"Financial Armageddon" coming to Wayne County?

**brizee** · February-06-15, 07:07 AM

Looks like the new admin is going to be playing pretty hardball with Dan Gilbert.

http://www.detroitnews.com/story/new...port/22908741/

**Shai_Hulud** · February-06-15, 09:41 AM

Even if Dan doubled the offer for the jail, and paid cash before he could take possession of the buildings I don't see how it would accomplish anything. 100 million would shore them up for probably a year and they would still have no jail. I imagine state intervention is on the way sooner or later.

DetroitBoy · February-06-15, 11:31 AM

Gilbert and his team are very astute. By getting into this matter early, they know they can shape the county efforts to resolve the financial crisis. He knows that one of the primary ways the county will recover is by shedding assets. So it's a smart move to go in and offer to buy the not completed [[and will never be completed) jail. In additon, he wants to rid the downtown area of any locations of incarceration[[what visitors want to see this and be reminded we are the murder capitol?) and related buildings.

His team went in with an initial offer close to the amount of their shortfall to gain interest in his plan and threw in the other buildings he wants as well knowing he can come back in with a higher offer for the entire deal. The county doesn't have many options or the luxury of time on their side. Sure, they can go to the State but they are struggling with their own financial problems. Unless there is some other private company coming forward with offers, Gilbert is in the driver's seat on this one. The county would be smart to look at this seriously as a way of speeding up the resolution of their crisis. Time is money and the longer they procrastinate the more expensive the resolution will be.

**jackie5275** · February-06-15, 02:01 PM

Originally Posted by DetroitBoy

Gilbert and his team are very astute. By getting into this matter early, they know they can shape the county efforts to resolve the financial crisis. He knows that one of the primary ways the county will recover is by shedding assets. So it's a smart move to go in and offer to buy the not completed [[and will never be completed) jail. In additon, he wants to rid the downtown area of any locations of incarceration[[what visitors want to see this and be reminded we are the murder capitol?) and related buildings.

His team went in with an initial offer close to the amount of their shortfall to gain interest in his plan and threw in the other buildings he wants as well knowing he can come back in with a higher offer for the entire deal. The county doesn't have many options or the luxury of time on their side. Sure, they can go to the State but they are struggling with their own financial problems. Unless there is some other private company coming forward with offers, Gilbert is in the driver's seat on this one. The county would be smart to look at this seriously as a way of speeding up the resolution of their crisis. Time is money and the longer they procrastinate the more expensive the resolution will be.

I don't think Evans is in any hurry to do any deal with Gilbert. He doesn't even seem as enthralled with him as Ficano did. Evans is right. I've also said before in other threads that $50 million is not enough for all those properties. Additionally, selling anything to Gilbert or anyone else will be a one-time quick fix just the same as last year when Ray Wojtowicz bailed out Ficano with $100 million from the delinquent tax fund. You can't look to one time fixes to solve your problems long term. Evans is more interested in fixing the structual deficit in the County to prevent anymore deficits. I see the incomplete jail remaining that way for the next 3-5 years.

DetroitBoy · February-06-15, 03:04 PM

No, what I said was that Evans and his crew need to move quickly to resolve the financial crisis and making the deal with Dan Gilbert can help expedite that process.

As bloated and bureaucratic county governments go, Wayne County is probably one of the worst. You can't fix structural debt without eliminating liabilities on a balance sheet and that means cooresponding assets have to be shed to do that. What other sources of income do they have? Who would buy bonds from a county that is broke no matter what the promised rate of return? And what is the positive outcome of letting the fiasco of a failed jail project sit there decaying for 3- 5 additional years? Will that help with the recovery of the largest city in the county by remaining an eyesore let alone the additional cost of holding on to it plus operating the facilities that it was built to replace?

The County leadership needs to grasp the concept that pouring more money into a failed project based on the fact that they already misspent millions, doesn't make any sense. There is no way to recover a sunk cost. This project has most likely contributed to the financial "armageddon' they announced.

