Court clears way for rescue pact for Detroit

March 26, 2012

Ben Klayman, Reuters

DETROIT (Reuters) – Michigan’s Court of Appeals has cleared the way for a team appointed by the governor to come up with a consent deal to keep afloat Detroit, America’s historic “Motor City,” which could run out of money in months.

The pressure on Detroit is intense. Monday is the deadline for Governor Rick Snyder‘s team to recommend what to do to fix the dire financial situation for Michigan’s largest city, long synonymous with the U.S.-based auto industry.

Detroit and the state of Michigan have been negotiating to try to stave off the appointment of an emergency manager for the nearly bankrupt city.

Those talks, which continued on Saturday, were given a boost when the court late on Friday reversed an order from earlier in the week that questioned whether the team could meet in private and barred it from issuing a recommendation until a hearing set for Thursday.

Also on Saturday, Detroit Mayor Dave Bing had successful surgery to repair a perforation of his intestines and designated his chief of staff as acting mayor while he recovers.

A spokesman for the city said Bing, 68, was resting comfortably and was still involved in talks to reach the consent agreement.

Detroit’s finances have been crumbling due to a steep population drop, sinking revenue and a huge debt load.

The city has faced hard times for decades. Detroit was home to nearly 1.9 million people in the 1950s, but now has a population of about 714,000, shrinking its revenue base. With the U.S. auto industry’s contraction, the city lost 25 percent of its population between 2000 and 2010.

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