Detroit's Debts, Derivatives, Swaps and Safe Harbors

[Eber Brock Ward]

Your math only highlights what some people knew from the get-go which is that the debt numbers being thrown around town were overhyped and that most of the pain is going to be inflicted on pensioners and employees..

Incorrect. The debt number was pegged at $14.108 Billion as long ago as June, 2010 [[http://www.crcmich.org/PUBLICAT/2010s/2011/rpt373.pdf <-- see page 7 of the PDF).

The city doesn't even have to spin off DWSD to be rid of the debt, it was never an obligation of the city in the first place.

Incorrect. Water bonds are issued by the "City of Detroit, Michigan." Here's an example deal from a few years ago: http://emma.msrb.org/ER546579-ER423371-ER825503.pdf

It's only included to allow Orr and Snyder to pump up the debt numbers.

Also incorrect. See the answer above about $14.108 Billion a few years ago.

That's not to say that unloading that debt isn't a good thing for the city. It is.

Agreed.

But a good chunk of that debt was already being paid off with existing debt millages. Getting those off the books won't add a dime to the city's ability to put more dollars into services for residents.

This, too, is incorrect. Interest alone on long-term GO [[non-DWSD) debt was $129,097,503 per year for debt that wasn't deferred by refunding or otherwise, per our last CAFR, and the ~9 mills to support unlimited tax debt yielded $69,141,680 [[page 47 of CAFR) [[http://www.detroitmi.gov/Portals/0/d...Statements.pdf). That means that the millage was short about $60 million dollars! And since we didn't default on those obligations until recently, that means that we had to make up that $60 million somewhere, and the answer is that it was being taken from the city's general fund in order to pay the bondholders.

I don't know what you think, but I think $60 million could go a long way toward providing the residents with services, if it were back in the general fund instead of being spent on bond interest.

I've seen you post here a long time and know that your heart is good, but Novine please don't believe the people that would lie to you and say "it's not that bad," because the proof is in the numbers that date from before Orr and even before Bing.