There aren't a lot of white knights out there willing to write a check for buildings that will be sold for pennies on the dollar if they went though formal bankruptcy proceedings. But like everything else in Wayne county, they will jack around with it and argue and have meetings and go in a circle while the ship continues to sink. Hopefully, they won't take the Detroit recovery down with them.

**Danny** · February-06-15, 03:49 PM

Blame it of Ficano for this mess. Now Snyder is thinking about having a consent team take over Wayne County Gov't. L.B. Patterson is laughing at Evans right now.

**Gistok** · February-06-15, 03:55 PM

.... yes but this isn't JUST about building [[or not building) a new county jail.... Gilbert wants the Murphy Hall of Justice [[courthouse) as well. What does the county use to replace it if they're in financial straits? $50 million is not going to build a new courthouse. As part of that $50 million offer, Gilbert also wants the Juvenile Justice Center... [[just north of Greektown Hotel/Parking Structure). That sprawling building cost $36 million to build not more than 10 years ago.

Also, I don't think that the sight of the jails is hurting tourist trade... those buildings have been in the Greektown area for decades.

**313WX** · February-06-15, 05:20 PM

Originally Posted by DetroitBoy

No, what I said was that Evans and his crew need to move quickly to resolve the financial crisis and making the deal with Dan Gilbert can help expedite that process.

As bloated and bureaucratic county governments go, Wayne County is probably one of the worst. You can't fix structural debt without eliminating liabilities on a balance sheet and that means cooresponding assets have to be shed to do that. What other sources of income do they have? Who would buy bonds from a county that is broke no matter what the promised rate of return? And what is the positive outcome of letting the fiasco of a failed jail project sit there decaying for 3- 5 additional years? Will that help with the recovery of the largest city in the county by remaining an eyesore let alone the additional cost of holding on to it plus operating the facilities that it was built to replace?

The County leadership needs to grasp the concept that pouring more money into a failed project based on the fact that they already misspent millions, doesn't make any sense. There is no way to recover a sunk cost. This project has most likely contributed to the financial "armageddon' they announced.

There aren't a lot of white knights out there willing to write a check for buildings that will be sold for pennies on the dollar if they went though formal bankruptcy proceedings. But like everything else in Wayne county, they will jack around with it and argue and have meetings and go in a circle while the ship continues to sink. Hopefully, they won't take the Detroit recovery down with them.

If anything, it was Detroit alone that brought Wayne County down [[via its 60 years and counting bleeding of taxpaying individuals and businesses to Oakland/MAcomb Counties)...

**Hypestyles** · February-06-15, 05:54 PM

Let the Ficanogate hearings begin!

bring it on. Let wayne county suburbanites feel the pinch like we Detroit residents are feeling it.

DetroitBoy · February-06-15, 08:01 PM

Originally Posted by Gistok

.... yes but this isn't JUST about building [[or not building) a new county jail.... Gilbert wants the Murphy Hall of Justice [[courthouse) as well. What does the county use to replace it if they're in financial straits? $50 million is not going to build a new courthouse. As part of that $50 million offer, Gilbert also wants the Juvenile Justice Center... [[just north of Greektown Hotel/Parking Structure). That sprawling building cost $36 million to build not more than 10 years ago.

Also, I don't think that the sight of the jails is hurting tourist trade... those buildings have been in the Greektown area for decades.

I understand what you are saying but the County is broke. They are going to have to net down on assets in order to emerge from this crisis. There are multiple court locations in Detroit, which are probably not optimal, but there is going to have to be major consolidation and changes to all aspects of County operations.

We're building a new Detroit which is the linchpin for stabilizing the region, and ultimately, the State. Everything should be on the table for consideration. After years of deprivation, there is finally momentum in a city which was written off by just about everyone in the country. Are people willing to slow that momentum because we are arguing over changing locations for county government functions including an eye sore of an unfinished JAIL near the center of flourishing downtown?

