DETROIT-The city, which earlier this month filed for Chapter 9 bankruptcy protection, is attempting to restructure $18 billion in debt and long-term obligations. Its fiscal mess, along with the city's pension system that is underfunded by as much as $3.5 billion, has been due in part to past questionable real estate investments.
The city's $2-billion General Retirement System lost $16 million in fiscal 2011 when the fund wrote off a housing development near Sarasota, FL. The $3.1-billion Police and Fire Retirement System lost approximately $15 million on 1,100 vacant acres 30 miles east of Dallas and a 2006 loan guarantee for a Westin hotel and condos in downtown Detroit cost the funds $14 million, according to Bloomberg News.
“Detroit has been working its way to a level of insolvency for decades,” Detroit Emergency Manager Kevyn Orr said at a news briefing after the city's bankruptcy filing on July 18. He added that Detroit “continuing to borrow, continuing to defer pension payments, continuing not to pay its bills on time, continuing a deepening insolvency.” See story at Bloomberg News.
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