Hamtramck Requests Bankruptcy Protection

[EastSider]

When Schimmel took over in Ecorse, I received calls from friends saying, "I went into work today and I no longer have a job". He closed the DPW, sold the equipment, closed the ice rink and sold it, and closed their library, which I think took about 10 years to reopen. Wayne County Sheriff's patrolled Jefferson Ave, Southfield and Outer Drive. City hall was put up for sale, though I don't believe it ever sold. There was talk of merging with River Rouge and Detroit. No one was willing to merge with Ecorse. We all know why. So, don't expect any takers for a merger, unless they're in worse shape than Hamtramck, and even then.........

Louis Schimmel was the EFM for Hamtramck, too, and his actions in Hamtramck mirror those in Ecorse. He downsized the DPW, sold the building and made a lot of positive changes, although he didn't chase the graft at all. When he left, he warned that Hamtramck would struggle again if the costs for pension, police and fire weren't brought under control.

[Left_For_Texas]

[QUOTE=Detroitnerd;199195
...2) American Axle shifted production to Mexico.../QUOTE]

That says a lot about Detroit [[and the U.S.) if manufacturing is being moved to a country enduring what amounts to a civil [[drug) war.

[1KielsonDrive]

Not to mention that Hamtramck traffic officers have been writing $60,000 worth of tickets a month to pay for their staffing over there. Anybody seen the Monday morning kangaroo court in Hamtramck with people lined up down the hall for a left turn on green?

That's pretty much true of any city nowadays. Try Farmington, River Rouge, Allen Park, etc, etc. They're all subsidizing their budgets with traffic traps. It isn't new either, but is certainly indicative of budget cuts and downsizing of governments. You have all these people saying 'cut taxes, cut taxes'. So you save a few bucks in taxes and pay ten times as much back in fees and fines. It's the old bait and switch. I was with a judge friend recently. We left his courtroom for lunch. As I pulled on to the main thoroughfare, which I've driven all of my life, he grabbed my arm and said, 'slow down, the speed limit is 25 here'. I said, 'since when?' He said, 'It was recently adjusted' and looked at me. I got the idea. He said he was having a dispute with the PD about it. It requires some work and tact to resolve a dispute with the cops you work for and with.

[trotwood]

I don't mean to highjack the thread but I've a question.
A friend told me about Hamtramck's request before I saw it on the news. He implied that the bankruptcy request meant the city would have to go back into receivership. From the interview I saw with Hamtramck's city manager I didn't get the impression that receivership was a requirement for the city to be allowed bankruptcy status.
I don't know much about it so can someone tell me if that's true or not?If the city files&is granted bankruptcy do they automatically go into receivership?
Thanks.

[RickBeall]

1KielsonDrive wrote:

>>If Hamtramck goes into receivership, look for our newly elected leaders in Lansing to attempt privatization/merger/consolidation of everything possible, including police, fire, municipal services, schools.............

Let's hope they don't merge/consolidate our bars. That's the best thing we have.

[woodwardboy]

I don't mean to highjack the thread but I've a question.
A friend told me about Hamtramck's request before I saw it on the news. He implied that the bankruptcy request meant the city would have to go back into receivership. From the interview I saw with Hamtramck's city manager I didn't get the impression that receivership was a requirement for the city to be allowed bankruptcy status.
I don't know much about it so can someone tell me if that's true or not?If the city files&is granted bankruptcy do they automatically go into receivership?
Thanks.

It is ultimately up to the Governor on what course to proceed. She could appoint a financial manager, put Hamtramck in state receivership, or allow Hamtramck to file bankruptcy. However, it is likely Hamtramck will receive a financial manager to look over its books with a second look. If Hamtramck can not pay for basic city services such as fire/police, the state would place Hamtramck into receivership.

[woodwardboy]

I highly doubt any Governor, either Democratic or Republican will ever allow any Michigan city to declare bankruptcy. The number one reason is their own butts are on the line. No elected leader will ever cut their own pensions or their friends/family pensions. Mike Bouchard has as much to loose in bankruptcy as does Hansen Clarke. Every local police officer/chief, firefighter and even the teachers are watching how this saga in Hamtramck plays out.

[Novine]

The pensions aren't going anywhere no matter how many times you say otherwise.

[woodwardboy]

The pensions aren't going anywhere no matter how many times you say otherwise.

