State to Detroit: Drop consent suit or lose funds...

[corktownyuppie]

Someone can correct me FACTUALLY on this, but I believe that the State is both constitutionally & statutorily bound to give that revenue sharing money to Detroit as long as that revenue is in the State's coffers which is the only reason why any bondholders are willing to take the risk of lending us their money. Hopefully, an expert on municipal bonding can weigh in. I don't mean to split hairs. My point was just that this isnt Detroit welfare or some special Detroit-only favor. Since the Govermor didn't think it wise to GIVE Detroit any direct financial assistance, the State encouraged the City to go to the bond market AGAIN to BORROW ITS WAY OUT OF DEBT. I thought that's what got us here in the first place, Mr. Governor? Hmmm...

Wait, are you implying that the Governor is trying to sabotage the city by encouraging them to borrow more money? And that if he was really trying to help the city then they would just GIVE Detroit more money?

If so, it's like we're living on two different planets.

[Scottathew]

I think Crittendon is being paid by the state to block the consent agreement. They know if the state can appoint an EM, the state will be able to sell Detroit's jewels to corporations and dissolve the city. Jewels like the Water Authority, transit, electric plant and the Sewer Plant, plus all the property that the City now owns, including the streets. It will all be sold to corporations who will raise the prices and make lots of money. They will give away City-owned land for free to big business so they can make profits off of it. They will bring all kinds of people into Detroit, who will take away the best places from current Detroiters. They will bring in police who violate the rights of criminals. It will be a disaster.

Quick! No one's looking! Let's get all of Detroit's jewels!

Look at all the land we can get our hands on! The crumbling streets, the failing electric infrastructure, the crime-infested neighborhoods! All ours! YES!!!

[townonenorth]

Someone can correct me FACTUALLY on this, but I believe that the State is both constitutionally & statutorily bound to give that revenue sharing money to Detroit as long as that revenue is in the State's coffers which is the only reason why any bondholders are willing to take the risk of lending us their money. Hopefully, an expert on municipal bonding can weigh in. I don't mean to split hairs. My point was just that this isnt Detroit welfare or some special Detroit-only favor. Since the Govermor didn't think it wise to GIVE Detroit any direct financial assistance, the State encouraged the City to go to the bond market AGAIN to BORROW ITS WAY OUT OF DEBT. I thought that's what got us here in the first place, Mr. Governor? Hmmm...

The bond in question is not getting the city out of debt. Its intent WAS to be a stopgap so the city would not run out of money.

[mwilbert]

As soon as I see someone saying that the plan is to sell off the Detroit's jewels to corporate interests, I am suspicious that the person is unfamiliar with gems. When they include "transit" among the jewels, I know they are ensconced in an alternate reality where corporations want to run transit systems because they are profitable.

Alternatively, it seems to me it might have been a joke.

[mam2009]

The only thing I was implying with that factual statement is that it is ironic that the State says that Detroit's problem is a huge mountain of debt and the most creative solution the State could come up with was -- more borrowing.

[mam2009]

The bond in question is not getting the city out of debt. Its intent WAS to be a stopgap so the city would not run out of money.

And now the State is attempting to extort the City again by threatening insolvency because the State didn't do all of its homework when they drafted Public Act 4. Now they want the person responsible for making sure the City follows the law to look the other way. She didn't create this financial mess. She's not in charge of the budget. She's in charge of the law. If everybody else in leadership [[both City & State) was as diligent about doing their job the City might be a lot better off.

I'm sorry. This blatant hypocrisy has made me very cranky.

[mam2009]

Wait, are you implying that the Governor is trying to sabotage the city by encouraging them to borrow more money? And that if he was really trying to help the city then they would just GIVE Detroit more money?

If so, it's like we're living on two different planets.

The only thing I was implying with that factual statement is that it is ironic that the State says that Detroit's problem is a huge mountain of debt and the most creative solution the State could come up with was -- more borrowing.

[corktownyuppie]

The only thing I was implying with that factual statement is that it is ironic that the State says that Detroit's problem is a huge mountain of debt and the most creative solution the State could come up with was -- more borrowing.

Um, that wasn't the only thing they came up with. The State wanted a jointly appointed board of municipal turnaround experts to take financial control in order to start the restructuring process. The "more borrowing" you refer to was put in place in order to keep the lights on and the bill paid while this board started putting together the plan.

