Detroit financial crisis

Politics & Government
11:11 pm
Wed February 27, 2013

Detroit mayoral candidate accuses state of inflating city's debt

Lisa Howze

A Detroit mayoral candidate says a state financial review team vastly overstates the city’s debt burden—and their motives are political.

Lisa Howze, a former state representative and an accountant, says her own calculations show the city’s debt load is just a little over $2 billion.

In its report outlining Detroit’s financial emergency, the state review team put the number at closer to $15 billion. Their report is now in Governor Snyder’s hands as he decides whether to appoint an emergency manager for the city.

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Politics & Government
9:39 pm
Tue February 26, 2013

No surprise: Mike Duggan is running for Detroit mayor

Mike Duggan talks with supporters at his campaign kickoff rally
Credit Sarah Cwiek / Michigan Radio

It’s not a surprise, but it is official: Mike Duggan wants to be Detroit’s next mayor.

Duggan was CEO of the Detroit Medical Center until recently. He’s spent the last few months laying the groundwork for a mayoral run.

At an official campaign kickoff Tuesday evening, Duggan touted his credentials as a turnaround artist in both the public and private sectors.

He told the crowd Governor Snyder shouldn’t appoint an emergency manager for Detroit, because that won't solve the city's financial problems.

And he says even if the Governor does appoint one, he'll be ready to challenge the appointment if he's elected mayor.

"We’re going to bring the talents of this community together," Duggan said. "And we’re going to put together such a powerful turnaround team, that we'll go to the Governor in a positive way and say, ‘We don’t need an emergency manager.'"

Duggan has been a longtime player in Detroit politics, though he only moved to the city recently. He’s lined up some influential supporters, including ministers, two former Detroit police chiefs, and business leaders.

Duggan’s run has drawn a lot of attention, in part because he’s the first white candidate for Detroit mayor in decades.

Duggan didn’t address that directly, though he--and some of his African-American supporters--said his candidacy "shouldn't be about color."

Duggan did say that Detroit should be open to anyone who wants to help rebuild the city: “Whether you were born in this city or you were born in another country, if you want to come to Detroit to be part of our future, you are just as welcome as anybody else.”

Despite the likely appointment of an emergency manager--and a very uncertain future for Detroit's elected officials--the mayor's race has gotten rather crowded.

In addition to Duggan, former State Representatives Lisa Howze and Fred Durhal are running, as is former Detroit corporation counsel Krystal Crittendon. Wayne County Sheriff Benny Napoleon is also widely expected to jump in the race.

And Detroit mayor Dave Bing has so far refused to say whether he'll seek re-election.

Politics & Government
3:17 pm
Mon February 25, 2013

Is Detroit gearing up for a "managed bankruptcy?" And what does that even mean?

It appears that officials might be laying the groundwork for a so-called “managed bankruptcy” in Detroit—though it’s something they hope won’t actually happen.

A process for going through Chapter 9 municipal bankruptcy is laid out in the state’s new emergency manager law that kicks in next month. And it could happen even if Governor Snyder appoints an emergency manager for Detroit.

Both state and city officials used to say that bankruptcy was completely off the table for Detroit.

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1:13 pm
Fri February 22, 2013

Forbes: Detroit and Flint are the top 2 most 'miserable cities' in the U.S.

Detroit from the air.
Aaron Headly Flickr

Every American city has its miserable parts.

Forbes Magazine says there are just more miserable parts to Detroit and Flint than other U.S. cities.

Complete with photos of burned out buildings and cop cars, Forbes Magazine put Detroit and Flint at the no. 1 & 2 spots on its "American's Most Miserable Cities 2013" list.

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Politics & Government
4:14 pm
Tue February 19, 2013

Detroit in a 'financial emergency,' review team cites 4 main problems

Kate Sumbler Flickr

The 'financial emergency' finding is no surprise to anyone who has been following the city's troubles for the last several years.

The finding clears the way for Gov. Snyder to appoint an emergency financial manager to oversee things in Detroit.

The review team concluded that the emergency exists because "no satisfactory plan exists to resolve a serious financial problem."

Here's the document that supports their conclusion.

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Politics & Government
3:23 pm
Tue February 19, 2013

Stateside: What the emergency review means for Detroit

A look into Detroit's finances may determine the cities financial troubles

Today is the day the State will released the results of its emergency review into Detroit's finances.

Since late last year, a six-member team has taken what's been called "a deep dive" into the city's records to determine just how massive Detroit's money troubles are.

Is getting this report card going to lead to any better cooperation between Mayor Bing and City Council members?

