The bankruptcy court’s chosen expert on the feasibility of Detroit’s debt-adjustment plan spotted several weaknesses in city government that she said need to be improved to ensure there’s no second default. Martha Kopacz, a senior managing partner at Phoenix Management Services LLC, filed a report with the court on July 18 concluding that Detroit “will be able to sustainably provide basic municipal services’’ under its plan. She also said the city will be able “to meet the obligations contemplated in the plan without the significant probability of default.’’ Kopacz will testify
at the plan-approval trial set to begin Aug. 14. Still, Kopacz said Detroit’s government needs improvement in several areas. Information systems and procedures are “broken and insufficient,’’ she said, and fixing them “is a very high priority.’’ The city also needs “to recruit a significant number of employees with improved skill levels,’’ she said. Kopacz also expressed concern that pension liabilities could grow in the future because contributions can be
pushed out to succeeding years. To keep liabilities in the forefront, she recommended that Detroit be required each year to release “the undiscounted liability of each of its pension plans.’’
— Bill Rochelle

This article was taken from Bloomberg Brief Municipal Markets Newsletter. To take a complimentary 30 trial click here.