So let's see what happened:

[[1) State approved the bonds.
[[2) The board is fully appointed except for city council's appointees.
[[3) The city wants to void the creation of the board.
[[4) The city still wants the money.

Sounds like a solution to me.

[townonenorth]

And now the State is attempting to extort the City again by threatening insolvency because the State didn't do all of its homework when they drafted Public Act 4. Now they want the person responsible for making sure the City follows the law to look the other way. She didn't create this financial mess. She's not in charge of the budget. She's in charge of the law. If everybody else in leadership [[both City & State) was as diligent about doing their job the City might be a lot better off.

I'm sorry. This blatant hypocrisy has made me very cranky.

It's like this. State law supersedes any city law, charter, etc. The state don't give two whits about the ginned up City Charter, they have a state to run. The charter could forbid state takeovers, emergency managers, institute a revolutionary communist government, and mandate free money for all, but state law still reigns supreme.

[JBMcB]

The only thing I was implying with that factual statement is that it is ironic that the State says that Detroit's problem is a huge mountain of debt and the most creative solution the State could come up with was -- more borrowing.

With that much debt, you're pretty much stuck with continued borrowing to pay off your maturing bonds until you get your structural deficit under control.

Also, I think it would be possible for the state to free up capital for Detroit by swapping some of Detroit's high interest debt for lower, state-issued instruments. This would increase borrowing short-term but be much better in the long term.

[mam2009]

It's like this. State law supersedes any city law, charter, etc. The state don't give two whits about the ginned up City Charter, they have a state to run. T he charter could forbid state takeovers, emergency managers, institute a revolutionary communist government, and mandate free money for all, but state law still reigns supreme.

The problem is that Public Act 4, a State law, does not permit a City to violate the portion of the Home Rule Cities Act [[another STATE law) that Ms. Crittendon is seeking a ruling on. Could everybody please let the courts do what they do? Why are people who otherwise know better so eager for this woman to break the law? Hasn't Detroit seen enough lawlessness?!

There is nothing stopping the Financial Advisory Board from meeting. It has a quorum. Get to it! Do the financial business while Ms. Crittendon handles the legal business!

[Novine]

mam2009, did you ever address my point that Ms. Crittendon's legal argument is laughably wrong? If her legal analysis is correct, the conditions that she claims put the state in default existed years ago. The revenue sharing concern didn't arise yesterday. That means that the city's Law Department should have raised that concern then, not now. So what are we to believe? She and the Law Department were incompetent then? Or now? Or both? I'm leaning towards both. If we accept her analysis as valid, that voids every contract between the state and city. Every one. Anyone still think her analysis is correct? Anyone?

[313WX]

It's like this. State law supersedes any city law, charter, etc. The state don't give two whits about the ginned up City Charter, they have a state to run. The charter could forbid state takeovers, emergency managers, institute a revolutionary communist government, and mandate free money for all, but state law still reigns supreme.

So, if the state wanted to dissolve all 100+ municipalities around Detroit tomorrow and merge them with the city, they can legally do it, no questions asked?

[mam2009]

Um, that The "more borrowing" you refer to was put in place in order to keep the lights on and the bill paid while this board started putting together the plan...

...Sounds like a solution to me.

Yeah, that's the same thing Dave Bing said just 2years ago when the City borrowed $300 million on the bond market. But, hey, maybe things will be different now. I think the previous DPS EFM did that too. How much is their accumulated deficit now?

[mam2009]

mam2009, did you ever address my point that Ms. Crittendon's legal argument is laughably wrong? If her legal analysis is correct, the conditions that she claims put the state in default existed years ago. The revenue sharing concern didn't arise yesterday. That means that the city's Law Department should have raised that concern then, not now. So what are we to believe? She and the Law Department were incompetent then? Or now? Or both? I'm leaning towards both. If we accept her analysis as valid, that voids every contract between the state and city. Every one. Anyone still think her analysis is correct? Anyone?

You may very well be right, Novine. So if it turns out to be that simple, it should take no time at all for a judge to make a ruling. Wouldn't it be nice, though, if the State just paid off the little money it actually owes for utilities, parking tickets, etc. & this would be a moot issue?

