Detroit emergency manager: 'We had to draw the line'
In his first national interview since he filed the largest municipal bankruptcy in U.S. history, Detroit Emergency Manager Kevyn Orr said he could not wait any longer to solve the city's long-term debt problems.
"This is a problem that has been more than 60 years in the making," Orr told CNBC's "The Kudlow Report" on Thursday. "There's $18 billion of debt total. Even if we took $200 million a year out of a $100 billion budget, which we can't do, it would take 68 years to pay off that debt."
Orr confirmed reports that the city had agreed to a settlement that would tap into $11 million a month in casino revenue. Under the deal, Detroit would pay a $344-million swap with a $255-million debtor-in-possession loan.
"We have an agreement in principle to get to our casino revenue and to relieve some of our secured debt," he said.
The Emergency Manager said negotiations will continue with the city's creditors to free-up cash flow and relieve some of the city's multibillion-dollar debt.
"We're negotiating with other creditors, too, and we'll negotiate with other stakeholders to get to a point where we can reach resolution with anybody who is willing to come in," Orr said. "The reality is there efforts being made, there's progress being made, but we had to draw the line somewhere."
"We're going to use every tool available to us to get at this crushing debt so that we can start restoring services to the citizens and create a path to sustainability for this city," he added.
At a meeting in June with debt holders, Orr said the city stood a 50-50 chance of a bankruptcy filing.
"Unfortunately in our collective estimation, it got to point where we had to make some very difficult decisions given the time frame that I have to work with and given the work that needs to be done," Orr said." "That's why we decided to move forward."
The city is prepared to move forward in court under Chapter 9 bankruptcy, he said.
"We don't know who our judge is going to be, and we're going to find that out hopefully in the next day or so," he said. "We believe very strongly that all the requirements are negotiations of good faith and the insolvency of the city have met that standard."
Orr would not comment on reports that he had spoken with the White House about the possibility of a federal bailout.
"We've reached out to a number of different people, but we've got to solve this problem on our own," he said.
But the bankruptcy expert said that he is confident about Detroit's future, calling it a "great and proud city."
"I feel very strongly and have a great deal of affinity for Detroit," he said. "I'm really looking forward to get this city on a path for sustainability, to grow and deliver services so it can continue to get back to the great city that it still is and thrive."
—By CNBC Associate Producer Elizabeth Schulze. Follow her on Twitter @ESchulze9.