Does the review team offer suggestions for action, or does it just present "the facts" and let the Governor draw his own conclusions?

Michigan Public Radio Network's Lansing bureau chief Rick Pluta talked to us about what to expect from the report.

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Politics & Government
2:23 pm
Tue February 19, 2013

Detroit financial review to be revealed at 4 p.m. today

Detroit from the air.
Aaron Headly Flickr

If you think you've heard this before, you have.

This is the second state review of Detroit's finances.

The first review in 2012 led to a "financial stability agreement" and the installation of a Detroit financial advisory board in the spring of 2012.

We're coming up on the one-year anniversary of that agreement, and the city's finances are anything but stable.

Many expect the review to be poor. More from Michigan Radio's Sarah Cwiek:

It’s widely expected that the report will depict a city on the brink of insolvency, a mayor and City Council unable to handle it—and suggest further state intervention.

Cwiek reports the Governor gave the review team extra time to delve deeper into the city's books - books that could show a long-term debt "estimated at more than $12 billion."

The financial review team will discuss its report to Governor Snyder during a press conference at 4:00 p.m. today on the 14th floor of Cadillac Place, 3044 W. Grand Blvd. in Detroit.

Michigan Radio's Sarah Cwiek will be there and give us a update later today.

Governor Snyder is not expected to attend, but an announcement on an emergency financial manager appointment is expected within the next week or two.

Politics & Government
8:27 pm
Mon February 18, 2013

State report on Detroit's finances expected to outline grim choices

We should know more about Detroit’s grim financial situation on Tuesday.

That’s when Governor Snyder is expected to receive a long-awaited report on the city’s finances.

A state-appointed review team began the process in December. Governor Snyder gave the group an extension because he wanted them to take a deep dive into Detroit’s long-term debt--estimated at more than $12 billion.

Snyder's office declined comment on Monday. But speaking to reporters a couple of weeks ago, the Governor said he’ll move quickly after he gets the report.

“It will probably take a week or two for me to make a full analysis of the report, and then decisions will be made,” Snyder said. “My reputation is not one to be sitting on things rather than making decisions.”

It’s widely expected that the report will depict a city on the brink of insolvency, a mayor and City Council unable to handle it—and suggest further state intervention.

Detroit has had a “financial stability agreement” with Lansing for nearly a year, but the city’s financial picture has only worsened since then.

Snyder has acknowledged interviewing candidates to potentially serve as the city’s emergency manager.

Politics & Government
2:45 pm
Mon February 11, 2013

A Detroit emergency financial manager could come soon

Kate Sumbler Flickr

In yesterday's Detroit News, columnist Nolan Finley said  an "emergency manager for Detroit [is] on its way."

Sources tell me that Snyder has selected an emergency manager, offered the person the job and expects to hear this week whether he or she will take it. While I don't have the name, the prospect is said to be from out of state, and it's not former Washington, D.C., Mayor Anthony Williams — the governor's first choice.

At a Detroit Regional Chamber luncheon today, Gov. Snyder didn't name a person he had in mind, but he did say there are talks going on. More from the Detroit Free Press

“We’re talking to people,” Snyder said. “But I won’t speculate about a particular candidate.”

Still, Snyder stressed he doesn’t want the state to run the city.

“The role of the state is not to run the city of Detroit. We’re here to be a partner,” he said.

He said it won't "take a significant amount of time" before he makes a decision on whether an emergency financial manager is needed for Detroit.

 A review team probing the city's finances will have a report to him in the coming weeks. The team began its review in December and is tasked with determining whether Detroit is in a financial emergency.

 The report officially is due February 19.

 The city has a budget deficit of more than $300 million and has struggled with sustaining cash flow in recent months.

5:46 pm
Mon January 7, 2013

Stateside: Detroit's deficit reaches nearly $327 million, raising question of financial manager

As the city's financial situation worsens, Detroit moves closer to having an emergency financial manager

According to an independent annual audit, Detroit's deficit recently reached almost $327 million.

Detroit Free Press editorial writer Nancy Kaffer addressed the city’s dire financial status.

Kaffer said Detroit is closer to having an emergency financial manager, but was unsure as to how soon it would happen.

“There is a relatively dysfunctional relationship between the Mayor and the Council... you really have to have everybody on board together to get some of the dramatic changes they’re looking for,” said Kaffer.

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5:23 pm
Wed December 5, 2012

Stateside: What would a Detroit bankruptcy bring?

A Chapter 9 Bankruptcy could present possible restructuring options for Detroit
John F. Martin Creative Commons

As the prospect of a Chapter 9 Bankruptcy looms over Detroit, many are wondering what will become of the city.

