EM spends $5M on consultants

[313WX]

First line from a Freep [[our liberal daily) article today:



http://www.freep.com/article/2013041...-Bing-s-budget

God bless the EM law [[and the EM and his consultants), because there is no reason this should ever, ever, EVER! be the case, and [[1) you can't tear up contracts/impose terms through bankruptcy and [[2) time has shown our politicians are unwilling or unable to attack this.

So go get 'em Kevyn, then take us to bankruptcy so we can soak the bondholders and then regular everyday citizens can get services, not have city budgets where there are to be "deeper cuts in services."

That bit of information right there pretty much counters the thoughts in the other thread about the improvements in the neighborhoods.

What do you think people are going to do when more cuts are imposed on them?

And actually, a BK judge can rip up the pension contracts. Orr, on the other hand, has to beg them to accept less of their return [[since the obligations are guaranteed in the state constitution). And even if he could cut health care benefits, there''s all the ligitation that will ensue too.

Finally, there's also the state if Michigan's investigation of Detroit tax assessment. Once those rates are lowered, that will mean even less revenue coming inti the city to provide services in the near term.

So ultimately, the road will end with the sell off of the DWSD [[most likely) and possibly Belle Isle [[less likely) since bankruptcy is not an option.

[Wesley Mouch]

That bit of information right there pretty much counters the thoughts in the other thread about the improvements in the neighborhoods.

What do you think people are going to do when more cuts are imposed on them?

You seem to connect current spending with quality services. This is wrong. We are currently spending a lot of money on services, and getting very little in return. Cuts are likely to improve basic services. Sure, there's a relationship between spending and services, but its not the only factor. Detroit is proof that spending doesn't deliver services in fact.[/quote]

And actually, a BK judge can rip up the pension contracts. Orr, on the other hand, has to beg them to accept less of their return [[since the obligations are guaranteed in the state constitution). And even if he could cut health care benefits, there''s all the ligitation that will ensue too.

What he can cut is a legal matter. The whole idea behind EM is to avoid the ruthless, single-minded cuts a bankruptcy court would impose, and replace it with restructuring that can be more collaborative and voluntary.

Unions for example have avoided giving up anything, and given up what they have very carefully. That's expected. What you give up becomes the starting line for future discussion. No one ever gives up anything they don't have to.

What the EM [[or BK) does is to bring everyone into the game, and to put everybody's real needs on the table. It will no longer be wealthy union members vs. regular Joe. And if done right, everyone will know that there's no tomorrow. If there's a tomorrow, everyone will wait for it. That's what we've seen so far.

Orr may have limitations on what he can do with pensions themselves, but he will have a lot of latitude around the fringes, literally. And one thing that gets forgotten is that although there may be a guarantee of pension, its only as good as the money around to pay that guarantee. If a deal isn't struck, then do you really want to risk your future on the kindness of taxpayers state-wide? Do you think they'll be OK with cutting school funds in their district to fund Detroit pensions? Do you think a constitutional change might be possible? Do you like Republican governors? You'll get more when you start raiding the state coffers to fund Detroit pensions.

[Eber Brock Ward]

That bit of information right there pretty much counters the thoughts in the other thread about the improvements in the neighborhoods.

What do you think people are going to do when more cuts are imposed on them?

Quite the opposite. The EM is good for the neighborhoods because it at least provides a chance to provide services. We know the current model is broken beyond repair, so even if the new EM model is also broken it's at least not any worse, with a chance to get better. Really simple example, but if you spend $100 now for something but 60% of it is waste, giving you only $40 of services, you can get the same or better services for $50 if the waste isn't there.

That's why we have the consultants. To identify and attack this waste.

And actually, a BK judge can rip up the pension contracts. Orr, on the other hand, has to beg them to accept less of their return [[since the obligations are guaranteed in the state constitution). And even if he could cut health care benefits, there''s all the ligitation that will ensue too.

You have it all turned around. The unions/retirees have to beg Orr to work with them. Sure, the pensions are guaranteed, but health care isn't. Orr has most of the leverage because he can say "I am cutting 100% of your health care in 30 days unless you come to the table and bargain, and if I don't feel you're bargaining in good faith I will cut 10% of those benefits each month until there is nothing left."

This is why it was absolutely necessary that the EM be an out-of-towner with ice in his veins, which he has been in past bankruptcies and reorganizations. No "hey man, my auntie works in that department" or negatively affecting his standing in the social/political scene here, because he's likely back onto DC after this is over. Someone tied into this region would likely either lack the courage or the desire to play hardball.

And who cares about litigation? It's like challenging the EM or Moroun's challenge to the new bridge -- a bug on a windshield, an annoyance, and nothing more.

Finally, there's also the state if Michigan's investigation of Detroit tax assessment. Once those rates are lowered, that will mean even less revenue coming inti the city to provide services in the near term.