Probably not... but raising taxes isnt a solution either.
Any new ideas on revenue is what is needed besides cuts.

[EastSider]

It is ultimately up to the Governor on what course to proceed. She could appoint a financial manager, put Hamtramck in state receivership, or allow Hamtramck to file bankruptcy. However, it is likely Hamtramck will receive a financial manager to look over its books with a second look. If Hamtramck can not pay for basic city services such as fire/police, the state would place Hamtramck into receivership.

There's no such thing as "receivership" for municipalities under Michigan law.

http://crcmich.org/rss/financialemergencies2010.html

Receivership is a form of corporate bankruptcy in which the court appoints a receiver to run the company and recoup as much of the unpaid loans as possible, by liquidation if necessary. It should not be confused with a municipal bankruptcy. Under municipal bankruptcy, no receiver is appointed: the local government develops a plan for adjusting its debts and the court approves or disapproves that plan. The court does appoint a trustee who appoints a creditors committee, but the trustee does not oversee the financial operations of the municipality. The local government itself implements the plan of adjustment under the oversight of the court.

[woodwardboy]

There's no such thing as "receivership" for municipalities under Michigan law.

http://crcmich.org/rss/financialemergencies2010.html

so Ecorse was in what then??

Deficit-ridden cities that don't dare declare bankruptcy can follow another route to recovery: operating under a court-appointed receiver.
Unlike bankruptcy with its federal code, receivership works under state laws. Forty-eight states have laws providing for municipal receivership in some form, according to James E. Spiotto, a bankruptcy expert at the Chicago-based law firm of Chapman and Cutler. Some states provide for receivership of municipal utilities, others for "virtually any type of municipality," Mr. Spiotto said.
But while a cash-starved city could seek to enter bankruptcy court to re-organize, it would probably not request the imposition of a receiver, and surrender the reins of government.

[Blarf]

If Hamtramck owed money in the form of Student Loans, it wouldn't be able to file for bankruptcy. Not a bad deal they have.

[Wesley Mouch]

I highly doubt any Governor, either Democratic or Republican will ever allow any Michigan city to declare bankruptcy. The number one reason is their own butts are on the line. No elected leader will ever cut their own pensions or their friends/family pensions. Mike Bouchard has as much to loose in bankruptcy as does Hansen Clarke. Every local police officer/chief, firefighter and even the teachers are watching how this saga in Hamtramck plays out.

Most true.

This is the structural defect in our government.

Promises made in past by long-gone officials/voters to be paid in future [[read 'now').

Was easier in past to just move to the 'burbs where premium public services and pay in the past were funded by us today.

[EastSider]

so Ecorse was in what then??

Deficit-ridden cities that don't dare declare bankruptcy can follow another route to recovery: operating under a court-appointed receiver.
Unlike bankruptcy with its federal code, receivership works under state laws. Forty-eight states have laws providing for municipal receivership in some form, according to James E. Spiotto, a bankruptcy expert at the Chicago-based law firm of Chapman and Cutler. Some states provide for receivership of municipal utilities, others for "virtually any type of municipality," Mr. Spiotto said.
But while a cash-starved city could seek to enter bankruptcy court to re-organize, it would probably not request the imposition of a receiver, and surrender the reins of government.

Schimmel ran Ecorse prior to PA 72 of 1990. In fact, that law was a result of the action in Ecorse. It was crafted to enhance options short of an actual receiver being appointed.

Regardless of what some out of town alleged expert says, the Citizen's Research Council has put together a report that lays out the definitions very clearly.

A receiver is appointed by a bankruptcy court. Under federal law, municipal bankruptcies do not get a receiver appointed; the existing municipal government develops the plan which the bankruptcy judge approves.

[trotwood]

It is ultimately up to the Governor on what course to proceed. She could appoint a financial manager, put Hamtramck in state receivership, or allow Hamtramck to file bankruptcy. However, it is likely Hamtramck will receive a financial manager to look over its books with a second look. If Hamtramck can not pay for basic city services such as fire/police, the state would place Hamtramck into receivership.

Thanks for the answer

[ddaydetroit]

I can already see no Labor day fest next year

[BrushStart]

I can already see no Labor day fest next year

"I'm going to kick you punks off campus! No more fun of any kind!" - Dean Wormer

I'm drunk enough to go the bar now. Good Evening DYes.

