Michigan governor clears way for state takeover of Detroit

[jobeterob]

Thomson ReutersMarch 1, 2013 19:30
UPDATE 3-Michigan governor clears way for state takeover of Detroit Facebook
By Steve Neavling

DETROIT, March 1 [[Reuters) - Michigan Governor Rick Snyder cleared the way for a state takeover of Detroit, declaring that the birthplace of the U.S. automotive industry faces a fiscal emergency and that he has identified a top candidate to assume its management.

Friday's declaration by the Republican governor virtually assures that the state of Michigan will assume control of Detroit's books, and eventually decide whether the city should file the largest municipal bankruptcy in U.S. history.

Detroit has faced the steepest population decline of any major American city in recent decades. Once the fifth largest U.S. city and springboard for music icons such as Michael Jackson and Diana Ross, it now ranks 18th in size with about 700,000 people.

"Its time to say we should stop going downhill," Snyder told a forum of residents hand-picked by his office, at a Detroit public television station. "There have been many good people who have had many plans, many attempts to turn this around. They haven't worked," he said.

A report commissioned by Snyder has described what it called "operational dysfunction" in the city government, crushing debt of $14 billion and a current fiscal year budget deficit of $100 million.

Detroit Mayor Dave Bing did not attend the announcement, nor did city council members appear to be in the audience. Earlier on Friday, a majority of the council said they wanted to challenge Snyder's decision but did not decide how to proceed.

While Snyder made his announcement on Wayne State University's campus, a few dozen protesters gathered about two miles away at city hall, clutching signs that read "Snyder, Go Home!" and "This is a takeover!"

The fate of Detroit is being watched closely across the country as many cities and towns are still struggling to recover from the housing bust and the deep recession that followed.

TOP CANDIDATE

Snyder would not identify the top candidate to run Detroit or say whether the person was from Michigan. Some residents and restructuring experts have said he should name an African-American to manage the city, which is 83 percent black.

Referring to the candidate, the Republican governor said, "They have vast experience working on relationships, they have strong financial knowledge, strong legal knowledge and that ability to say how do we build teams and work together," the Republican governor said of the candidate.

Snyder had acknowledged last week that many qualified people did not want the controversial job.

The emergency manager will eventually have strong powers to develop a financial plan, revise or reject city budgets, consolidate departments, reduce or eliminate the salaries of elected officials, sell eligible assets, lay off workers and renegotiate labor contracts.

Reaction in the city ranged from anger to despair and resignation.

Mayor Bing, a former professional basketball player and steel executive, said he did not favor an emergency manager but would try to work with the state of Michigan.

"If, in fact, the appointment of an Emergency Financial Manager both stabilizes the City fiscally and supports our restructuring initiatives which improve the quality of life for our citizens, then I think there is a way for us to work together," he said in a statement.

Bing has complained that part of Detroit's financial crisis stems from cuts in state funds for the city.

Karen Lewis, 49, a manager at a fast food store, reflected the resentment some residents feel at the takeover of the predominantly black and Democratic city by a predominantly white and Republican state government.

"It don't take a genius to know what this is all about," said Lewis, who is black. "They want our money and our land. No one cares about us. And we're the ones who stuck around. Not the white folks."

But Bernard Ragin, 41, said he was tired of living in a city that has seen a collapse of basic services.

"I don't care who fixes Detroit, as long as the street lights work and the police show up on time," he said.

Detroit officials now have 10 days to request a hearing with the governor about his decision. Snyder said the hearing would be held on March 12. The nine-member city council has been preparing to argue that Detroit should not have an emergency manager and could also appeal the decision in state court.

After the hearing, Snyder will either confirm or revoke the declaration of emergency. If he confirms the emergency, as expected, management of Detroit's fiscal affairs would revert to a board composed of three state officials who will be Snyder appointees. The board would formally appoint an emergency manager, although in practice Snyder will make the final decision.

Michigan Democratic Party Chairman Lon Johnson sharply criticized Snyder's decision, calling it a "hostile take-over."

"This overthrow of the democratic process is a deeply disappointing moment in our state's history," Johnson said.