Gilbert doesn't want to showcase buildings related to the adminstration of the crime industry in Detroit. He sees the city from the eyes of a prospective visitor and investor. In order to attract these people, we can't have jails and courts and juvenile detention centers as prominent landmarks which serve as constant reminders of the crime problems in the city.

**Danny** · February-06-15, 09:03 PM

Meanwhile at White Detroit [[I mean Oakland County) , Mayor [[ I mean Oakland County Exec.) L.B. Patterson [[ I mean a white version of Coleman Young) addresses his people that they will get a tax breaks and more refund money is coming back to their homes.

And he is saying, "I wonder how the poor black folks and hillbillies in Wayne County are doing."

What a nut he is!

**mwilbert** · February-07-15, 02:49 AM

Originally Posted by DetroitBoy

I understand what you are saying but the County is broke. They are going to have to net down on assets in order to emerge from this crisis. There are multiple court locations in Detroit, which are probably not optimal, but there is going to have to be major consolidation and changes to all aspects of County operations.

We're building a new Detroit which is the linchpin for stabilizing the region, and ultimately, the State. Everything should be on the table for consideration. After years of deprivation, there is finally momentum in a city which was written off by just about everyone in the country. Are people willing to slow that momentum because we are arguing over changing locations for county government functions including an eye sore of an unfinished JAIL near the center of flourishing downtown?

Gilbert doesn't want to showcase buildings related to the adminstration of the crime industry in Detroit. He sees the city from the eyes of a prospective visitor and investor. In order to attract these people, we can't have jails and courts and juvenile detention centers as prominent landmarks which serve as constant reminders of the crime problems in the city.

This doesn't seem like an adequate response to the point. Selling a non-functional jail site at a loss can be viewed as cutting one's losses or rationalizing assets and is the kind of thing one might sensibly do in a financial pinch. Selling things you actually need [[like a courthouse) for less than what it would cost you to replace is not.

This is true whether or not you think that having criminal justice facilities downtown is a problem, which I guess is arguable, although it seems a very common practice, and provides jobs downtown. It isn't as if there is a shortage of low-value space nearby. If there is someday, perhaps land values will have risen to the point that selling the criminal justice sites would raise enough money to make putting them someplace else worthwhile.

DetroitBoy · February-07-15, 08:47 AM

Originally Posted by mwilbert

This doesn't seem like an adequate response to the point. Selling a non-functional jail site at a loss can be viewed as cutting one's losses or rationalizing assets and is the kind of thing one might sensibly do in a financial pinch. Selling things you actually need [[like a courthouse) for less than what it would cost you to replace is not.

This is true whether or not you think that having criminal justice facilities downtown is a problem, which I guess is arguable, although it seems a very common practice, and provides jobs downtown. It isn't as if there is a shortage of low-value space nearby. If there is someday, perhaps land values will have risen to the point that selling the criminal justice sites would raise enough money to make putting them someplace else worthwhile.

What's particularly aggravating about this situation is the 7 and Mound facility would have been perfectly adequate to upgrade and use as the primary jail location. Not only would moving it there help remove the crime industry from downtown, it would provide jobs to an otherwise marginal neighborhood. There is no neighborhood impact from utilizing this location. It's already there. I bristle at the memory of that County commissioners meeting where they announced they would not use the Mound site because they had spent too much money already building the downtown facility. That was the tipping point where people should have been picketing and calling for removal of these idiots running the County.

**lpg** · February-07-15, 10:02 AM

I live in Lincoln Park. We have a Emergency Manager. Barely functioning city services How are we not feeling the pinch ? Ficano needs to be investigated for sure

**Wesley Mouch** · February-07-15, 12:31 PM

Originally Posted by 313WX

If anything, it was Detroit alone that brought Wayne County down [[via its 60 years and counting bleeding of taxpaying individuals and businesses to Oakland/MAcomb Counties)...