We spoke with contributor Micki Maynard and the Detroit News' Daniel Howes about restructuring the city and those who run it.

“It would be very difficult for the image of the city. It would be the largest municipal bankruptcy in the history of the country. It would probably last three years and be very unforgiving to the employees and residents,” said Howes.

Howes insisted that taxpayers would mostly likely have to fund the restructuring of the city.

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Politics & Government
2:30 pm
Wed December 5, 2012

Report: Detroit facing appointment of an emergency financial manager

wikimedia commons

Update 2:30 p.m.

Darren Nichols and Leonard Fleming of the Detroit News also report state officials are warning city leaders about the potential appointment of an emergency financial manager.

Dillon, a top administration source said, has spoken to Mayor Dave Bing personally about the movement toward an emergency financial manager. Other city leaders have been approached and will continue to be contacted throughout the day, the source said.

The News reports a spokesman has confirmed the meetings took place this morning: 

"The Treasurer has heard growing concerns, from his discussions with members of the Financial Advisory Board and others in the city, about the city's near-term ability to meet its financial obligations and its long-term viability," his spokesman Terry Stanton said in a released statement.

"While we continue to work collaboratively with the city to move it forward, the EFM option cannot be taken off the table. As the Treasurer has noted many times, delaying reforms and tough decisions only promises to make eventual solutions more difficult and painful."

1:58 p.m.

Matt Helms of the Detroit Free Press quotes anonymous sources reporting that State Treasurer Andy Dillon is apparently issuing an ultimatum to Detroit's Mayor and City Council - "implement reforms immediately or risk appointment of a manager."

Helms reports his sources say Dillon has been discussing who would be named to the position and the roles of Mayor Bing and the City Council under such an arrangement:

A ranking city official who spoke only on condition of anonymity said he spoke with Dillon by phone this morning and was told that the Bing administration’s inability to fix Detroit’s immediate cash crisis and enact major financial reform gave the state no choice but to bring in an outside manager.

The conversations appeared to give the city only one way out: through approving a series of reforms Bing’s administration said it will negotiate with the council ahead of its next meeting Dec. 11.

Bing has promised more negotiations to fix the city's troubled finances.

Neither Bing nor state officials would comment for Helms' report.

Michigan Radio is working to confirm these reports and will have more later.

Politics & Government
5:40 pm
Tue December 4, 2012

December not so dire for Detroit

Detroit city officials are sending some mixed signals when it comes to the city’s crumbling finances.

On the one hand, officials said Tuesday that the city won’t run out of cash this month. They had previously said that would happen without state help, in the form of releasing at least $30 million in Detroit bond money the state is withholding.

On the other hand, Deputy Mayor Kirk Lewis says the city faces an even bigger than expected cash shortfall by the middle of next year.

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Politics & Government
9:32 am
Thu November 29, 2012

Detroit's bond rating goes one more step toward the basement

"Spirit of Detroit" outside the municipal building.

In Moody's world, you can be triple A when you're at your best, or C when you're at your worst.

Detroit is dropping further into the Moody's bond rating basement with the recent worry over the city's financial position. The city might not be able to make a December payroll if they don't meet a state-set benchmark.

The Bloomberg Businessweek headline is "Detroit Bonds Cut Deeper Into Junk as Cash Crunch Nears":

Detroit had its bond ratings cut deeper into noninvestment-grade territory by Moody’s Investors Service, citing a cash crisis that may mean bankruptcy or default in the next 12 to 24 months.

“These downgrades reflect the city’s ongoing precariously narrow cash position and a weakened state oversight framework,” Moody’s analysts Genevieve Nolan and Henrietta Chang said in a statement from the New York-based credit-scoring company. The downgrades affect $8.2 billion in Detroit debt, according to David Jacobson, a Moody's spokesman.

The city's Moody's credit rating went from B3 to Caa1.

Politics & Government
9:35 am
Tue November 27, 2012

In this morning's Michigan news headlines...

User: Brother O'Mara flickr

Detroit deadlock continues

Detroit needs cash if it's going to make payroll in December. $30 million waits from the state.

But Mayor Bing and the Detroit City Council are locked in a battle over a law firm contract. A special council meeting was supposed to be held yesterday to resolve the problem, but the the city's legal department canceled the meeting.

Even it the meeting had been held, Matt Helms of the Detroit Free Press reports, Bing would not have had the votes to end the deadlock.

Had a vote been taken, it likely would not have gone Bing's way. The sole council member to vote to approve it, President Pro Tem Gary Brown, said Monday that the Bing administration "doesn't have the votes" to reverse course.

