
AND A REMINDER THAT IF YOU CAN'T SAY ANYTHING NICE, DON'T
SAY ANYTHING AT ALL. >> OAKLAND COUNTY EXEC BROOKS
PATTERSON, WHO HAS MADE A CAREER OF SAYING OUTLANDISH THINGS AT
TIMES, IS FACING BACKLASH FROM WHAT HE TOLD THE NEW YORKER
MAGAZINE ABOUT DETROIT. THE DEBATE OVER AN
APOLOGY COMING UP. >> PLUS, REPUBLICAN NATIONAL
COMMITTEEMAN DAVE AGEMA, WHO HAS MADE A STRING OF INFLAMMATORY
COMMENTS ABOUT GAYS AND MUSLIMS, IS DUCKING THE RNC MEETING IN
WASHINGTON THIS WEEK AMID CALLS FOR HIS RESIGNATION.
>> BUT FIRST TONIGHT, THE NEWS THAT A DEAL IS DEVELOPING TO
HELP PENSIONERS AS WELL AS PROTECT DETROIT-OWNED
ART AT THE DIA. >> WE FIRST HEARD ABOUT THE
GOVERNOR'S PROPOSAL FOR STATE FUNDS TO CLOSELY MATCH WHAT
FOUNDATIONS WERE CONTRIBUTING LAST WEEK, BUT ON WEDNESDAY THE
GOVERNOR MADE IT OFFICIAL. >> HE'S PROPOSING $350 MILLION
OVER TWENTY YEARS, AND THAT MONEY COULD COME FROM
TOBACCO SETTLEMENT FUNDS THAT MICHIGAN GETS.
>> THERE ARE STRINGS ATTACHED TO THIS PLAN, THAT THE GOVERNOR
THINKS WILL HELP RESOLVE THE BANKRUPTCY CASE AND PROTECT
ART AT THE DIA AS WELL AS HELP RETIREES.
THERE WOULD HAVE TO BE CHANGES IN THE WAY THAT THE PENSION
FUNDS ARE MANAGED. THE PLAN STILL WOULD HAVE TO BE
APPROVED IN BANKRTUPCY COURT. SO FAR, THIS IS
JUST A PROPOSAL. >> THIS IS A SETTLEMENT.
THIS IS NOT A BAIL OUT. AND I WANT TO BE VERY, VERY
CLEAR ABOUT THAT. THIS IS NOT A BAIL OUT OF
PAYING THE DEBTS DIRECTLY OF THE CITY OF DETROIT.
THIS IS NOT A BAIL OUT OF DOLLARS FOR DETROIT DEBTS.
THIS IS NOT A BAIL OUT OF BANKS AND OTHER CREDITORS.
THIS IS FOCUSED IN ON HELPING REDUCE AND MITIGATE
THE IMPACT ON RETIREES. FOCUSED ON PROTECTING ASSETS.
FOCUSED ON SHOWING GOOD RESULTS AND ALLOWS THE CITY TO MOVE
FORWARD BY RESOLVING THIS CASE IN A MORE POSITIVE RATHER THAN A
NEGATIVE WAY FASTER AND BETTER. THAT WE COULD HAVE DRAMATIC
SAVINGS IN TERMS OF DOLLARS AND TIME.
BECAUSE THIS IS REALLY ABOUT SETTLING IT SO WE CAN
GROW THE CITY OF DETROIT. >> LET THE QUESTIONS BEGIN.
HOW DOES THIS $350 MILLION MAKE A DIFFERENCE?
>> CAN YOU GET THE STATE LEGISLATORS TO APPROVE THIS,
EVEN WITH REPUBLICAN LEADERSHIP STANDING AT THE FRONT OF
THE ROOM IN SUPPORT? WE'LL GET STARTED WITH OUR
MIWEEK CONTRIBUTORS , NOLAN FINLEY, OF THE DETROIT
NEWS AND STEPHEN HENDERSON OF THE DETROIT FREE PRESS.
GENTLEMEN GOOD TO SEE YOU. WHEN WE HEAR ABOUT THE DETROIT
DEBT AND THE FIGURE, AND $350 MILLION FROM THE STATE, HOW DOES
THAT ALL MAKE SENSE AND WHAT KIND OF DIFFERENCE OVER 20 YEARS
WILL THAT MAKE? >> A HUGE DIFFERENCE IF IT CAN
BE THE FINAL PIECE IN CLOSING THIS DEAL.