I don't see how this relates to the EM issue. It is an independent issue spurred on by good reporting by the Freep[[?) and would have taken place with or without an EM. I'm willing to be educated on this if you have a different viewpoint, though.

So ultimately, the road will end with the sell off of the DWSD [[most likely) and possibly Belle Isle [[less likely) since bankruptcy is not an option.

Selling off DWSD - Good if net positive for the city. All of the political grandstanding about jewels does bring us at least one advantage, and it's that we generally get better deals than we deserve when it comes to regionalization. Most successful regions have regionalized water/sewer, generally speaking. Just another way we are behind the times.
Selling Belle Isle - Not gonna happen. But a lease would be great. I look at that issue from a "If you are an average Detroiter, would you be better off from a lease than the current situation?" I think the answer is yes for just about everyone in the city. I know it would be for me. I was just at sunset point last weekend and saw trash all over the grass, the dividers were still up from the Grand Prix[[!), and Portajohns because we can't afford to keep the bathrooms up.

Sorry, but that's just shameful. I think a lot of people just stick their head in the sand because they've never left the city or region and don't get how things should work. The sort of people that would say "that's the way we do things" or "that's the way we've always done things" at a job, instead of trying to get better.

[Wesley Mouch]

Quite the opposite. The EM is good for the neighborhoods because it at least provides a chance to provide services. We know the current model is broken beyond repair, so even if the new EM model is also broken it's at least not any worse, with a chance to get better. Really simple example, but if you spend $100 now for something but 60% of it is waste, giving you only $40 of services, you can get the same or better services for $50 if the waste isn't there.

That's why we have the consultants. To identify and attack this waste.



You have it all turned around. The unions/retirees have to beg Orr to work with them. Sure, the pensions are guaranteed, but health care isn't. Orr has most of the leverage because he can say "I am cutting 100% of your health care in 30 days unless you come to the table and bargain, and if I don't feel you're bargaining in good faith I will cut 10% of those benefits each month until there is nothing left."

This is why it was absolutely necessary that the EM be an out-of-towner with ice in his veins, which he has been in past bankruptcies and reorganizations. No "hey man, my auntie works in that department" or negatively affecting his standing in the social/political scene here, because he's likely back onto DC after this is over. Someone tied into this region would likely either lack the courage or the desire to play hardball.

And who cares about litigation? It's like challenging the EM or Moroun's challenge to the new bridge -- a bug on a windshield, an annoyance, and nothing more.

I don't see how this relates to the EM issue. It is an independent issue spurred on by good reporting by the Freep[[?) and would have taken place with or without an EM. I'm willing to be educated on this if you have a different viewpoint, though.



Selling off DWSD - Good if net positive for the city. All of the political grandstanding about jewels does bring us at least one advantage, and it's that we generally get better deals than we deserve when it comes to regionalization. Most successful regions have regionalized water/sewer, generally speaking. Just another way we are behind the times.
Selling Belle Isle - Not gonna happen. But a lease would be great. I look at that issue from a "If you are an average Detroiter, would you be better off from a lease than the current situation?" I think the answer is yes for just about everyone in the city. I know it would be for me. I was just at sunset point last weekend and saw trash all over the grass, the dividers were still up from the Grand Prix[[!), and Portajohns because we can't afford to keep the bathrooms up.

Sorry, but that's just shameful. I think a lot of people just stick their head in the sand because they've never left the city or region and don't get how things should work. The sort of people that would say "that's the way we do things" or "that's the way we've always done things" at a job, instead of trying to get better.

I couldn't agree more. Yes -- who cares about litigation. Those who care about Detroit accept progress -- even if imperfect. Those who are looking to protect their interests [[Maroun, anti-EFM & outstaters) litigate to stall and keep their advantages over the residents as long as possible. In the end, maybe there's a flaw with EFM. There're flaws with most laws. But who cares? Certainly no one who wants Detroit to succeed.

Great post.

[Richard]

[[Selling off DWSD - Good if net positive for the city. All of the political grandstanding about jewels does bring us at least one advantage, and it's that we generally get better deals than we deserve when it comes to regionalization. Most successful regions have regionalized water/sewer, generally speaking. Just another way we are behind the times.)





There are lots of successful city owned water departments ,it's not about selling city jewels , it is more about the city retaining assets for future bonding power.

[old guy]

I went through this thread and couldn't find the specifics on what people were discussing about privatizing the DWSD. Can you enlighten me?

If someone is attempting to privatize your water department, you should really do some research. That's not a good thing. I'm amazed that you're not aware of the consequences of that action.

[313WX]

I went through this thread and couldn't find the specifics on what people were discussing about privatizing the DWSD. Can you enlighten me?

If someone is attempting to privatize your water department, you should really do some research. That's not a good thing. I'm amazed that you're not aware of the consequences of that action.