And the city's financial crisis looms.

Legislature aims to cut a source of revenue for some cities

There have been a lot of proposals floated in this lame-duck session of the Michigan legislature, but one plan the Gov. hopes to pass by the end of the year is a phase out of the "personal property tax."

That's a tax that many manufacturers pay to local governments on equipment they own. Local governments that have a big manufacturing base have said eliminating the tax would hurt their bottom line.

MLive's Dave Eggert reports Lt. Gov. Brian Calley plans to unveil a new plan to cut the tax today:

Sources who have been briefed on the proposal said key changes include partially replacing the revenue with a portion of the state's tax on out-of-state retail transactions and allowing local governments to assess a special tax to recoup money for police, fire and ambulance services.

Troy breaks ground on new transit center

The city of Troy is breaking ground on a new transit center today. The project was opposed by Troy's recently recalled Mayor, Janice Daniels, because the funding for the project is comging from the federal government. The transit center will cost $6.3 million to build and will house facilities for bus, train, and car rental services. The transit center will replace Birmingham's Amtrak stop. It's expected to open the summer of 2013.

Politics & Government
9:01 am
Fri November 16, 2012

In this morning's Michigan news headlines...

User: Brother O'Mara flickr

Michigan's longest serving first lady, Helen Milliken, dies at 89

Helen Milliken was Michigan’s first lady for 14 years, from 1969 to 1983.

The Detroit Free Press writes of a Republican who fought for causes that sometimes were at odds with the party:

Helen Milliken is perhaps best remembered as Michigan’s leading proponent of the Equal Rights Amendment to the U.S. Constitution. The ERA, which would have banned discrimination based on sex and authorized Congress to adopt laws enforcing it, came close to passage (it was approved by Congress and 35 of the needed 38 states, including Michigan).

But she was also a leading advocate for the arts and environment, becoming a political force in her own right.

Missing today's due date, Michigan gets a health care exchange extension

Michigan Republicans don't care for it.

And they've been hoping that provisions of the Affordable Care Act would get struck down. That hasn't happened, and one deadline for action is today.

But as MLive's David Eggert reports, they've been given an extension to decide on whether to set up a state run health care exchange:

The Obama administration late Thursday gave Michigan another month to decide if it wants to build its own online marketplace where individuals and businesses can shop for health insurance.

The deadline had been set for today. But in a bow to a request from the Republican Governors Association, U.S. Health and Human Services Secretary Kathleen Sebelius extended the deadline until Dec. 14.

Detroit Mayor reaches deal to keep city afloat

The dire financial projections for Detroit continue, with some predicting the city could run out of cash in December.

But Michigan Radio's Sarah Hulett reports, Mayor Bing has reached a deal with the state worth $137 million:

Mayor Bing says the agreement will help the city make changes it needs, and avoid running out of cash as early as next month.

"We're asking for $10 million in the month of November. We meet the milestones we've agreed upon, we're asking for $20 million in December, and then we've got another $50 million that will be held in escrow at a later date," Bing said.

Politics & Government
7:47 pm
Wed July 11, 2012

Detroit city lawyer loses legal battle over consent agreement--but could continue war

Krystal Crittendon

A court has once again rebuffed a Detroit city lawyer's attempts to have the city’s consent agreement with the state overturned.

Detroit’s corporation counsel, Krystal Crittendon, has pushed forward with a legal action that could un-do the consent agreement.

Crittendon maintains that legally, the city can’t enter into any contracts with the state because the state owes the city money.

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5:05 pm
Wed June 13, 2012

Judge dismisses lawsuit challenging Detroit consent agreement

Judge William Collette of Ingham County Circuit Court dismissed a lawsuit by Detroit's top lawyer, Krystal Crittendon, this morning. She was challenging the city's consent agreement with the state. The judge ruled she didn't have standing to bring the case. We've been updating this post today.

Update 5:05 p.m.

Governor Rick Snyder said he’s also happy the judge threw out a legal challenge to the consent agreement the state made with the City of Detroit. The agreement was made to avoid the appointment of an emergency manager and to prevent the city from running out of money.  

"We’ve been continuing to work forward on our projects from the state perceptive while all this has gone on because we want to make sure we’re fulfilling our part of this," said Snyder. "It was a Detroit internal issue. I hope they continue to work hard to resolve their issue so they can continue to work hard to resolve their issues so they can work better between the mayor city council and corporate counsel."

Detroit's top lawyer argued the consent agreement was null and void because the state owes Detroit money. The state treasury denies that.

