CHICAGO - Detroit emergency manager Kevyn Orr plans to issue a request for proposals for private firms interested in taking over the city's parking system, where nearly half the meters are reportedly broken.
City Council last week rejected the privatization plan by a vote of 6-2. Orr is moving ahead, using power granted under the state's emergency management plan. Mayor Mike Duggan is reportedly in favor.
The city will take bids from firms interested in buying the entire system, a piece of it, or managing it.
A representative for Orr told the council that the deal could mean a cash payment that would lower the amount of money the city would need for exit financing as it emerges from bankruptcy.
The system includes seven parking garages and 3,200 spaces. Nearly half of the parking meters don't work, and Detroit would need to spend $40 million over the next 40 years to repair the system, according to a consultant's report.
It's one of a handful of privatizations Orr has considered since taking over the city in March 2013. He is also in the midst of trying to privatize or regionalize the city's troubled water and sewer department. That deal could be key to the city's restructuring.
In related news, another hedge fund filed a challenge Wednesday to Detroit's confirmation plan. Blue Mountain Capital Management LLC filed a joinder to an objection to the city's plan by holders of the city's certificates of participation. The city wants to repudiate the COPs, arguing in a lawsuit that they were illegally issued and should be overturned. Syncora Guarantee Inc. and Financial Guaranty Insurance Co., which insure the COPs, have also filed objections.
Blue Mountain is the sixth hedge fund to join the case. Several weeks ago, five other hedge funds, including Stone Lion Capital Partners LP, Aurelius Capital Management, Bronze Gable LLC, Monarch Alternative Capital, and Panning Capital Management, purchased at least $750 million of the $1.4 billion of certificates. The hedge funds reportedly paid 43 cents on the dollar for the debt.
