EFM Law Facing Repeal

**Novine** · February-29-12, 04:58 PM

Update: The Michigan Supreme Court ruled on August 3, 2012 that the ballot proposal to repeal the EFM law is valid and must appear on the ballot.

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"A group seeking repeal of the state’s emergency manager law submitted this afternoon what they said were 226,000 petition signatures to force a referendum on the issue in November.

If a state elections panel verifies that 161,305 of the signatures are those of registered voters, the controversial statute enacted last year would be suspended until the vote...."

Detroit Free Press

Detroit News

**Flintoid** · February-29-12, 05:29 PM

I think we all knew this a month or two ago.

**One Shot** · February-29-12, 11:26 PM

Too bad this is really just an "US vs. THEM" [[black/white) issue and not really about getting things in order!

**313hero** · March-02-12, 08:11 AM

Originally Posted by One Shot

Too bad this is really just an "US vs. THEM" [[black/white) issue and not really about getting things in order!

NO IT'S NOT. Its a RIGHT to be an AMERICAN Issue. Its a RIGHT TO VOTE ISSUE. NOT Black Vs. White. Eventhough it only seems to be Black communities lossing their right to vote, govern etc. What if China told America we are going to appoint someone to run OUR country cause we so deep in debt. Would YOU let that Fly. Should it Fly??????????

**Packman41** · March-02-12, 08:36 AM

Originally Posted by 313hero

What if China told America we are going to appoint someone to run OUR country cause we so deep in debt. Would YOU let that Fly. Should it Fly??????????

Hmmm… that already happens every day in the real world.

During a bankruptcy [[particularly commercial real estate) the lender can take several routes. If the lender perceives the borrower is not part of the problem the loan failed, then they MAY allow a “debtor-in-procession.” This is where the owner maintains management of the property while they attempt to restructure their loan.

However, if the lender believes the borrower is part of the problem and contributing to losses, then they can ask the court for a court appointed receiver. Once a Receiver is named, then the borrower gives up control of the asset and the Receiver becomes responsible for the property. The borrower is still the owner, but no longer in control.

Sound familiar?

Maybe not a China/US thing, but this happens every day in Michigan.

**ndavies** · March-02-12, 09:43 AM

If you mess up your finances bad enough, Your rights get taken away. It doesn't matter if you're a person, city, state or country. The minute you have to have someone come in and save you, You lose your right to decide on your future.

If I was the Governor, I would send one of the entities assigned an EFM through chapter 9 bankruptcy. The communities that are in trouble will be screaming for an EFM after they watch the fallout from a bankruptcy.

The choice is between a EFM appointed by the state and a receiver appointed by a federal judge. I personally think the EFM is the better route.

**corktownyuppie** · March-02-12, 10:53 AM

Originally Posted by 313hero

NO IT'S NOT. Its a RIGHT to be an AMERICAN Issue. Its a RIGHT TO VOTE ISSUE. NOT Black Vs. White. Eventhough it only seems to be Black communities lossing their right to vote, govern etc. What if China told America we are going to appoint someone to run OUR country cause we so deep in debt. Would YOU let that Fly. Should it Fly??????????

China would not appoint someone to run OUR country because we were so deep in debt. They would appoint someone to run our country if we were so in debt to THEM and ALSO IF the way we were running our country caused them not to get paid.

This is the way the world works. If you lent $1,000 to a friend and you found out she was using to buy a 7-day cruise, you would eventually get pissed and say...ok, look, you owe me $1,000, and as long as you pay me back on schedule, I don't care what you do with the money.

But if you aren't paying me back on time and I find out you're using that money to do other less important things, then OF COURSE you're going to want to control her spending.

That's the way the business world works. It's the way the political world works. It's the way human nature works.

If you don't want the Chinese taking over, you have two choices: Pay them back on time or Don't borrow money from them.

