Detroit, Review Team Reach Deal to Fix Finances

[Zacha341]

DETROIT [[AP) -- Detroit's City Council and a state-appointed review team reached an agreement Wednesday aimed at fixing Detroit's broken finances and avoiding the appointment of an emergency manager armed with sweeping powers to take control of the cash-strapped city.


Mayor Dave Bing was expected to sign the deal that allows the city to dodge a Thursday deadline that would have allowed Gov. Rick Snyder to decide whether to appoint an emergency manager.

http://www.myfoxdetroit.com/dpp/news...te-20120404-ms

[Wesley Mouch]

DETROIT [[AP) -- Detroit's City Council and a state-appointed review team reached an agreement Wednesday aimed at fixing Detroit's broken finances and avoiding the appointment of an emergency manager armed with sweeping powers to take control of the cash-strapped city.


Mayor Dave Bing was expected to sign the deal that allows the city to dodge a Thursday deadline that would have allowed Gov. Rick Snyder to decide whether to appoint an emergency manager.

http://www.myfoxdetroit.com/dpp/news...te-20120404-ms

Sad day for Detroit. Lost chance for progress. More years of the same now.

[corktownyuppie]

Sad day for Detroit. Lost chance for progress. More years of the same now.

I wouldn't go that far. The consent decree essentially gives local government pre-determined benchmarks and quasi-EM powers. If they don't deliver, the EM is automatic. But more likely, using the EM as a threat, local leaders will have the political cover to make hard changes necessary to meet the benchmarks.

[Zacha341]

It's going to be an interesting ride to see how things go IMO. From article:

"Council members Andre Spivey, Joann Watson, Brenda Jones and Kwame Kenyatta voted against it.

"There's some things that were in this agreement that I just couldn't live with. There was no sunset clause, no money attached with it and we seem like we get no support from state legislature, and then the project management director seemed like it was a de facto mayor," said Council Member Andre Spivey.

The hardest part for Spivey is union contracts that are now nullified under the agreement."

Sad day for Detroit. Lost chance for progress. More years of the same now.

[DetroitScooter]

In fact, this is the FIRST chance for real progress in a long time. I'm glad that five members of the clowncil [[and the Baptist Pastors contingent) realized that this was the only way to get a chance to influence the massive changes that are necessary to restructure city operations. There will be a lot of pain, but it will be a necessary pain to help this city provide the services that tax-paying residents and workers expect.

[Scottathew]

This seems to be a good middle ground. If it works, great. If it doesn't, then send in the EM.

This way a good amount of local control is maintained, with benchmarks and objectives to meet.

Although I preferred an EFM, I really hope that the Consent Agreement will work. I want Detroit to be a part of the solution, not along for the ride.

[corktownyuppie]

This seems to be a good middle ground. If it works, great. If it doesn't, then send in the EM.

This way a good amount of local control is maintained, with benchmarks and objectives to meet.

Although I preferred an EFM, I really hope that the Consent Agreement will work. I want Detroit to be a part of the solution, not along for the ride.

My gut is telling me we will eventually see either a managed Chapter 9 process [[cut down to 1-2 years rather than 7+ years) or a major infusion of cash from the state in loans. After the draconian cuts come sweeping through, it will be clear whether or not such an infusion of cash is going to be effective. By then Snyder can go to state legislature and say, "Look, we've been overseeing the city. They've been doing as we've instructed. The re-structuring is happening, but needs to be facilitated with capital. So we can either choose to do so or we can go through a municipal bankruptcy process."

The debate then will not be about what's best for Detroiters, but what's best for the entire state and its fiscal position. Certainly, as a Detroit, I hope we get the cash. But the point is that Snyder will be in a political position where can make a viable case for it once Detroit demonstrates that they're complying the agreement. And even if the state says no way, then at least a managed bankruptcy will be less painful than the drag-em-out bloodbath in bankruptcy court.

I'm very hopeful for the next 5-10 years...though obviously, next 12-24 months will be quite tumultuous and painful.

[Wesley Mouch]

This seems to be a good middle ground. If it works, great. If it doesn't, then send in the EM.

This way a good amount of local control is maintained, with benchmarks and objectives to meet.

Although I preferred an EFM, I really hope that the Consent Agreement will work. I want Detroit to be a part of the solution, not along for the ride.

Detroit should be part of the solution, but the close vote on the Consent Agreement suggests that they're being dragged kicking and screaming.

The opportunity to be part of the solution has existed. And it hasn't been taken.

Full bankruptcy is necessary for full healing.

Detroit needs to stay on its meds until the antibiotics have run their full course.

[corktownyuppie]

Detroit should be part of the solution, but the close vote on the Consent Agreement suggests that they're being dragged kicking and screaming.

The opportunity to be part of the solution has existed. And it hasn't been taken.

Full bankruptcy is necessary for full healing.