And I thought white fled FROM Detroit TO Wayne County, and that was the problem.

**jackie5275** · February-09-15, 10:52 AM

Originally Posted by DetroitBoy

What's particularly aggravating about this situation is the 7 and Mound facility would have been perfectly adequate to upgrade and use as the primary jail location. Not only would moving it there help remove the crime industry from downtown, it would provide jobs to an otherwise marginal neighborhood. There is no neighborhood impact from utilizing this location. It's already there. I bristle at the memory of that County commissioners meeting where they announced they would not use the Mound site because they had spent too much money already building the downtown facility. That was the tipping point where people should have been picketing and calling for removal of these idiots running the County.

Have you seen that facility? Apparently not because you think it's adequate to upgrade. That place is stripped, gutted by urban miners. It's as if you would be starting from scratch to upgrade that place. You're going to spend the same amount of money there as downtown.

Please stop drinking Gilbert's kool-aid. There has been law enforcment facilities in that area since the 1840s. No one complained about them being an "eye-sore" and detrimental to development until Gilbert set his eyes on that bunch of property he wants for a song.

Wayne County's financial problems sources are multiple. The incomplete jail is just one of them. The Pinnacle Race Track & Aerotropolis that sits empty, the purchase of the Guardian Building, the generous pensions to appointees & Commissioners, etc are products of the Ficano administration. Does Evans have the ability to clean up these messes? Yeah, I think so, because he did so after following Ficano at the Sheriff's Office back in 2003.

Wayne County will have to get out of this on their own. Gilbert is not going to be the savior here because he doesn't want to cough up enough cash. I don't see Evans having a fire sale of County assets, particularly anything in the Greektown area. County employees & retirees will probably take the biggest hit on this one.

**jackie5275** · February-09-15, 10:55 AM

Originally Posted by lpg

I live in Lincoln Park. We have a Emergency Manager. Barely functioning city services How are we not feeling the pinch ? Ficano needs to be investigated for sure

I feel bad for you. We left LP about 12 yrs ago. The body found at Council Point Park was the last straw for us. I've seen it steadily declining since when visiting our old neighbors or going to Calder's.

**Khorasaurus** · February-09-15, 10:59 AM

Originally Posted by jackie5275

Wayne County will have to get out of this on their own. Gilbert is not going to be the savior here because he doesn't want to cough up enough cash. I don't see Evans having a fire sale of County assets, particularly anything in the Greektown area. County employees & retirees will probably take the biggest hit on this one.

Sure, but the half-built jail isn't an asset. It costs the County money every day and produces no revenue or service or use at all. Sell it to Gilbert and cut your losses. I can't believe they think there's any other option.

**bailey** · February-09-15, 11:07 AM

Originally Posted by Khorasaurus

Sure, but the half-built jail isn't an asset. It costs the County money every day and produces no revenue or service or use at all. Sell it to Gilbert and cut your losses. I can't believe they think there's any other option.

Well, to jackie's point though, Gilbert wants to buy the whole complex which isn't for sale. It's not JUST getting rid of the fail jail.... if Gilbert's offer were to be accepted, that means relocating Frank Murphy, the current holding facility, the juvenile courts AND fail jail up to Mound, which would basically require an entire new build. That doesn't solve the problem as it isn't "cutting any losses".

**Khorasaurus** · February-09-15, 11:14 AM

Originally Posted by bailey

Well, to jackie's point though, Gilbert wants to buy the whole complex which isn't for sale. It's not JUST getting rid of the fail jail.... if Gilbert's offer were to be accepted, that means relocating Frank Murphy, the current holding facility, the juvenile courts AND fail jail up to Mound, which would basically require an entire new build. That doesn't solve the problem as it isn't "cutting any losses".