[woodwardboy]

Solutions? New ideas?
or is more borrowing the only answer ?

[skyl4rk]

higher taxes

you're welcome

[EastSider]

Solutions?

The only long-term solution to the expense side is a complete reworking of contracts, something possible only through bankruptcy.

[piczka]

Jeszcze Polska nie zginela!!!

[EastSider]

Piczka, what does the Polish national anthem have to do with Hamtramck's inability to live within its means?

[Hypestyles]

If granholm stalls, what would happen under Snyder?

[EastSider]

From yesterday's Gongwer News Service:

GILMARTIN: CITIES NEED TOOLS TO AVOID SERVICE CUTS, BANKRUPTCY


There aren't any other communities considering bankruptcy as Hamtramck did last week, but there are plenty that have cut services to avoid reaching that point, Dan Gilmartin, executive director of the Michigan Municipal League, said in an interview.
Mr. Gilmartin said he hoped the incoming Legislature and Snyder administration would be open to the calls for additional resources for local governments.


Hamtramck's fiscal hole, a resulting request to file bankruptcy, was the result of circumstances peculiar to that community, Mr. Gilmartin said. But other cities and villages throughout the state have cut emergency services, ended services and closed parks as a way to keep their budgets balanced.


"There's a number of communities around state that are in difficult straits," he said.

Among the resources those communities need is funds, Mr. Gilmartin said, particularly given the cuts to revenue sharing in recent years.


"The state has basically been balancing its budget for the last decade on the backs of locals," he said. "That exacerbated the problem from the economy."


And he said the cuts were particularly troublesome because "revenue sharing" is a misnomer. The funds were intended to replace taxing authority that was taken from local governments.


"It's not really a sharing situation; it's a partnership," he said. "That was a partnership that worked for decades, but when the state ran into its own problems, it hijacked the funds that came to locals."


But he said funding is not the sole need for local units. Many locals have reached the end of what they are able to do to cut costs because, while legislators have called for consolidation of services, state law inhibits it, he said.


"If the state would allow for local units to do more in terms of consolidating services without holdups, we would be better off," he said.


In addition to simply making it easier for communities to join together in offering services, Mr. Gilmartin said it would also help to have the revenue follow the programs. "People talk about the need for more regionalism and yet there's not regional funding streams," he said.


That approach would work particularly well for roads and other infrastructure, he said.


He said those aids to local governments are essential to the overall health of the state as well. "I'd like to see somebody understand that economics aren't going to turn around until we have places people want to come to in the state," he said.


Much of the emerging economy locates where people want to live, not where production can be most effective, he said. But cities are cutting services and programs that make them attractive.


For those cities that do still end up in the financial hole, Mr. Gilmartin said the state's emergency financial management system reacts too slowly. "That's something that happens way late in the game," he said.


Communities instead need some options that would allow them to react to budget shortfalls rather than having to wait until they are in deficit.


The request for the changes should see broad support because fiscal problems are hitting a broad swath of communities. "It's not just core cities; it's extending to suburbs," he said. "They are not able to provide the levels of services that quite frankly will make us competitive."


But he said he had some hope for the New Year. "We're cautiously optimistic that we've got a group that's going to listen to us in January," he said.

Not sure if it's crap journalism or if Mr. Gilmartin is an idiot, but I'm still trying to figure out what this means: "Communities instead need some options that would allow them to react to budget shortfalls rather than having to wait until they are in deficit."


Aside from that mystery, there's some good points in here, especially the need to change the state laws in regard to local municipalities sharing services.

[iheartthed]

State denies Hamtramck request to file bankruptcy:

Hamtramck officials are still considering four loan options after meeting with current state Treasury officials Monday, as well as future state Treasurer Andy Dillon.

"On the one hand, the meeting was productive because there was a lot of listening on both sides and clarifying positions, but the end result is the current administration made it clear that they won't allow us to declare bankruptcy," Hamtramck City Manager Bill Cooper said.
The meeting came days after the legal counsel to Gov. Jennifer Granholm informed city officials that she has no power under Michigan law to issue an executive order granting the city permission to file for bankruptcy.


Read more: Hamtramck can't declare bankruptcy, state says | freep.com | Detroit Free Press http://www.freep.com/article/2010120...#ixzz17HSQ2lFu