Al Garrett, president of Detroit's biggest union representing municipal employees, said efforts are underway to challenge the decision in court. But he said the case would have to be filed in federal court rather than state court because the Michigan Supreme Court has a Republican majority.

A court challenge of Snyder's decision would not delay the appointment of a manager, a state government official said.

Snyder said that Detroit's creditors should be brought to the table to renegotiate debt terms by possibly delaying or relieving payments.

"This should be part of the strategy that needs to take place," he said.

http://www.globalpost.com/dispatch/news/thomson-reuters/130301/update-3-michigan-governor-clears-way-state-takeover-detroit

[marv2]

Soulful Detroit Clubhouse.......................

[soulster]

The Republican Party: R.I.P.

[skooldem1]

Detroit needs rescue. This is what happens when you elect people like Kilpatrick and Martha Reeves. If the elected officials weren't so corrupt or incompetent, this wouldn't have had to happen.

[marv2]

Detroit needs rescue. This is what happens when you elect people like Kilpatrick and Martha Reeves. If the elected officials weren't so corrupt this wouldn't have had to happen.

Yeah see you don't even know what you are talking about. I am in Detroit typing this right now. Detroit's problems started long before now, they started many decades ago and are probably far too complex for you to grasp if you are going lay the blame at the feet of Kwame Kilpatrick and Ms. Martha Reeves. They came on the local political scene after Detroit was already in fully declining mode~!

[marv2]

Detroit's economic base began retreating from the city in the early 70's and never completely stopped.

[jobeterob]

What might Martha Reeves have ever done that might be called corrupt?

I saw her standing in front of a bunch of posters who were supposedly supporters or something. It seemed to me she was way out of her depth as a politician and had made an error in entering that arena. But I haven't read that she did anything corrupt.

Enlighten please.

[marv2]

What might Martha Reeves have ever done that might be called corrupt?

I saw her standing in front of a bunch of posters who were supposedly supporters or something. It seemed to me she was way out of her depth as a politician and had made an error in entering that arena. But I haven't read that she did anything corrupt.

Enlighten please.

Martha who? That should be the customary response when it comes to dissecting the ills of the City of Detroit. That's right she didn't even play bit role in why the city's problems became what they are today. This is just ridiculously goofy! LOL!

[skooldem1]

Kilpatrick and Martha were just 2 examples. Maybe I should have chose the word incompetent.

[skooldem1]

Kilpatrick was corrupt. Didn't he go to prison? The point is they are electing officials that are not doing what is needed to be done.

[jobeterob]

Michigan to take over Detroit city government
By Poppy Harlow and Chris Isidore @CNNMoney March 1, 2013: 12:51 PM ET

NEW YORK [[CNNMoney)

Michigan Gov. Rick Snyder announced Friday that the state will take over the operations of Detroit's city government due to its long-standing financial problems.

The takeover is short of a formal bankruptcy, but it will include appointing an emergency manager who would have many of the same powers as a bankruptcy judge. It could mean throwing out contracts with public employee unions and vendors that the city can't afford, and could lead to further cutbacks in already depleted city services.





Detroit has 10 days to appeal Snyder's decision that there is a financial emergency in the city. Snyder said he has a "top candidate" for the manager post, but that he won't announce it until after the appeals period has passed.

Snyder, a Republican, insisted the emergency manager is the best way to deal with the problems facing the city's operations.

"The current system has not been working. We have not stopped the decline," he said. "This is time for us not to argue or to blame, but to come together as Detroit, Mich., not Detroit vs. Michigan, and bring all of our resources to bear."

The U.S. auto industry, long associated with the city, has enjoyed a resurgence in the last few years since General Motors [[GM, Fortune 500) and Chrysler Group went into bankruptcy and received federal bailouts. But the auto turnaround has done little to help Detroit's finances. While GM's headquarters are in downtown Detroit and there is still a concentration of auto plants and suppliers in southeastern Michigan, there are relatively few facilities within the city limits.

Related: Best car sales in five years

A week ago, a state review board issued a report saying the city faces a cash shortfall of more than $100 million by June 30, and that long-term liabilities, including unfunded pension liabilities, exceeded $14 billion. Detroit has been borrowing to continue operations and would have fallen about nearly $1 billion short last year if it hadn't issued new debt.

