The Detroit City Council has unanimously approved Mayor Kwame Kilpatrick's proposal to issue $1.2 billion in pension obligation bonds. Proceeds of the bond sale will be used for the $1.2 billion unfunded liability of the Detroit General Retirement System and Policemen and Firemen Retirement System, which have a combined $5.8 billion in assets.
The POB proposal, approved Friday, has been before the council since November. Detroit City Council President Maryanne Mahaffey said in a statement that she supported the mayor's proposal "with great reluctance. As stated before, the city is not yet in solid enough shape to assume the kind of risk posed by this transaction." Ms. Mahaffey said she only approved the measure after Mr. Kilpatrick agreed that he would abandon his plan to lay off more than 700 city workers in 2005 and freeze non-essential purchases and new real estate leases.
Neither Howard Healey, a mayoral spokesman, nor city CFO Sean K. Werdlow returned a calls requesting comment.