Detroit needs to stay on its meds until the antibiotics have run their full course.

Yes, 5-4 looks like a close vote...and it is. There's more to the story,though. Spivey would have voted yes, making it 6-3, had the state brought a capital injection to the table. And even if you disagree with a capital injection, even Snyder and Dillon say that it'll eventually be necessary to do the restructuring they need to do. Realistically, no corporate restructuring can be done without some access to capital to pay for the upfront costs of tearing the system down and re-building it. With every municipal turnaround it's been necessary, too. Now will they get it through the state legislature? That's a whole other debate, and it's not one worth having here because there's too many unknowns right now.

But it does show that despite the 2 hours of ridiculous public comment, a 6-3 vote was on the table and very close. Moreover, the shifts in city council make up do show a trend of reform-minded demographics. Yes, the opportunity to be part of the solution has existed...but that's a Detroit thing...it's with every institution. Whether it was GM or Lehman Brothers on the brink of bankruptcy, every organization will fight to the very brink to maintain the status quo because it's what they're incented to do. Now take that demographic and apply it to a democratically elected leadership? It's impossible.

No, I think the majority on this new council is ready and get to work to make the tough changes, but they couldn't do it politically until Lansing "put the gun to their head". Lastly, look at Kenyatta and Watson. Wow, you can really see their absurd and humorous struggle to stay relevant. They were 8th and 9th place in an at-large election where the many other reform-minded councilmembers all had their votes split between them.

JoAnn Watson would be off the council had she gotten .8% fewer votes. I can't see them both surviving in a head-to-head election with anyone.

So I don't agree that full bankruptcy is the needed medicine, but even if we were to examine that as our prime option...isn't a managed bankruptcy going to be quicker and easier than walking off the cliff of Chapter 9? Look at Lehman Brothers...it's been 3 years and they're STILL not done yet. Now try it in an elected government...constitutional challenges and due process at every single step...the endless marches and rallies distracting us from actually getting to work...

I was highly in favor of the EM a month ago, but now I think the consent agreement is the most pragmatic way of accomplishing the same ends. We'll just have to see.

[Wesley Mouch]

Yes, 5-4 looks like a close vote...and it is. There's more to the story,though. Spivey would have voted yes, making it 6-3, had the state brought a capital injection to the table. And even if you disagree with a capital injection, even Snyder and Dillon say that it'll eventually be necessary to do the restructuring they need to do. Realistically, no corporate restructuring can be done without some access to capital to pay for the upfront costs of tearing the system down and re-building it. With every municipal turnaround it's been necessary, too. Now will they get it through the state legislature? That's a whole other debate, and it's not one worth having here because there's too many unknowns right now.

But it does show that despite the 2 hours of ridiculous public comment, a 6-3 vote was on the table and very close. Moreover, the shifts in city council make up do show a trend of reform-minded demographics. Yes, the opportunity to be part of the solution has existed...but that's a Detroit thing...it's with every institution. Whether it was GM or Lehman Brothers on the brink of bankruptcy, every organization will fight to the very brink to maintain the status quo because it's what they're incented to do. Now take that demographic and apply it to a democratically elected leadership? It's impossible.

No, I think the majority on this new council is ready and get to work to make the tough changes, but they couldn't do it politically until Lansing "put the gun to their head". Lastly, look at Kenyatta and Watson. Wow, you can really see their absurd and humorous struggle to stay relevant. They were 8th and 9th place in an at-large election where the many other reform-minded councilmembers all had their votes split between them.

JoAnn Watson would be off the council had she gotten .8% fewer votes. I can't see them both surviving in a head-to-head election with anyone.

So I don't agree that full bankruptcy is the needed medicine, but even if we were to examine that as our prime option...isn't a managed bankruptcy going to be quicker and easier than walking off the cliff of Chapter 9? Look at Lehman Brothers...it's been 3 years and they're STILL not done yet. Now try it in an elected government...constitutional challenges and due process at every single step...the endless marches and rallies distracting us from actually getting to work...

I was highly in favor of the EM a month ago, but now I think the consent agreement is the most pragmatic way of accomplishing the same ends. We'll just have to see.

Rhetoric aside, a good consent agreement is a very healthy and positive step. I do hope it is enough to remove bad practices from the City. My fear is that it is not enough.
.
When I heard the objection it was about 'not enough State money'. I had missed that this was 'capital injection'. That suggests that this is a loan of capital, injected to allow the city to survive financially until it can be self-supporting -- including paying off loans. That's quite reasonable. And the State should support the capital needs of the City. In fact, investment in capital projects is what will allow the City to become self-sufficient -- so long as you invest in the right things.

I do wish the best for the City.

[coracle]

I'm disappointed in Governor Snyder. He kicked the can down the road instead of fixing the problem. He blinked. Those that want to maintain Black Supremacy of the city or burn it down won the day. Unfortunately the eventual fall will be that much greater.