**313hero** · March-02-12, 11:07 AM

LMAO too funny

**313hero** · March-02-12, 11:12 AM

So if someone lends me $1000 and I cant/dont pay it back they should have the right to choose who in charge of my household??? they have the right to take away my wife and appoint me a new one??? they have those rights??? So If America Misses a payment to China they have the right to appoint us a new President. Is that what you guys are saying??? I hope yall dont truly believe that. Well seeing how yall treat KK yall probably do. WOW. Is that why we invading all of these other countries cause they owe us money??? or is because WE want EVERYBODY to be governed the way we are??? We want to spread "Freedom" buy actually taking away the freedoms of other Nations. In a Free world those countries should be "free" to have dictatorships. Hmmmmmmmmmmm

**townonenorth** · March-02-12, 11:33 AM

Municipal bankruptcies are not preferred to EFM or a consent agreement. Removing the other two options via petition will assure that a whole lot of stuff will be out of the hands of Detroiters. Get used to it.

**Wesley Mouch** · March-02-12, 11:37 AM

I find it funny that there's a rebellion against EFMs. The EFMs are actually a tool of the government to try and find a way of avoiding the real pain of bankruptcy.

It would frankly be much better for all of us if we just let the bankrupt municipalities go through bankruptcy. The deep pain involved might actually change municipal government for the better.

Under the EFM, there'll just be a little pain, and then mostly back to business.

I don't want to shield the corrupt [[Detroit) and greedy [[contractors and unions) and stupid [[Allen Park) from their bad financial decisions. Let them live with the results of raping their cities.

**Packman41** · March-02-12, 11:42 AM

No, you don't get it - you are hung up on the US/China thing.

Notice I said, "...particularly commercial real estate." It happens is business every day. It pays to understand the terms and conditions you agreed to when you signed that loan, mortgage or note.

You've never heard of a court appointed receiver??

Seriously???

**corktownyuppie** · March-02-12, 11:47 AM

This whole China-chooses-your-own wife thing is pretty hilarious.

Look, let's be simple about this.

Let's say you're a plumber for the City of Quahog. You get paid $1,000 per week. Quahog misses 3 consecutive paychecks. You're pissed. Not to mention, you're f-ing broke.

So then you find out that Quahog didn't pay you because they were too busy paying for the Mayor to go on 2-week vacations to Tahiti.

At some point, you're gonna say...LISTEN...you OWE me money for STUFF I ALREADY DID.

Since you don't like the EFM solution and don't like a court-appointed receiver making the decisions, what is your solution? How are you gonna make sure you get paid? And seriously, how would forcing the Mayor to marry your Chinese bride help you get paid any more?

**Kevgoblue** · March-02-12, 01:48 PM

Admittedly I'm not as informed of all the ins and outs of the EFM law as I would like to be. That being said......

I've never heard it mentioned, is there any type of long term fiduciary resposibility associated with appointing an EFM? So what happens after the EFM [[sent by our pro-business, outsourcing, charter loving Governor) comes in cancels contracts and sells off all desireable assets of the community in question? The municipality may have enough money from the selling of assets to sustain itself for another couple years, but what about after that? Does the state now assume responsiblity for paying that city's bills? Will they maintain the infrastructure in that city? Will they assure the retirees still get paid? Because more than likely the EFM's slash and burn policies to reduce the bills will render the city to be less desireable to future residents or businesses.

Or is this just a way to legally raid a sickly community? To allow the buzzards to come in for an easy meal and pick the last of the flesh from the dying carcass?

**7miledog** · March-02-12, 01:49 PM

Ok, I've got to chime in here. The current EFM statute actually provides GREATER authority to an EFM than a bankruptcy judge or trustee would have over a municipality in a Ch 9 proceeding. Case in point, a trustee in ch 9 cannot sell off city assets in order to satisfy municipal debt, an EFM can [[remember the Pontiac Silver Dome). The problem with Ch 9 is that there is a great deal of uncertainty over Ch 9 as there have been relatively few cases under it [[the largest I think was debt of ~$5B in AL, very recently), and there is additional potential fallout on the state and/or other local governments if the largest municipality in a state cannot fund its obligations.