THE FOUNDATIONS RAISED $330 MILLION.
THEY'RE ASKING $100 MILLION FROM THE DIA.
RETIREES WILL TAKE A SMALLER HIT BUT WILL STILL CONTRIBUTE TO
THIS SETTLEMENT WITH THE STATE COMING IN WITH THIS SIGNIFICANT
NUMBER, I THINK IT SEALS THE DEAL AND IF IT HEADS OFF FUTURE
LAWSUITS, IT COULD GET THIS BANKRUPTCY DONE QUICKLY.
>> COULD SEAL THE DEAL BUT SO MANY DANGLING THINGS
ABOUT THIS ONE OF THE MOVING PARTS IS THE DIA.
THEY SAID IT WOULD BE HARD FOR THEM TO RAISE $100 MILLION.
>> WELL, $100 MILLION IS A LOT FOR THEM.
THEY DON'T HAVE IT. THEY WOULD HAVE TO GET A DONOR
TO COME UP WITH THAT MONEY AND I THINK IN THE END, THEY
WILL COME UP WITH A CONTRIBUTION TO THIS DEAL.
IT WON'T BE $100 MILLION. MAYBE, $25, $30 MILLION IS
MORE IN THE REALM OF WHAT THEY COULD RAISE FROM
SOMEBODY. EVERYONE THINKS. MUSEUM ITS SITTING ON MONEY.
THAT IS NOT TRUE. THEY CAN'T USE
THEIR ENDOWMENT FOR THIS. THAT WOULD VIOLATE THE TERMS OF
MANY AGREEMENTS. >> THAT IS THE PROBLEM WITH THE
DIA FROM THE BEGINNING. THEY CAN'T, THEY CAN'T, THEY
CAN'T DO ANYTHING BUT SIT THERE AND SAY WE CAN'T BE PART
OF THE SOLUTION. >> THEY ARE.
THEY'RE SAYING THEY DON'T HAVE $100 MILLION.
>> BUT THEY'RE GOING TO HAVE TO GET IT.
I DON'T THINK THEY'RE GOING TO GET AWAY WITH $25, $30 MILLION.
THE GOVERNOR WAS CLEAR WHEN HE TALKED TO US.
THE FOUNDATIONS HAVE BEEN ADAMANT.
AND I DON'T THINK THEY CAN AFFORD TO ALIENATE
THE FOUNDATIONS. >> WHERE WOULD YOU GET
$100 MILLION? >> I WOULD REINSTATE
THE ADMISSION FEE. I THINK PEOPLE WOULD UNDERSTAND.
>> WHICH VIOLATES THE TERMS OF --
>> VERBAL PROMISE IS NOT WRITTEN INTO THE MILLAGE.
>> IT IS WRITTEN IN. >> THAT WAS A VERY BALL PROMISE.
IT IS NOT WRITTEN IN IN ANY WAY. >> WOULDN'T YOU UNDO A LOT OF
GOOD WELL IF YOU WENT BACK ON THIS?
>> I THINK PEOPLE WOULD UNDERSTAND.
LOOK AT THE ZOO. THE ZOO HAS BOTH THE
REGIONAL AND THE ADMISSION FEE. >> THE MUSEUM, TO VISIT THE
MUSEUM HAS VALUE, PEOPLE WOULD PAY.
>> IF YOU THINK YOU'D RAISE $100 MILLION OFF ADMISSION FEES,
YOU'RE MISTAKEN. >> YOU NEEDED $5 MILLION A YEAR.
REINSTATING THE FEE COULD RAISE HALF OF THAT.
>> NOT EVENLY CLOSE. >> THEN YOU HAVE TO GO OUT AND
TOUCH THE FOUNDATIONS. >> WHAT I'M PUSHING BACK AGAINST
IS THE IDEA THAT THE MUSEUM IS SAYING THAT THEY'RE OUT.
THEY'RE NOT. THEY'RE SAYING FROM THE
BEGINNING THEY'RE IN. WHAT THEY HAVE SAID IS
THEY CAN'T SELL ART. THAT'S TRUE.
THEY CAN'T SELL ART BECAUSE THAT VIOLATES ALL THE COVENANTS THAT
MUSEUMS HAVE AND DESTROYS THE MUSEUM.
