XPost: ba.politics, dc.media, soc.penpals   
   XPost: alt.burningman   
   From: obamatheidiot@yahoo.com   
      
   The fiercest opponent to Detroit’s blueprint for erasing its   
   debts and investing in city services has reached an “agreement   
   in principle” with city officials, court documents filed Tuesday   
   evening showed, clearing the way to end the city’s court fight   
   over its future and emerge from bankruptcy far more quickly and   
   smoothly than expected.   
      
   The tentative settlement with Syncora Guarantee, a bond insurer   
   that said its exposure in Detroit amounted to hundreds of   
   millions of dollars, came suddenly, a week into a trial aimed at   
   allowing Detroit, the largest American city ever to file for   
   bankruptcy, to remake its finances and start over.   
      
   For months, as the city reached deals with other creditors,   
   including city employees and retirees, Syncora had been the most   
   forceful and public critic, and its legal objections to the   
   city’s plan for eliminating $7 billion in debts threatened to   
   keep Detroit in litigation for months, even years.   
      
   In one indication of the significance of the deal,   
   representatives from Syncora and Detroit called for an immediate   
   two-day adjournment in the trial, which began Sept. 2 and was   
   expected to run well into October. The pause was needed, the new   
   court filings said, to work out conditions and logistics of the   
   deal, adding that “if this agreement is finalized within this   
   time period as we expect, it will profoundly alter the course of   
   the proceeding and the litigation plans of the remaining   
   parties.”   
      
   There remain significant objectors to the city’s plan, and the   
   still-unfinished details of Syncora’s agreement could prove   
   vexing, but city officials expressed optimism about the deal.   
   “Anything that shortens the time that we’re in court, that   
   limits the objectors that we have, is good for the city,” said   
   Bill Nowling, a spokesman for Detroit’s emergency manager, Kevyn   
   D. Orr. “We’re not just giving Syncora anything. They’re going   
   to have to make investments.” In a written statement, James H.   
   M. Sprayregen, a partner in the Chicago law office of Kirkland &   
   Ellis who has worked on behalf of Syncora, described the   
   agreement as “an acceptable resolution for all concerned,”   
      
   A person with information about the negotiations, which have   
   taken place under strict, court-ordered secrecy rules, described   
   an unusual set of circumstances that ultimately became the basis   
   of Syncora’s deal — one that will give the insurer a stake in   
   vehicle tolls from the tunnel that runs between Detroit and   
   Windsor, Ontario, as well as some nearby land.   
      
   As a creditor in an earlier bankruptcy of a company called   
   American Roads, Syncora settled its claims by taking ownership   
   of the company in a debt-for-stock exchange. One of American   
   Roads’ assets was a five-year lease on the Detroit-Windsor   
   tunnel. Under the new agreement with Detroit, Syncora would   
   extend its concession by 20 years, to 2040. Some additional land   
   adjacent to the tunnel would also go to Syncora, giving the   
   insurer the chance to cash in on prime riverfront development   
   projects.   
      
   A memo summarizing the agreement for Detroit’s City Council,   
   signed by Mr. Orr, described some elements as options available   
   to Syncora. The insurer would have the option of leasing a   
   parking garage for 30 years, for instance, if it would invest   
   $13.5 million in repairs over the first five years of the lease.   
   That lease would give Syncora a 40 percent return on its   
   investment, the memo said, and one-fourth of that would be   
   shared with Detroit.   
      
   Syncora now stands to get a recovery rate of 20 percent to 25   
   percent on its bankruptcy claims.   
      
   That would be a little more than double what Detroit had offered   
   Syncora and another bond insurer with similar claims, the   
   Financial Guaranty Insurance Company, of New York. Both insurers   
   stood to receive 10 cents on the dollar, or less, under   
   Detroit’s proposed bankruptcy-exit plan, one of the lowest   
   recoveries in the blueprint.   
      
   It was uncertain as of Tuesday evening whether Financial   
   Guaranty would accept the new terms. And negotiations with other   
   parties in the coming days will determine whether the deal goes   
   through. Two banks that underwrote the 2005 borrowing that   
   Syncora helped insure, Bank of America and UBS, must still   
   decide whether to release Syncora from its obligations as an   
   insurer.   
      
   All along, the city’s plan to emerge from bankruptcy had drawn   
   objections from creditors who said they were to receive vastly   
   different recoveries on their claims. Those involved with $1.4   
   billion of certificates the city issued in 2005 — like Syncora —   
   could have come away with little or nothing, while city workers   
   with pensions would take comparatively smaller losses. Yet if   
   settlements with Syncora and others are completed, this case may   
   not provide a judge’s reasoned answer to a question some in the   
   municipal bond industry have been awaiting: whether a city may   
   shelter municipal retirees even as it forces tougher losses on   
   bondholders and other financial-markets creditors.   
      
   Earlier on Tuesday, Detroit reached an agreement with its   
   suburban neighbors to lease its water system to a new regional   
   authority, a move that, like the tentative agreement with   
   Syncora, could remove further opposition to Detroit’s bankruptcy   
   plan.   
      
   Under the lease agreement, the city would receive $50 million a   
   year for 40 years, then use the money to repair the vast, aging   
   water and sewer system. Detroit would still hold title to its   
   more than 7,000 miles of water mains and sewer pipes, while the   
   newly created Great Lakes Water Authority would give officials   
   of three nearby counties more say over how the system is run and   
   what it charges customers.   
      
   The deal also calls for using $4.5 million a year to help   
   struggling Detroit residents stay current on their water bills.   
   Detroit cannot afford such an assistance program on its own, and   
   city officials in recent months have been sharply criticized for   
   turning off some residents’ water when they fell too far behind.   
      
   The new agreement must be confirmed by at least one of the three   
   county boards, and either Detroit’s City Council or its   
   emergency manager, Mr. Orr, who is nearing the end of his term.   
      
   The water system, now run by the Detroit Water and Sewerage   
   Department, is considered a valuable public asset at risk of   
   wasting away because it was caught in the city’s own financial   
   collapse. Much of the system was built decades ago when the city   
   was booming, and it now needs maintenance that goes beyond the   
   means of Detroit’s own shrunken population. Officials have been   
   dealing with nearly 2,000 broken water mains a year, some of   
   them bad enough to cause big sinkholes.   
      
   But in addition to providing water and sewer service to Detroit,   
   the system covers a broad suburban area, populated, to a great   
   extent, by middle-class residents and businesses that are able   
   to pay their bills. Detroit now provides water to about 40   
   percent of Michigan’s total population and sewer services to a   
   smaller group. By leasing the system to a regional authority,   
      
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