The whole US-China thing is completely asinine. If the US cannot pay the portion of its debt owned to China [[currently $2T of the total national debt of ~14 or 15T), then the result would likely be a civil suit in US Court, diplomacy, or war. There is no provision for a foreign country to take over another in the event of a debt default, because, at the end of the day, who would enforce it? US Courts interpret US and international [[based on treaties, etc) law, and it is enforced by executive branch [[FBI, etc). The only judicial body that would enforce a default on Treasury debt would likely be a US Court, but you then get into a variety of other legal issues, such as governmental immunity, etc. It is all very hypothetical because it has never happened and likely never will. In the event we cannot pay with the money we have, we will print more [[unless of course, we have a political issue with the debt ceiling authority).

**antongast** · March-02-12, 02:24 PM

Originally Posted by townonenorth

Municipal bankruptcies are not preferred to EFM or a consent agreement. Removing the other two options via petition will assure that a whole lot of stuff will be out of the hands of Detroiters. Get used to it.

This isn't going to get rid of EFMs entirely. What it will do is roll back Snyder's expansion of the EFMs' powers and reinstate the previous EFM provision. From the Freep article linked at the top of the thread:

In a statement issued shortly after the petitions were submitted, Attorney General Bill Schuette said suspension of the 2011 law would revive an earlier emergency manager law which was repealed by the new statute. “Pending the outcome of the referendum vote in November…the previous state law governing emergency financial managers…will govern in the interim,” Schuette said.

**corktownyuppie** · March-02-12, 03:05 PM

Originally Posted by Kevgoblue

Admittedly I'm not as informed of all the ins and outs of the EFM law as I would like to be. That being said......

I've never heard it mentioned, is there any type of long term fiduciary resposibility associated with appointing an EFM? So what happens after the EFM [[sent by our pro-business, outsourcing, charter loving Governor) comes in cancels contracts and sells off all desireable assets of the community in question? The municipality may have enough money from the selling of assets to sustain itself for another couple years, but what about after that? Does the state now assume responsiblity for paying that city's bills? Will they maintain the infrastructure in that city? Will they assure the retirees still get paid? Because more than likely the EFM's slash and burn policies to reduce the bills will render the city to be less desireable to future residents or businesses.

Or is this just a way to legally raid a sickly community? To allow the buzzards to come in for an easy meal and pick the last of the flesh from the dying carcass?

From a business standpoint, understanding that it doesn't exactly follow when dealing with a municipality, the process of restructuring generally involves eliminating the shackles of mounting and accumulating debt while doing everything you can to stabilize and increase revenues.

So I don't think the city is going to default it's pensioners. But it does beg the question, why the didn't we stop offering the pension benefits to new hires 10-15 years ago like everyone else? At minimum, we need to stop that right now for the new hires because every year we keep it going is just making the problem worse.

The city needs to consolidate, consolidate, consolidate. Which policy do you think attracts more residents, one which charges 3.5% income tax but collects less than half of it? Or one which charges 1.25% income tax but collects all of it?

If you were running a company, would you rather have 6 sales reps costing $100,000 per year? Or 6 sales reps that you paid a $40,000 salary plus commissions that could get them to $100,000 per year? We have way too much excess capacity in our processes and not enough lean operation.

So at this point even if an EFM "sold everything" but then eliminated our debts, then that's f-ing awesome. It's so much easier to start all over with a blank slate and build from there, rather than walk into battle with an 90lb. elephant around your neck weighing you down.

**rb336** · March-02-12, 04:42 PM

If there were a way to appoint an EFM that wouldn't be giving the finger to the democratic process, I'd be more willing to accept it. If it came with actual state assistance to maintain vital services, it would be more palatable. When we see an EFM getting rid of a city's vital services, as was done in Pontiac, we can't see any benefit to the citizens of the city. When one is proposed for a city like Detroit which has a mountain of valuable assets, and when the past behavior of other EFMs is known, it seems like an invasion aimed at controlling those assets, especially when the suburban leaders are known to have been drooling over that idea for decades.