3:04 p.m.

Detroit Mayor Dave Bing says he’s happy a “distracting” court case brought by his own city attorney was dismissed Wednesday and the city can now follow through on its consent agreement with the state.

Bing said he was “not happy with” his corporation counsel’s decision to push the legal challenge—but insists that’s all in the past now.

“We need to get on with running the city," Bing said. "The city is still in a crisis. And we can’t have all of these distractions and think we’re going to bring the city back.”

The first steps: convening the city’s nine-member financial advisory board. That’s a key provision of the consent agreement. Bing says they’ll meet for the first time Friday.

11:59 a.m.

MPRN's Rick Pluta spoke with Michael Hodge, the lawyer who argued the case on Mayor Bing's behalf. Hodge said if the case went forward, it could have forced the city into bankruptcy this week.

From Pluta's report:

“The judge understood that financially, the stabilization agreement between the city and the state was an essential agreement to go forward and to continue to address the financial issues involving the city,” said Hodge.

Detroit Corporate Counsel Krystal Crittendon argued the agreement is not valid because the state owes the city millions of dollars. The judge’s decision does not address the question. The state Treasury says Detroit is not owed any money.

10:40 a.m.

Judge William Collette of Ingham County Circuit Court dismissed the lawsuit by Detroit's top lawyer Krystal Crittendon challenging the city's consent agreement with the state of Michigan this morning.

MPRN's Rick Pluta reports Judge William Collette said it was obvious Crittendon could not go forward with her lawsuit without the support of Mayor Bing or city council. He said Crittendon did not have the authority to file the lawsuit on her own.

Collette also said Detroit's consent agreement with the state of Michigan is in place and people will just have to live with it.

Mayor Dave Bing is holding a press conference at 11:15 a.m. Michigan Radio's Sarah Cwiek will be there.

And Gov. Risk Snyder will meet with members of the media at noon today. Michigan Radio's Lindsey Smith will bring us reaction from Mr. Snyder

5:09 pm
Tue June 12, 2012

Detroit Council President: State 'irresponsible' for using threats

Charles Pugh, Detroit City Council President.
Charles Pugh

Detroit's top lawyer, Krystal Crittendon, plans to argue in court that the city's consent agreement with the state is not legal.

The Detroit News reports that Crittendon contends the state owes the city "more than $220 million in past-due state revenue sharing payments and millions of other unpaid bills." She says the city can't enter into a consent agreement with the state since the state is in default.

The state has denied they owe Detroit money, and Gov. Rick Snyder and state Treasurer Andy Dillon have said they'll withhold $80 million in revenue sharing payments to the city if the lawsuit goes forward.

Crittendon is expected to appear in Ingham County court tomorrow for an initial hearing.

Crittendon said it is her legal obligation to go forward with her lawsuit. From the Detroit News:

"Those of you who have worked with me should know that I take my legal, moral, ethical, professional and charter-mandated responsibilities very seriously," Crittendon wrote. "They are not for sale and will not be compromised."

Yesterday, Michigan Radio's Sarah Cwiek reported Detroit Mayor Dave Bing was unsuccessful in persuading city council to back his effort to stop Crittendon from moving forward with the lawsuit.

Today, we here more about council's reaction to the lawsuit and the state's threat of withholding money from the city.

Detroit City Council President Charles Pugh said state officials are "scaring the hell" out of Detroit by threatening to pull funding from the city. More from MLive's Jonathan Oosting:

Council President Charles Pugh today questioned reports that Detroit is poised to run out money this week and called the state "irresponsible" for threatening to withhold expected funding because of concerns over a pending lawsuit by the city's top attorney.

"They can have those concerns," Pugh told reporters this morning. "But you don't put the city at risk of not being able to pay our police officers and firefighters and scaring the hell out of citizens by saying we're going to run out of cash. That's irresponsible, and it makes me angry because we didn't have to get to this point."

6:17 pm
Thu May 10, 2012

Jack Martin named Detroit CFO

Jack Martin has has been appointed chief financial officer in Detroit. That's one of two key positions in the effort to turnaround the city's troubled finances.

Martin served as CFO of the U.S. Department of Education several years ago, and in January he was picked to be the state-appointed emergency manager of Highland Park schools.

The Detroit native says he also helped turn around Washington D.C.'s municipal finances. 

"That effort was successful," Martin says." I'm confident that this initiative will be successful. But I know it won't be easy. It will be a very, very tough struggle."

Martin will work alongside a still-unnamed program management director, and a financial advisory board. He starts the job on Monday with a yearly salary of $220,000.