"One of the things that needs to happen is all creditors need to be called to table, asking something from everyone," Snyder said when asked if Detroit would get relief from the debt it owes those who own the city bonds. He said he hoped different payment schedules could be worked out for those who are owed money.

Under Michigan law, the emergency manager is expected to stay in place for at least 18 months. Snyder agreed with a questioner who said that is not enough time to solve the city's problems, but said it should be enough time to implement a plan and put a "structural process" in place.

The review team said that while the mayor and city council deserve credit for some difficult financial reforms, "those reforms are too heavily weighted toward one-time savings and apply only to non-union employees who represent only a small portion of the city's overall wage and benefit burden."

The review team therefore found that an emergency exists in the city "because no satisfactory plan exists to resolve a serious financial problem."

That report set the stage for Snyder to announce the takeover. Snyder has made many decisions unpopular with Democrats in the state, including signing a "right-to-work" strongly opposed by unions. The state takeover of Detroit is very unpopular with many residents in the state's largest city, especially its unions. Neither Mayor Dave Bing nor any member of the city council attended Snyder's announcement Friday, which was made at a town hall meeting where residents had the opportunity to ask questions.

-- CNN's Dana Garrett contributed to this report To top of page
- See more at: http://money.cnn.com/2013/03/01/news/economy/detroit-takeover/index.html?hpt=hp_t2#sthash.G8SzrEHV.dpuf

[marv2]

You need to go back before his Honor, Mayor Coleman A. Young. Research General Motors, Ford Motors and Chryslers decisions impact on the city. Follow that up with major flight to the suburbs and out State for starters. By the time you get to Kwame Kilpatrick you will probably yawn at his name and role in the history of all of this.

[jobeterob]

Yes, incompetent I can see. Whenever I saw her talk about politics, it sounded like a gong show and that she fit right in with the civic government. She should have stayed with her music career but I suppose she was out of money.

[skooldem1]

I am not denying that problems started years ago. The point is, the people that the citizens of Detroit have elected in the last 10 years have not helped the situation. You elect people not so you can complain about the past. You elect people with hope for the FUTURE. To try and fix problems. That has not been done. I don't see what your problem is.

[skooldem1]

I will edit it to say corrupt OR incompetent.

[skooldem1]

Kilpatrick corruption trial jury goes home for weekend, resumes deliberating Monday
March 1, 2013

The jury in ex-Detroit Mayor Kwame Kilpatrick's public corruption trial has gone home for the weekend, wrapping up day nine of deliberations with no verdict. The panel of eight women and four men ended deliberations at about 4:30 p.m. today.

The jury has emerged from behind closed doors only twice in nine days: once to ask for clarity about an extortion count; a second time to ask if an extortion allegation listed in the racketeering count is the same as the extortion crime alleged in a separate count. U.S. District Judge Nancy Edmunds said the alleged conduct involved the same incident, and that the jury has to issue separate verdicts on all counts.

Deliberations will resume at 9 a.m. Monday in U.S. District Court in downtown Detroit.

Technically, the jury has deliberated for eight days and 1.5 hours as deliberations were cut short one day due to a sick juror.

The jury has to issue verdicts on more than 30 counts.

Kilpatrick is facing 30. His contractor friend Bobby Ferguson is facing 11. His father Bernard Kilpatrick is facing four.

All four men are charged with racketeering conspiracy, the most serious crime alleged in the indictment. It carries a maximum penalty of 20 years in prison, as does mail and wire fraud, which Kilpatrick also is charged with.

All three defendants are charged with running a criminal enterprise through the mayor's office to enrich themselves through bid rigging and extortion. They also are charged with using nonprofit funds for personal use.


http://www.freep.com/article/20130301/NEWS0102/130301079/kwame-kilpatrick-public-corruption-trial

[marv2]

I am not denying that problems started years ago. The point is, the people that the citizens of Detroit have elected in the last 10 years have not helped the situation. You elect people not so you can complain about the past. You elect people with hope for the FUTURE. To try and fix problems. That has not been done. I don't see what your problem is.

