Detroit reaches deal with city's largest union

DETROIT - A tentative deal announced Monday on major aspects of a contract between Detroit and some of its unions could help speed up the city's long exit from bankruptcy.

The city and the Coalition of Detroit Unions, which represents more than 3,500 city workers, agreed in principle on "major aspects" of the five-year collective-bargaining agreement, a court-appointed mediation team said. The coalition comprises the American Federation of State, County and Municipal Employees - the city's largest - and 13 other civilian unions.

Terms of the deal were not released, but mediators said it will "provide an economically feasible agreement for the city as it emerges from bankruptcy."

When bankruptcy judge Steven Rhodes approved the city's plan to pay $85 million to UBS and Bank of America for pension debt, he urged the city and other creditors to reach more deals. It appears to have been taken to heart.

Since then, state-appointed emergency manager Kevyn Orr and his team have reached agreements with Detroit's two employee pension funds and with retired police and firefighters on retiree pension cuts.

The flurry of agreements reached "are positive developments that will allow the city to exit from bankruptcy sooner and financially solvent," Orr's spokesman Bill Nowling said via e-mail Monday.

Union members still have to ratify terms of the collective-bargaining agreement. Plus, roughly 30,000 retirees and city employees will receive ballots to vote on the pension deals ahead of a summer trial on Orr's plan to restructure city debt.

Under the pension deals, police and firefighters would see cost-of-living payment trimmed to about 1 percent. Other city retirees would get a 4.5 percent cut in their pension and elimination of the cost-of-living payment. That agreement is possibly "the centerpiece" of Orr's plan, said James McTevia, a turnaround expert and managing member of McTevia & Associates in suburban Detroit.

Orr has said Detroit's unfunded retiree health obligations were about $5.7 billion, while unfunded pension liabilities were $3.5 billion.

Source: Philly.com