THAT'S WHAT THIS DEAL AVOID. HE CAN'T SELL, LEASE.
THEY CAN'T, THEY CAN'T. >> THIS HAS BEEN AN
ORGANIZATION. >> IF PART OF THIS DEAL DEPENDS
ON THEM RAISING $100 MILLION AND THEY SAY THEY CAN'T DO IT,
ITS THIS INTEGRAL PART? >> I DON'T KNOW THAT NUMBER IS
THE NUMBER -- IT'S GOING TO BE A FINAL NUMBER.
>> MY POINT IS THEY WILL CONTRIBUTE TO THIS DEAL.
THEY'RE WORKING ON ABOUT WAY TO DO THAT YOU KNOW, ONE OF THE
THINGS THAT IS ANNOYING ABOUT THIS IS THE MUSEUM IS
NOT AT FAULT HERE. THE MUSEUM IS INDEPENDENT
ORGANIZATION THAT TAKES NO PUBLIC MONEY AT ALL OTHER THAN
THESE MILLAGES THIS THEY ASKED TO BUILD UP ENDOWMENT SO THEY
CAN BE COMPLETELY INDEPENDENT. COMING AFTER THEM BECAUSE
DETROIT, YOU KNOW, MISSPENT ITS MONEY AND MISHANDLED THE
PENSION FUNDS I THINK IS THE WRONG ATTITUDE.
>> IT'S A DETROIT ASSET. THE ARE NOT AT FAULT EITHER.
THE PEOPLE AT FAULT IN THIS THING ARE LONG GONE.
SITTING EITHER IN GRAVES OR JAIL.
>> I THINK BEYOND BLAMING PEOPLE.
BEYOND SAYING WHOSE FAULT IT IS. LET'S LOOK AT THE ENTIRE DEAL
AND LET'S SAY THAT THE DIA CAN COME UP WITH $100 MILLION OR $50
MILLION YOU HAVE TO SELL THIS TO THE LEGISLATORS STRAIGHTWIDE.
INTERESTING WATCHING THE PRESS CONFERENCE AND THE GOVERNOR
AND WHAT WE ROLLED HERE FOR YOU SAID THIS IS A SETTLEMENT,
NOT A BAIL OUT. ARE THOSE IMPORTANT WORDS NOLAN?
>> WE'LL OF WELL, THEY'RE JUST WORDS.
IT'S A BAIL OUT FOR GOD'S SAKE. >> YOU DON'T BUY THE FACT THIS
IS -- IT'S A BAIL OUT. IT'S A BAIL OUT.
THEY'RE GIVING DETROIT MONEY FROM OF THE STATE TREASURY TO
RESOLVE IT'S PROBLEMS. THAT'S A BAIL OUT AND A
NECESSARY ONE AND IT'S GOD FOR THE ENTIRE STATE IF IT GETS THE
BANKRUPTCY SETTLED AND GETS THE STATE OFF THE HOOK FOR
ANY FUTURE RELIABILITY FOR THE PENSIONS.
THAT MATTER HAS NOT BEEN SETTLED.
THOSE COULD COST THE STATE A LOT OF MONEY.
IF THEY CAN GET THE UNIONS TO AGREE AND GET THE OTHER
CREDITORS TO AGREE, I THINK IT'S A GOOD DEAL FOR THE STATE AND
ANY TIME THE GOVERNOR HAD BOTH BOLGER AND RICHARDVILLE WITH
HIM, HE MANAGED TO GET WHAT HE WANTS.
I THINK THEY'LL GET IT THROUGH THE REPUBLICAN CAUCUS AND GET
THIS THING PASSED. >> IF THE PENSIONERS AGREE TO
IT. >> HOW DIFFICULT DO YOU THUNK
THIS WILL BE? ARREST A LINT DIFFICULT BUT KEY
THAT BOLGER AND RICHARDVILLE WERE BOTH THERE.