My problem is when people take the easy way out and blame for instance Kwame Kilpatrick, Pope Benedict XVI, Barack Obama, etc, etc for this World's current problems when it always goes far deeper and further back than today.

I don't like it when people sit back and watch a house fire start and then complain when the firemen arrive and can't put the damn thing out! I was thoroughly digusted with Kwame Kilpatricks behavior. When he was elected I was excited over in New York about the possibilities. Later on, I refused to go to any of his parties after it became clearer of what was up?! Still I could not in good conscience sit here and pretend that his brief tenure and how he ran the city is the cause of it's massive problems today. I do not agree with this asshole of a Governor basically using Marshall Law to take over things.

[motony]

LOL, the stupidity of socialism always makes a fool out of its followers.

[marv2]

I am not denying that problems started years ago. The point is, the people that the citizens of Detroit have elected in the last 10 years have not helped the situation. You elect people not so you can complain about the past. You elect people with hope for the FUTURE. To try and fix problems. That has not been done. I don't see what your problem is.

My problem is, you should tell this to all those folks that voted in those "Tea Party" Republican Congressmen back in 2010. They will vote for those same "do-nothing obstructionist" in 2014.
In the case of Detroit [[as with most all Municipalities), candidates for City Office must reside within the city limits which means that individuals that may have been the best candidates for those positions were ineligible. All you have to do is live on the other side of 8 Mile Rd or any of the Western Suburbs and you are OUT! That leaves the residents of Detroit to pick and choose from whoever is left and interested in running.

[jobeterob]

Sounds like City of Detroit should declare bankruptcy. There are many other bankrupt cities in the USA.

Let the bank run it.

[marv2]

Sounds like City of Detroit should declare bankruptcy. There are many other bankrupt cities in the USA.

Let the bank run it.

the Federal Government may not be too far behind.......

[RossHolloway]

All Americans should be concerned about what is happening all over the state of Michigan with the governor's taking over cities and basically taking away towns people representation. Could you imagine if this was President Obama dissolving some states government? We'd be in the middle of Civil War II right now. I expect a federal court challenge on this overreach. My understanding was that the people of the state of Michigan repealed this law back in Novermber only for the governor and the republican controlled legislature to pass the same law again.

[marv2]

All Americans should be concerned about what is happening all over the state of Michigan with the governor's taking over cities and basically taking away towns people representation. Could you imagine if this was President Obama dissolving some states government? We've be in the middle of Civil War II right now. I expect a federal court challenge on this overreach. My understanding was that the people of the state of Michigan repealed this law back in Novermber only for the governor and the republican controlled legislature to pass the same law again.

I agree! You are exactly right on all points!

[jobeterob]

Two things got the USA in financial distress. One was the cost of the Iraq War. And the second was what was allowed to go on in the mortgage lending market. And Detroit and it's auto manufacturing probably got hit harder than anywhere else.

There is debt everywhere and a recovery has not really occurred.

But it is pretty tough to tell people they will not have services they have gotten used to which is why people in Spain, Greece and Portugal are demonstrating all the time.

[RossHolloway]

The rumor in Michigan is that the governor is going to appoint MITT ROMNEY to manage the city of Detroit!

[marv2]

The rumor in Michigan is that the governor is going to appoint MITT ROMNEY to manage the city of Detroit!

Oh that's just wunderful! That would be the final nail for the Detroit we once knew.

[RossHolloway]

Oh that's just wunderful! That would be the final nail for the Detroit we once knew.


Let Detroit Go Bankrupt! - Mitt Romney.

[skooldem1]

Ex-Detroit mayor Kilpatrick convicted of racketeering in corruption trial

By Erin McClam, Staff Writer, NBC News
Former Detroit Mayor Kwame Kilpatrick was convicted Monday of racketeering conspiracy after prosecutors said he presided over a breathtaking profit machine by rigging contracts and demanding bribes.

The racketeering count carries up to 20 years in prison.
Kilpatrick was convicted of at least six other criminal counts and acquitted of one, and jurors said they were unable to reach a verdict on two. Kilpatrick was charged with 30 federal crimes. The verdict was still being delivered in federal court in Detroit.
Jurors began deliberating Feb. 18.

