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Detroit reaches labor deal with city unions

A man rides his bike past graffiti that reads "Bankruptcy" in Detroit, Michigan, December 3, 2013. REUTERS/Joshua Lott
A man rides his bike past graffiti that reads "Bankruptcy" in Detroit, Michigan, December 3, 2013. REUTERS/Joshua Lott

DETROIT (Reuters) - Detroit and a coalition of 14 city employee unions have reached a tentative deal on five-year collective bargaining agreements, federal court-appointed mediators said on Monday.

The agreement in principle covers the major aspects of labor contracts with the city's largest union, the American Federation of State, County and Municipal Employees (AFSCME), and 13 other bargaining units, said the mediators, who were appointed by the U.S. Bankruptcy Court judge overseeing Detroit's historic municipal bankruptcy.

Kevyn Orr, the city's state-appointed emergency manager, has been reeling in deals this month with key creditors, including Detroit's two retirement systems and three bond insurance companies, giving him critical support for his blueprint for the city's emergence from bankruptcy.

Once the union pacts are finalized and ratified by union members, the terms will be included in the city's plan of adjustment, which must be approved by the bankruptcy court, the mediators said in a written statement. Terms of the deal, which covers 3,500 workers, were not released and will be made public once the contracts are ratified.

Edward McNeil, chief spokesman for the union coalition, said the unions will work with Mayor Mike Duggan on improving operations with existing workers not private contractors.

"We know operationally what needs to be done to save money and improve services," McNeil said in a statement. "This agreement in principle offers an opportunity for the unions to provide regular input and guidance to city management."

The tentative deal does not include public safety workers. Officials with the Detroit Police Officers Association and the Detroit Fire Fighters Association were not immediately available for comment.

At a court hearing on Monday, Judge Steven Rhodes asked Detroit to submit by Friday a final version of a key supporting document for its plan to adjust $18 billion of debt and exit the biggest municipal bankruptcy in U.S. history.

The city filed a revised so-called disclosure statement with the court late on Friday after reaching an agreement in principle on pensions and healthcare with a court-appointed committee representing retired city workers.

Settlements over pension reductions depend on $466 million pledged by philanthropic foundations and the Detroit Institute of Arts to aid retirees and avoid a fire sale of art works. Michigan Governor Rick Snyder is also seeking legislative approval for $350 million for Detroit's retired workers.

Rhodes said if the state money is not in place by the time the confirmation hearing on Detroit's plan begins on July 24 votes by participants in the retirement systems in favor of the plan would turn into votes against the plan.

Orr is heading to Lansing, the state capital, on Tuesday and Wednesday to meet with lawmakers, according to his spokesman Bill Nowling.

The judge continued to urge talks on creating a regional authority for water and sewer services currently run by Detroit, despite opposition from two nearby counties. Meanwhile, court mediators have scheduled sessions on Thursday and Friday with Detroit, bond insurance companies and municipal bond funds over outstanding water and sewer bonds.

(Reporting by Cherie Curry in Detroit, additional reporting by Dan Burns in New York and Karen Pierog in Chicago; Editing by James Dalgleish, Chizu Nomiyama and Cynthia Osterman)

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