Agreed.

Water and Sewerage is something that should remain operated by the government.

[313WX]

Selling off DWSD - Good if net positive for the city. All of the political grandstanding about jewels does bring us at least one advantage, and it's that we generally get better deals than we deserve when it comes to regionalization. Most successful regions have regionalized water/sewer, generally speaking. Just another way we are behind the times.


There are lots of successful city owned water departments ,it's not about selling city jewels , it is more about the city retaining assets for future bonding power.

Also agreed.

No one should have to go through a fire sale because they're down and out.

[Richard]

I went through this thread and couldn't find the specifics on what people were discussing about privatizing the DWSD. Can you enlighten me?

If someone is attempting to privatize your water department, you should really do some research. That's not a good thing. I'm amazed that you're not aware of the consequences of that action.

I was quote EBW but trying not to get the whole post,my regular Internet is down and it is a pia trying to figure all the little quirks of a smart phone

[Eber Brock Ward]

Under the deal being discussed, DWSD would not be privatized. It would go to a regional water authority.

Huge difference between the two.

[Richard]

Under the deal being discussed, DWSD would not be privatized. It would go to a regional water authority.

Huge difference between the two.

You are meaning Huge difference between the three?

City owned
Privatized
Regionial

[old guy]

Under the deal being discussed, DWSD would not be privatized. It would go to a regional water authority.

Huge difference between the two.

That's true.

If you look at the main agenda of the World Bank/WTO right now, one of their priorities is going into third world countries that can't pay their debts and offering to excuse them [[settle on their debt) if they privatize their water departments. The outcome has been good for them and almost always tragic for any country that's agreed to such a deal.
I find it unbelievable that this is happening to cities that are in debt in the U.S.
By all means, question what I'm saying. Do some research and draw your own conclusions. I'm just amazed that people on this site that I regard to be very intelligent and have good intentions aren't aware of the outcome of such a nefarious scheme.

[313WX]

Also the regional authority will be autonomous from governmental entities.

Thus [[besides the lack of environmental oversight by elected officials), the road would still likely end at Privatization.

[old guy]

Just one of thousands of examples from the last few decades.

Bolivia v. Bechtel: The People Win!
In the late 1990s, the World Bank pressured Bolivia to privatize the public water system of its third-largest city,
Cochabamba. In particular, it threatened to withhold debt relief and other development assistance. In 1999, in a process
with just one bidder, the California-based engineering giant Bechtel, was granted a 40-year lease to take over Cochabamba’s water system, through a subsidiary the corporation formed for just that purpose [[“Aguas del Tunari”). Within weeks of taking over the water system, Bechtel raised prices by an average of more than 50%, leaving the poorest segments of the population without access to water. The rate hikes sparked massive citywide protests that the Bolivian government brutally suppressed. In April 2000, as anti-Bechtel protests continued to grow, the company’s managers abandoned the project. In consequence, Bechtel rescinded the contract.
As a response, Bechtel filed legal action against Bolivia in November 2002 demanding $25 million in compensation. This figure was far greater than Bechtel’s investment in the few months it operated in Bolivia, because it included a
portion of the company’s expected profits from the project. Bechtel filed the case with the International Centre for the Settlement of Investment Disputes [[ICSID), which operates under the auspices of the World Bank. Like most international
arbitration processes, ICSID operates in secret, without any possibility for public input of scrutiny.

IMO, they were lucky Suez wasn't the main shareholder. Privately owned water systems are now traded on Wall St. just like oil.

[Richard]

They keep throwing this number out there,sorry I do not have the exact, but the city is 5 billion in debt but 3 billion of that debt is owned by DWSD.

When you read the bond offering for DWSD it states that it is separate from the city reach , which in turn gives it credit ability. So bonding for DWSD and bonding for the COD are two separate issues but yet they pad COD numbers.

No doubt the city is in debt ,EM has more power then a bankruptcy judge,but there are a lot more reasons for a EM then a bankruptcy which makes it easier to be more below the law so to speak, to me anyways the only good the EM can do is put the currant city gov in a holding pattern until you can elect a working mayor and CC , lots of damage control in the meantime and struggle to keep and not lose long term .


So in maybe my screwed up mind they are taking the 3 billion debt from DWSD which is actually a debt that is being paid already so you really cannot count it as a debt ,dollar in dollar out or self supporting debt.

So they are taking that debt from DWSD and then transferring it to the city debt in order to turn it over with a clean slate or no debt.

So then the city is oweing the debt without the revenue to pay it,DWSD now has no debt and who ever ends up with it can then go and sell bonds and collect 3 billion because it is debt free. Slick Hugh

[downtownguy]

First line from a Freep [[our liberal daily) article today:



http://www.freep.com/article/2013041...-Bing-s-budget

Gannett = liberal. That's funny.