Kilpatrick, 42, was charged with bribery, extortion and tax evasion
Prosecutors said that Kilpatrick, a Democrat, steered $83 million in city contracts to Ferguson in exchange for hundreds of thousands of dollars in kickbacks. They also told jurors that the ex-mayor raided his own nonprofit for personal expenses.
Kilpatrick’s lawyer told jurors that Kilpatrick never extorted anyone and that he only helped Ferguson win city business because he knew Ferguson would hire people who live in Detroit.

Kilpatrick was considered a rising Democratic star when he was elected in 2001, but his tenure was scarred by allegations of cronyism, nepotism and out-of-control spending.
He pleaded guilty to obstruction of justice in 2008 for lying in a civil trial during which he denied having an affair with his former chief of staff and plotting with her to fire the deputy police chief. He resigned and spent three months in jail.

http://usnews.nbcnews.com/_news/2013/03/11/17269402-ex-detroit-mayor-kilpatrick-convicted-of-racketeering-in-corruption-trial?lite

[calvin]

NYT: For Detroit, a Crisis of Bad Decisions and Crossed Fingers
http://www.nytimes.com/2013/03/12/us/for-detroit-a-financial-crisis-was-long-coming.html?ref=us&_r=1&pagewanted=all&

[marv2]

Let Detroit Go Bankrupt! - Mitt Romney.

He was an asshole from time he was a kid right up until now! Detroiters and Michiganers know it. That is why he failed to carry the State of Michigan in the general elections. He believed in what he was saying and only tried to back track from it when it became abundantly clear that he was going to lose his home State! Asshole! LOL!

[marv2]

Ex-Detroit mayor Kilpatrick convicted of racketeering in corruption trial

By Erin McClam, Staff Writer, NBC News
Former Detroit Mayor Kwame Kilpatrick was convicted Monday of racketeering conspiracy after prosecutors said he presided over a breathtaking profit machine by rigging contracts and demanding bribes.

The racketeering count carries up to 20 years in prison.
Kilpatrick was convicted of at least six other criminal counts and acquitted of one, and jurors said they were unable to reach a verdict on two. Kilpatrick was charged with 30 federal crimes. The verdict was still being delivered in federal court in Detroit.
Jurors began deliberating Feb. 18.

Kilpatrick, 42, was charged with bribery, extortion and tax evasion
Prosecutors said that Kilpatrick, a Democrat, steered $83 million in city contracts to Ferguson in exchange for hundreds of thousands of dollars in kickbacks. They also told jurors that the ex-mayor raided his own nonprofit for personal expenses.
Kilpatrick’s lawyer told jurors that Kilpatrick never extorted anyone and that he only helped Ferguson win city business because he knew Ferguson would hire people who live in Detroit.

Kilpatrick was considered a rising Democratic star when he was elected in 2001, but his tenure was scarred by allegations of cronyism, nepotism and out-of-control spending.
He pleaded guilty to obstruction of justice in 2008 for lying in a civil trial during which he denied having an affair with his former chief of staff and plotting with her to fire the deputy police chief. He resigned and spent three months in jail.

http://usnews.nbcnews.com/_news/2013/03/11/17269402-ex-detroit-mayor-kilpatrick-convicted-of-racketeering-in-corruption-trial?lite

Is anyone surprised?

[jobeterob]

Many are warning that the United States could become the next Greece. But there’s no need to look across the ocean to see a poorly-governed area that’s deep in debt and crumbling. Just look to Detroit.

That city was once the picture of American industrial might. Henry Ford deployed the production line there and helped create the modern middle class. During World War II, more than a third of U.S. war material was manufactured in the city. And during the post-war boom, cars made in Detroit embodied the American success story.




Now, though, the Motor City is collapsing in every conceivable way.

The unemployment rate is 18 percent, meaning almost one of every five people is out of work. A big reason for that is that the city’s schools have failed. Just 7 percent of eighth-graders are proficient in reading. Only a handful of Detroit residents [[12 percent) have a college degree. Yet Detroit teachers are the best paid in the nation, the Mackinac Center for Policy Policy says, when their pay is adjusted for purchasing power.

