William J. Howard, who retired after 35 years in the city’s Water Department, described working nights and weekends repairing Detroit’s sewers and incinerators.
“During that time, I worked in human waste with my fellow employees, working to serve the city of Detroit,” Mr. Howard said. “My fellow employees and I are entitled to a pension. I pray that Your Honor objects to this bankruptcy.”
His testimony and that of others homed in on some of the toughest questions before the judge, Steven W. Rhodes of United States Bankruptcy Court, as the case heads toward critical hearings next month on Detroit’s eligibility to file for Chapter 9.
Opponents of the bankruptcy, led by the city’s public employee unions, have argued that the filing in July violated Michigan’s Constitution, which expressly protects pension rights for workers.
They also assert that the state-appointed emergency manager, Kevyn D. Orr, did not bargain fairly with unions, bondholders and other creditors to cut costs and debt before recommending bankruptcy — the nation’s largest municipal bankruptcy filing — to Gov. Rick Snyder. The city is trying to reduce an estimated $18.5 billion in long-term debt.
Judge Rhodes has so far reserved decision on the pension and bargaining issues until formal eligibility hearings start on Oct. 23. He also ordered hundreds of creditors to participate in mediation sessions before then to possibly reduce some of the city’s debts.
But the judge made it clear Thursday that he considers the testimony of residents, retirees and community leaders to be a key element in deciding whether Detroit should be in bankruptcy, and how its 700,000 residents and rank-and-file workers should be treated.
“Everyone who has a stake in the outcome of this case should take the time to listen to this,” the judge said.
The hearing had its difficult moments. One woman, Lucinda Darrah, was removed by a security guard when she refused to leave the microphone after the three-minute limit. And tempers flared at times when residents raised a racial issue: whether Mr. Snyder, a Republican who is white, had deliberately imposed emergency managers on several Michigan cities that have largely black populations.
Sheilah Johnson, who worked for the city for 28 years, said she feared losing her $3,000 monthly pension, and blamed Mr. Orr and Mr. Snyder for seizing control of the city from its voters and elected officials.
“We do not need a dictator,” she said. “We do not need a slave owner. I’m not a slave.”
While Judge Rhodes cautioned people against making personal attacks on Mr. Orr and others, the frustration and anger of many homeowners and retirees repeatedly boiled over.
Paulette Brown, who rose from a junior typist to a manager during her 30-year career with the city, said longtime employees were being “treated worse than animals” in the bankruptcy. “I object to being referred to as a creditor,” she said. “We did our part and we need the city of Detroit to continue to do theirs.”
Others expressed concern that the dismal state of city services like police and fire protection would get worse because of cuts imposed in bankruptcy.
One resident, Jean Vorkamp, told of how a gunshot victim lay dead on her street last month for five hours because of staffing reductions in the county coroner’s office.
“This is austerity,” she said. “And there is no more room for any more austerity in Detroit.”
Bankruptcy experts said that allowing residents and retirees to testify was a prudent and compassionate move by Judge Rhodes, but not one that will likely affect whether the city is found legally eligible to file for bankruptcy.
“An individual objector that doesn’t have a lot of resources was probably not going to make an adequate case with sufficient evidence to overcome the city’s arguments on those issues,” said Michael A. Sweet, a bankruptcy lawyer with the firm Fox Rothschild.
Yet the stirring anecdotal testimony of regular Detroiters seemed to frame the case in ways far different from the legal issues at stake.
Cynthia Blair, the widow of a Detroit police officer, said she relies on her husband’s pension to make a home for her family. “The bankruptcy could take me and my daughter’s pension away,” she said. “And we would be thrown directly to the welfare rolls.”
About half of the 110 individuals who filed objections to the bankruptcy testified on Thursday. Judge Rhodes said he found their statements “moving, thoughtful and passionate,” and called the hearing a “truly extraordinary session of the court.”
A second hearing on Thursday addressed a motion by a retirees committee representing former city workers. The committee is seeking a stay of the bankruptcy and all further hearings until the Michigan constitutional issues are settled.
The committee’s lawyer, Claude Montgomery, argued that the questions about the state’s protection of pensions should be dealt with in Federal District Court rather than in bankruptcy court.
Judge Rhodes indicated that he believed the city could not afford to squander any time in its efforts to restore services and fix its finances. “If we put off the eligibility hearing, we delay the whole process,” he said.
The second hearing concluded without a decision from the judge, who said he would rule on the issue within a few days.
Steven Yaccino contributed reporting from Chicago.
Article source: http://www.nytimes.com/2013/09/20/us/residents-of-detroit-go-to-court-for-pensions.html?partner=rss&emc=rss