**corktownyuppie** · March-02-12, 04:55 PM

Originally Posted by rb336

If there were a way to appoint an EFM that wouldn't be giving the finger to the democratic process, I'd be more willing to accept it. If it came with actual state assistance to maintain vital services, it would be more palatable. When we see an EFM getting rid of a city's vital services, as was done in Pontiac, we can't see any benefit to the citizens of the city. When one is proposed for a city like Detroit which has a mountain of valuable assets, and when the past behavior of other EFMs is known, it seems like an invasion aimed at controlling those assets, especially when the suburban leaders are known to have been drooling over that idea for decades.

I would have no objection at "electing" our EFM and giving him a 12-month period to straighten out the finances. But even that has problems, because the people who have the money [[or who are owed the most) will spend some coin to finance "their guy".

I think the best way to avoid the EFM is to pay our bills. We find a way to do that, and then this whole EFM thing won't even be on the table. Somehow, I feel like that's been forgotten in all of this.

**rb336** · March-02-12, 08:06 PM

Originally Posted by corktownyuppie

I would have no objection at "electing" our EFM and giving him a 12-month period to straighten out the finances. But even that has problems, because the people who have the money [[or who are owed the most) will spend some coin to finance "their guy".

I think the best way to avoid the EFM is to pay our bills. We find a way to do that, and then this whole EFM thing won't even be on the table. Somehow, I feel like that's been forgotten in all of this.

The problem goes way deeper than that -- it's a whole restructuring of the city that is needed. Too much area for too few people. structural problems. It's a daunting task, and only serious reinvestment in the city will permanently fix it. That means bringing more jobs to the city and turning around the population decline, broadening the tax base. We've had a serious reinvestment in the schools - $500 million to renovate and build new buildings. Parents need to get on board to make sure their kids stay in school and WORK at learning. That's a decent start

**Schoolcraft** · March-03-12, 02:54 AM

Since we're talking about paying our bills that we owe, we can start with the state paying the money it owes Detroit:

http://www.detroitnews.com/article/2...CS02/201040375

I believe the $220 million owed would cover the debt... After that, let's talk about the state and the city coming up with solutions together that attack the legacy debts and that doesn't usurp the democratic voting process.

Ravine · March-03-12, 05:42 AM

Yeah, let's keep resisting, keep fighting the EFM thing. The folks currently running things are doing a fucking swell job and certainly shouldn't be subjected to interference of any sort. Yay team. Rah. Rah.

**greatman05** · March-03-12, 06:58 AM

I really do hope that the State isn't stupid enough to give Detroit $220 million dollars without Detroit demonstrating their ability to make good and sustainable use of that money. We've already seen reports that the DHS in Detroit was unable to spend money fast enough and may have to return it. That really makes me laugh though; who would've thought that the government would have problems spending money? That is the most bass-ackwards thing I've ever heard of.

It really saddens me that the possibility of bankruptcy does not register at all with Detroiters. Maybe when the money really runs out and bankruptcy is the only way out, Detroiters will realize how harsh creditors can be.

For me, being a Detroiter is almost embarassing. When I see how my leaders are unable to come to even basic agreements without pointless arguments, it really shows the sad state of what we have to call 'leadership'. I couldn't vote in the previous elections [[I was only 17 at the time), but best believe I will NEVER vote for any of those clowns in city office. They need to go, and go fast! I have nearly given up on Detroit; I wanted to help out and bring my city to glory, but Madison Heights and Southfield are looking really good after I graduate :|

**Hermod** · March-03-12, 07:46 AM

Originally Posted by corktownyuppie

If you don't want the Chinese taking over, you have two choices: Pay them back on time or Don't borrow money from them.

One big difference with China as the lender and the US as the borrower. If the lender makes too big of a stink about it, the US just pays them off. The debt is denominated in dollars and the US owns the printing press. If the debt was denominated in euros or in gold, there might be a bigger problem.

**Hermod** · March-03-12, 07:50 AM

Originally Posted by rb336

If there were a way to appoint an EFM that wouldn't be giving the finger to the democratic process, I'd be more willing to accept it.

It is the democratic process. The people of Michigan elected the governor and the legislature [[last time I looked, Detroiters were able to vote for that). Now the democratically-elected government of the State of Michigan has a prblem on its hands which it needs to clean up. That is what the EFM is for.