Meanwhile, Detroit is $327 million in the red and has no credible plan to get back on its feet. That’s why Michigan’s Republican Gov. Rick Snyder recently appointed an emergency manager. Kevyn Orr has 18 months to try to save the city. Even though he has broad power to sell assets and renegotiate contracts, his job will be difficult.

These days there’s more work to be done tearing homes down than building new ones. An executive at Pulte Homes has set up a non-profit to do just that in Detroit. By reversing the building process, it can remove an empty house for just $5,000, half what it would cost the city government to do so.

In fact, government is more a hindrance than a help. “If the government could fix the problem, they would,” urban artist Jenenne Whitfield told National Review. “Everything we know that’s historically held up this city is broken. It’s a bit of a radical way of thinking . . . [but] our government has to change. It has to go back to what it was, going all the way back to the Constitution.”

A non-profit group called Motor City Blight Busters that has taken down some 1,500 houses. There “a lot of rules and regulations that relate to removing property,” the group’s founder said. “The government [has been] interfering with our ability and others’ ability” to remove blight.

There are signs, however, that the city’s government has seen the light. “Our role is to support. And sometimes, our role is just to get out of the way,” Karla Henderson told National Review. Henderson heads up Mayor Dave Bing’s efforts to remove urban blight by helping people “navigate around some of these government bureaucracies that are sitting in the way.”

Detroit also needs to get a handle on crime. With all the empty buildings, arsonists strike more often in Detroit than anywhere, with more than 10,000 fires per year reported. Forbes magazine has named Detroit the most dangerous city for four straight years. Its murder rate is one of nation’s the highest. And in 2012, the city’s crime rate hit its highest level in 20 years.

Help may be on the way, though, following some common sense political reforms.

In a statewide election in Michigan last year, voters soundly defeated Proposal 2, a measure that would have made union collective bargaining a right and given collective bargaining agreements the force of law. Voters shot down the union-backed measure 58-42 percent.

Then in December, the Michigan legislature struck a blow for workers’ rights. It passed a bill to become the nation’s 24th right-to-work state. This simply means that workers will no longer be forced to join a union, though they remain free to do so.

It’s possible that free-marketers will eventually rebuild on the ruins of Detroit. For now, though, it serves as a cautionary tale. Even a city with everything going for it can collapse under the weight of bad economic policies. The rest of us must learn from Detroit, not repeat its mistakes at the national level.


Edwin J. Feulner is president of the Heritage Foundation.

[smark21]

Jobetrob, why are you posting an opinion piece from a right wing think tank The Heritage Foundation, the group that supplied many of the policies of the Reagan and Bush administrations that helped get the US in its present mess? Detroit is in bad shape, but the last group they should be taking advise from is the Heritage Foundation.

[thanxal]

Jobetrob, why are you posting an opinion piece from a right wing think tank The Heritage Foundation, the group that supplied many of the policies of the Reagan and Bush administrations that helped get the US in its present mess? Detroit is in bad shape, but the last group they should be taking advise from is the Heritage Foundation.
Right On! Smark21. It was their "free trade" policies that helped facilitate capital flight from Detroit. Detroit's decline started in the 1950s when capital started leaving, but state and federal policy towards both urban and manufacturing policy has been absymal, both Democrats and Republicans. They're both tools of big business.

[jobeterob]

Right On! Smark21. It was their "free trade" policies that helped facilitate capital flight from Detroit. Detroit's decline started in the 1950s when capital started leaving, but state and federal policy towards both urban and manufacturing policy has been absymal, both Democrats and Republicans. They're both tools of big business.

Mostly for the info on Detroit.

They are not my babies either although I have to admit I didn't know anything about them; I wondered when I saw some reference to "right to work" legislation.

[JL2648]

I must say I'm surprised that a thread like this is allowed to stand on a board like this with its political overtones and all. It is kind of refreshing, actually. If you really want to know what is going on around town, check out the detroityes.com board [[I found out about this site there). I learn more about what is happening in the area from that board than in the Detroit dailies.

Jeff