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Retirees appear to OK Detroit deal

Nathan Bomey and Matt Helms
Detroit Free Press
The sun sets on the Detroit skyline viewed from Belle Isle in Detroit on Wednesday June 4, 2014.

DETROIT — City of Detroit pensioners appear to have voted in favor of a deal to help resolve the city's Chapter 9 bankruptcy, several sources familiar with the voting results told the Detroit Free Press.

Police and fire pensioners appeared to have accepted the deal by a wide margin, and while the vote was closer with civilian retirees, only an unexpected last-minute surge of "no" votes would derail the plan, according to people familiar with the voting results.

The sources weren't authorized to speak publicly. They cautioned that many ballots were mailed in the final week of the 60-day process, so it's possible that those late votes could still swing against the plan.

Votes were due at 5 p.m. Friday on Detroit's plan of adjustment — which would slash more than $7 billion in debt and liabilities and reinvest in services. The voting results, which will be tabulated and certified by a balloting agent in California, do not have to be publicly revealed until July 21.

The city declined to comment on the results Friday.

"As voting has come to a close on the plan of adjustment, the city will now tabulate and check the results," Detroit Emergency Manager Kevyn Orr said in a statement.

If the two separate classes of pensioners vote "yes," the city would accept $195 million in upfront cash from the state of Michigan and $466 million in 20-year pledges from nonprofit foundations and the Detroit Institute of Arts to help reduce pension cuts and allow the museum to be spun off. The deal has come to be known as the "grand bargain."

If pensioners vote "no," Detroit may pursue significant pension cuts, could be forced to consider pursuing a sale of the art museum's property or may choose to divert money to other creditors.

Sources familiar with the vote said that although ballots mailed at the last minute have not yet been tabulated, a high percentage of public safety pensioners — classified under the Police and Fire Retirement System class — voted "yes" to accept a reduction in annual pension inflation adjustments from 2.25% to 1%.

It's closer among civilian pensioners — classified under the General Retirement System class — the sources said.

Two people familiar with the situation said that with last-minute votes yet to be counted, more than 70% of GRS voters had voted "yes." They are being asked to accept 4.5% cuts to their monthly pension checks, the elimination of annual cost-of-living adjustment increases and a claw back of excessive annuity payments from 2003-13.

U.S. Bankruptcy Judge Steven Rhodes will consider the votes when he conducts a 28-day trial starting Aug. 14 to decide whether Detroit's bankruptcy restructuring plan is fair, legal and feasible.

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