YOU KNOW, THAT IMPLIES HE'S GOT LEADERSHIP ON BOARD
AND THAT MATTERS. WHEN IT COMES TIME
TO COUNT VOTES. I THINK THIS WILL BE A TOUGH
SELL FOR SOME LEGISLATORS OUTSTATE TO SAY WE'RE SENDING
THIS KIND OF MONEY TO DETROIT WHICH IS NOT, YOU KNOW,
ANYBODY'S FAVORITE CHARITY CASE. BUT IN THE END,
WHAT CHOICE DO YOU HAVE? THIS WOULD MAKE THE MUSEUM A
STATEWIDE ASSET, NOT A BAD THING.
PEOPLE ARE GETTING SOME SORT OF BENEFIT BACK FROM IT.
MY BIGGER CONCERN I THINK IS WHAT MESSAGE THIS SENDS ABOUT
UNDERFUNDED PENSIONS? DETROIT IS FAR FROM THE
ONLY CITY THAT HAS THAT PROBLEM. MOST CITIES IN THE STATE
HAVE UNFUNDED LEGACY. PENSIONS OR HEALTH CARE.
IF I WERE ANY OF THOSE CITIES, I'D BE AT THE GOVERNOR'S DOOR
SAYING WHERE IS OUR HELP? WHAT IS YOUR SOLUTION TO TRY TO
GET US OUT OF THIS SO WE DON'T END IN COURT LIKE DETROIT.
>> THIS A DANGEROUS PROSPECT THEN?
>> FRANKLY I HOPE HE HAS. THIS IS A PROBLEM THAT SAY THE
GOVERNMENT WILL HAVE TO WRESTLE WITH AT SOME POINT.
WE CAN'T ALLOW CITIES AND SCHOOL DISTRICTS TO MAKE THE KIND OF
PROMISES THEY MADE GOING FORWARD ON PENSIONS AND HEALTH
CARE AND NOT FUND THEM. THAT HAS GOT TO BE DEALT WITH
AND THEN THE LEGACY COST NOW THAT ARE HANGING OVER
EVERYBODY'S HEAD HAVE GOT TO BE REFINANCED.
YOU HAVE CITY THAT'S CAN'T AFFORD TO
MEET THESE OBLIGATIONS. >> THAT IS TRUE.
I MEAN, THIS IS GOING, THIS PROBLEM IS NOT GOING TO GO AWAY.
IT WILL CONTINUE TO ESCALATE. WHAT THE GOVERNOR WITH THE
LEGISLATURE NEEDS TO DO IS FREEZE ALL PUBLIC PENSIONS IN
THE STATE AND START MAKING THE PEOPLE WHO ARE OWED MONEY WHOLE.
AND MAKING SURE WE DON'T RACK UP OBLIGATIONS WE
CAN'T PAY IN THE FUTURE. >> WHAT IS THE TIME LINE FOR
THIS PLAN, GOING BACK TO DETROIT'S PLAN?
HOW FAST THAT IS GOING TO BE? WE'VE SEEN THEM MOVE
FAST WHEN THEY WANT. >> IT WILL BE PART OF A BUDGETS
ADDRESS THIS WEEK AND PART OF THE BUDGETS SETTLEMENT I ASSUME
WHEN THEY USUALLY DO THAT NOW. THEY'VE BEEN DOING
THAT IN MAY AND JUNE. I ASSUME HE'LL GET IT FOR THE
PURPOSES OF THE COURT, THEY'LL GET SOME SORT OF ASSURANCE OR
COMMITMENT THAT THEY CAN GET THIS THING PASSED.
BECAUSE I'M NOT SURE THE BANKRUPTCY COURT CAN WAIT UNTIL
THE BUDGET IS ACTUALLY PASSED BEFORE THAT.
>> AND ALSO THE GOAL OF TRYING TO GET OUT OF
BANKRUPTCY IN ONE YEAR. THAT POSSIBILITY IS
STILL OUT THERE. >> I THINK SO.
I THINK WE'RE MOVING MUCH FASTER.
LOOK AT WHAT HAPPENED IN THE CALIFORNIA CITY THAT'S
WERE IN BANKRUPTCY. LOOK AT WHAT IS GOING ON IN
BIRMINGHAM, ALABAMA WHERE THE COUNTY THERE IS IN BANKRUPTCY.
THE COMPARISON IN TERMS OF SPEED IS MIND BLOWING.
I MEAN, WE ARE EONS AHEAD OF WHERE THEY WERE AT THIS POINT.