This article from yesterday says Gilbert offered $20 million for just the Fail Jail site: http://www.freep.com/story/news/loca...unty/23091463/

His original offer was $50 million for everything. While I think it would be good for the city to have the existing jails removed and the criminal courts re-located somewhere else downtown while Gilbert builds "North Greektown" or whatever, I certainly understand why that didn't work for Wayne County.

But $20 million to take a liability off their hands and put it back on the tax rolls seems like a no-brainer. They aren't going to finish the Fail Jail, so the site may as well be redeveloped into something else.

**bailey** · February-09-15, 11:21 AM

Originally Posted by Khorasaurus

This article from yesterday says Gilbert offered $20 million for just the Fail Jail site: http://www.freep.com/story/news/loca...unty/23091463/

His original offer was $50 million for everything. While I think it would be good for the city to have the existing jails removed and the criminal courts re-located somewhere else downtown while Gilbert builds "North Greektown" or whatever, I certainly understand why that didn't work for Wayne County.

But $20 million to take a liability off their hands and put it back on the tax rolls seems like a no-brainer. They aren't going to finish the Fail Jail, so the site may as well be redeveloped into something else.

My bad... I didn't see the new article. IIRC it was 20 for the jail and 30 for the rest? Either way, I think Evans still has a point about having 130 mil into the ground and no way to get it out. 20 million releases them from the monthly cost of the fail jail site, but they'll still be servicing the debt and still needing a jail.

**ABetterDetroit** · February-09-15, 11:33 AM

Originally Posted by bailey

My bad... I didn't see the new article. IIRC it was 20 for the jail and 30 for the rest? Either way, I think Evans still has a point about having 130 mil into the ground and no way to get it out. 20 million releases them from the monthly cost of the fail jail site, but they'll still be servicing the debt and still needing a jail.

I agree with Bailey, cut your losses and move on. Get the property on the tax rolls ASAP. Rising property values are Wayne county's best way out of this mess and Gilbert is committed to that goal as should the county be as well.

**Khorasaurus** · February-09-15, 11:39 AM

Originally Posted by bailey

My bad... I didn't see the new article. IIRC it was 20 for the jail and 30 for the rest? Either way, I think Evans still has a point about having 130 mil into the ground and no way to get it out. 20 million releases them from the monthly cost of the fail jail site, but they'll still be servicing the debt and still needing a jail.

Completely agree that it doesn't fully solve the problem. But there is no solution that fully solves the problem. That's why people are in prison for screwing this up so badly. Assuming there's no feasible scenario where the Fail Jail gets completed, every option they have leaves them with debt and no new jail.

Getting rid of the monthly costs and putting $20 million into their pocket is at least a step in the right direction. Plus the property will then produce tax revenue, although I realize that isn't much because the DDA will end up with a big chunk if/when Gilbert increases the value by developing it. But still now you've taken $130 million down to $110 million and instead of spending money every month you get additional tax revenue.

**Scottathew** · February-09-15, 11:43 AM

The thing that really pisses me off is that building a jail isn't something new. Why the hell could they not get it done.

Huge cost overruns and delays make more sense when you doing something unique and not done before, like Boston's big-dig, or a subway tunnel underneath a city of 8 million people.

But a jail? Really? Bah.

**bailey** · February-09-15, 11:49 AM

Originally Posted by Khorasaurus

Completely agree that it doesn't fully solve the problem. But there is no solution that fully solves the problem. That's why people are in prison for screwing this up so badly. Assuming there's no feasible scenario where the Fail Jail gets completed, every option they have leaves them with debt and no new jail.

Getting rid of the monthly costs and putting $20 million into their pocket is at least a step in the right direction. Plus the property will then produce tax revenue, although I realize that isn't much because the DDA will end up with a big chunk if/when Gilbert increases the value by developing it. But still now you've taken $130 million down to $110 million and instead of spending money every month you get additional tax revenue.

Sure, perhaps this is just Evans negotiating in the press. I really can't disagree with him when he says that 20 million [[which only buys what..? 14 months of costs savings?) is not enough to make sense for the county to act right now though.