CHICAGO Detroit officials regained control of most government functions, while remaining under state-controlled emergency management, after the city council late Thursday adopted a resolution that keeps Kevyn Orr on as manager with reduced powers until the bankruptcy is over.
The council voted unanimously on a resolution to keep Orr, whose tenure was up Sept. 27, on as EM only until the city's bankruptcy plan of confirmation is adopted, expected in several weeks. In return, Orr agreed to hand over control of most of the city to Mayor Mike Duggan and council members. The council will terminate Orr once the confirmation plan is adopted and the Chapter 9 is over.
The move means that local officials will gain control of the Motor City for the first time since March 2013, when Gov. Rick Snyder declared a financial emergency and took over the city. Orr, a bankruptcy attorney from Jones Day, began his job on March 25, 2013.
The council's decision came after three days of closed-door talks over Orr's future. Mayor Mike Duggan joined the negotiations, as did US District Chief Judge Gerald Rosen, the chief mediator in the city's bankruptcy case, according to local reports.
"If I'm lucky, before the end of the day, we might even have a new beginning when the mayor and city retake control of Detroit city government," Duggan said early Thursday afternoon at a ground breaking for a new hockey arena, according to local reports.
Orr will agree to exercise only the powers necessary to get the city's bankruptcy plan of confirmation confirmed. The resolution terminating him said Orr believes "the mayor and the city council are prepared to resume their responsibilities, powers and duties."
The resolution also said the council supports the plan of adjustment and believes the bankruptcy could benefit from a "short extension of the EM's term" until the plan is confirmed.
Michigan's law for distressed governments allows local officials to vote out an emergency manager 18 months after the appointment.
Snyder earlier this week voiced his support for keeping Orr in the city through the end of the bankruptcy. Snyder and Orr have always pushed for a fast-tracked bankruptcy that had the city emerging the early fall of 2014, before the end of Orr's tenure and ahead of the November gubernatorial elections.
Within a few months of taking over the city in March 2013, Orr released a debt restructuring proposal that called for defaults on nearly all of the city's debt, including general obligation bonds, which he treated as unsecured. Orr said he hoped to avoid bankruptcy, but after a month negotiations, he took the city into Chapter 9 on July 19, 2013.
The bankruptcy trial on the city's confirmation plan, meanwhile, is set to resume Monday.