AND EITHER OF THOSE CASES. SO I THINK, YOU KNOW, IF WE CAN
GET STUFF LIKE THIS SETTLED UP FRONT, THAT MAKES EVERYTHING
ELSE A LOT EASIER AND SO A YEAR, MAYBE LESS BECOMES A MUCH
MORE REALISTIC TIME FRAME. >> ONCE THE CREDITORS SEE THE
OTHER CREDITORS SEE THAT THERE IS NOTHING LEFT TO GRAB, I MEAN
IF YOU TAKE THE DIA OFF THE TABLE WILDLIFE THIS DEAL,
WHAT IS LEFT TO GRAB? THEY'RE NOT GOING TO KEEP
FIGHTING A FUTILE FIGHT. THEY'LL HAVE TO SETTLE.
>> ONE OF THE INTERESTING THINGS ABOUT THIS DEAL TOO IS HOW MUCH
IT COULD HELP THE PENSIONERS. IT'S NOT $37.5 BILLION,
BUT IT IS STRUCTURED OVER A LONG TIME. 20 YEARS.
IF YOU CAN TAKE, IF YOU CAN GET ENOUGH OF THAT MONEY UP FRONT
AND DO SOMETHING SMART WITH IT, IT MIGHT GROW TO FILL
MOST OF THAT HOLE. OVER THE NEXT 30 YEARS.
AND SO, THIS IDEA THAT THE PENSIONERS STILL MIGHT TAKE A
HIT I THINK COULD END UP BEING ADDRESSED WHEN YOU TAKE A LOOK
AT HOW MUCH CASH IS GOING TO COME IN IMMEDIATELY.
>> BUT THE GOVERNOR WAS CLEAR THAT IT PROBABLY WOULDN'T AND HE
DIDN'T WANT TO MISLEAD. >> YOU CAN'T PROMISE THAT.
>> STILL GOING TO BE SOME KIND OF HIT.
>> NOT NEAR WHAT IT WAS. DO YOU AGREE THERE IN NEEDS TO
BE PARAMETERS ON HOW THE FUNDS ARE NOW MANAGED WITH
THE INFUSION OF THIS MONEY? OF COURSE.
CAN'T POUR STATE MONEY AND HAVE IT CONTINUE TO BE MISMANAGED.
HAVE PEOPLE CONTINUE AS WE SAW DURING THE KILPATRICK
ADMINISTRATION TO TAKE MONEY OUT FOR CORRUPT PURPOSES.
THEY GOT TO BE RESPONSIBLE. >> PEOPLE ARE STILL DISPUTING
THE SHORTFALL. >> THEY'RE DISPUTING.
THAT IS A VERY SILLY CONVERSATION.
I MEAN, ONE OF THE EASIEST ANSWERS TO THAT IS IF THERE IS
NO SHORT FALL, WHY ARE WE NEGOTIATING WITH THE PENSION
FUNDS IN BANKRUPTCY COURT. IF THE CITY DOESN'T OWE
THEM ANYTHING, FINE. GO MANAGE YOUR MONEY THE WAY
I CAN AND MAKE YOUR OBLIGATIONS THE BEST YOU CAN.
AND THE BETTER QUESTION IS WHETHER YOU CAN TREAT THE
POLICE AND FIRE FUND THE SAME AS YOU TREAT THE
GENERAL RETIREMENT FUND. POLICE AND FIREMAN FUND IS
BETTER FUNDED THIS THE OTHER AND THIS DOESN'T QUITE MEET
THE REQUIREMENTS FOR THE EMERGENCY MANAGER TO BE
ABLE TO JUST WIPE IT OUT. SO, WHAT IS THE LEGAL
CONTEXT IN WHICH YOU CAN SAY I'M GETTING RID OF THAT BOARD.
IT'S A TECHNICAL QUESTION BUT IT COULD END UP HANGING
US UP FOR A WHILE. >> THESE FUNDS HAVE TO, THEY
HAVE TO MAKE REALLY HARD DECISIONS HERE.
DO THEY ROLL THE DICE AND TAKE A CHANCE THEY CAN PREVAIL IN COURT
OR DO THEY TAKE THIS DEAL FOR FEAR OF GETTING DINGED WORSE?
>> YOU TAKE THE DEAL. NO QUESTION.
>> I DON'T KNOW. >> WE'LL WATCH IT UNFOLD IN
THE NEXT COUPLE OF WEEKS.