Officials are looking at the possible refunding of the bulk of Detroit’s $8.4 billion in debt as one in a series of moves that a recent report said could save the cash-strapped city up to $600 million.
Mayor Dave Bing last week released a report recommending up to 150 measures that the city’s Crisis Turnaround Team, crafted after months of study. The team is made up of 50 volunteers.
Bing said he would implement the recommendations according to three timelines: over three months, six months, and over the longer term, defined as one year or longer. The debt refinancing would likely come after one year or longer.
“The city’s cash position has been deteriorating for many years and has now reached a crisis point,” the report said. “The city is at risk of running out of cash to settle obligations at several points throughout the year (October 2009, January 2010, and especially late spring 2010).”
Noting that previous administrations had borrowed to cover cash shortfalls, the team said recent revenue declines and the city’s junk-bond ratings make borrowing too expensive.
The 145-page report featured 150 recommendations. Others ideas — which Bing said he would begin to implement immediately — include privatizing management at the Coleman A. Young International Airport as well as the city’s payroll and accounts receivable departments, and closing a city-owned power plant and buying power from DTE Energy. Many of the recommendations have already sparked criticism from union leaders and former city officials.