[townonenorth]

So, if the state wanted to dissolve all 100+ municipalities around Detroit tomorrow and merge them with the city, they can legally do it, no questions asked?

There's a section of State Law that handles that process. You should look it up sometime.

[313WX]

There's a section of State Law that handles that process. You should look it up sometime.

But I thought whatever the state says goes and stinkin' laws don't matter!!! Heaven forbid, there may even be a legal process the state isn't abiding by with Detroit's finances!!!

But anyways, the emergency meeting with the City Council and Mayor Bing will be tomorrow at 8 AM [[channel 22 on Comcast I believe) for those who want to see it.

[corktownyuppie]

Yeah, that's the same thing Dave Bing said just 2years ago when the City borrowed $300 million on the bond market. But, hey, maybe things will be different now. I think the previous DPS EFM did that too. How much is their accumulated deficit now?

I'm not sure what this has to do with the current situation. The state agreed to lend money to the city in exchange for turning over control to a board of municipal turnaround experts.

The city doesn't want answer to the experts. But the city still wants the money. You're ok with this. How do you reconcile this seemingly irrational position?

[Meddle]

Sounds like whats-her-face needs to be fired instead of allowing her to tie things up in court, causing more legal fees and more delays while she sucks up public money for her own salary.

Get the obstructionists out of the way and get on with the process of fixing the mess.

[Novine]

"You may very well be right, Novine. So if it turns out to be that simple, it should take no time at all for a judge to make a ruling. Wouldn't it be nice, though, if the State just paid off the little money it actually owes for utilities, parking tickets, etc. & this would be a moot issue?"

Your answer is that an incompetent law department should be able to drive the city into bankruptcy or into the hands of an EFM over an issue that has no basis in law?

[mam2009]

I'm not sure what this has to do with the current situation. The state agreed to lend money to the city in exchange for turning over control to a board of municipal turnaround experts.

The city doesn't want answer to the experts. But the city still wants the money. You're ok with this. How do you reconcile this seemingly irrational position?

I always respect the thoughtfulness of your points of view, but please stop making the factually incorrect statement that the State loaned the City money. That is not accurate. Even if it were true [[which it ABSOLUTELY is not), it wouldn't change the fact that law must be followed.

The only thing the State gave in exchange for the City signing the consent agreement was the assurance that an EM would not be assigned to the City within 10 days of the day that the consent agreement was signed. At the risk of sounding like a broken record, that sounds like extortion to me especially when you consider that the bond deal was ALREADY in place prior to the consent agreement. There is no legal connection between the consent agreement & the bond deal.

[mam2009]

"You may very well be right, Novine. So if it turns out to be that simple, it should take no time at all for a judge to make a ruling. Wouldn't it be nice, though, if the State just paid off the little money it actually owes for utilities, parking tickets, etc. & this would be a moot issue?"

Your answer is that an incompetent law department should be able to drive the city into bankruptcy or into the hands of an EFM over an issue that has no basis in law?

No, my answer is that you are NOT the judge assigned to adjudicate this matter. I believe that a valid legal question has been raised and that the State may owe the City a little money. If the State paid the money, the legal question would become moot and the consent agreement would still be in place!

[Meddle]

If the State paid the money ....

... it would be squandered as pasts funds have been.

[corktownyuppie]

No, my answer is that you are NOT the judge assigned to adjudicate this matter. I believe that a valid legal question has been raised and that the State may owe the City a little money. If the State paid the money, the legal question would become moot and the consent agreement would still be in place!

I disagree with your notion there being no quid pro quo, although I recognize it's not formal or legal. But let's put that aside for a second.

You raise a very interesting point. If the state wrote the $150MM check in order to allow the City Council agreement to stay in place, then inevitably that $150MM would be subject to the oversight of the financial advisory board. Meaning that the $150MM could be used to finance the capital restructuring necessary.

If I could be assured that the $150MM would never be spent by the City Council and only spent by the Financial Advisory Board's authority, I could back this.

Hm.

[Meddle]

^^ But you can't trust the Clowncil. Once they get the money, they'll find a way to squander it, one way or another. They'll get Legal to distort the law in whatever way necessary.

The only way to make sure they don't waste it is to not let them have it.