DETROIT — It wasn’t easy making Detroit the largest U.S. city to file for bankruptcy protection, but it was the right decision, Michigan Gov. Rick Snyder said Sunday as he, the city’s mayor and its emergency manager made the television talk show rounds.
Snyder, a Republican, gave his blessing to emergency manager Kevyn Orr’s decision to file for bankruptcy for Detroit on Thursday.
Detroit on Thursday became the largest city in U.S. history to file for bankruptcy, as the state-appointed emergency manager filed for Chapter 9 protection.
Kevyn Orr, a bankruptcy expert, was hired by the state in March to lead Detroit out of a fiscal free-fall and made the filing Thursday in federal bankruptcy court.
A number of factors — most notably steep population and tax base falls — have been blamed on Detroit’s tumble toward insolvency. Detroit lost a quarter-million residents between 2000 and 2010. A population that in the 1950s reached 1.8 million is struggling to stay above 700,000. Much of the middle-class and scores of businesses also have fled Detroit, taking their tax dollars with them.
In recent months, the city has relied on state-backed bond money to meet payroll for its approximately 10,000 employees.
Orr was unable to convince a host of creditors, the city’s union and pension boards to take pennies on the dollar to help facilitate the city’s massive financial restructuring. If the bankruptcy filing is approved, city assets could be liquidated to satisfy demands for payment.
“Only one feasible path offers a way out,” Gov. Rick Snyder said in a letter to Orr and state Treasurer Andy Dillon, approving the bankruptcy.
Snyder determined earlier this year that Detroit was in a financial emergency and without a plan to improve things. He made it the largest U.S. city to fall under state oversight when a state loan board hired Orr in March. His letter was attached to Orr’s bankruptcy filing.
“The citizens of Detroit need and deserve a clear road out of the cycle of ever-decreasing services,” Snyder wrote. “The city’s creditors, as well as its many dedicated public servants, deserve to know what promises the city can and will keep. The only way to do those things is to radically restructure the city and allow it to reinvent itself without the burden of impossible obligations.”
A turnaround specialist, Orr represented automaker Chrysler LLC during its successful restructuring. He issued a warning early on in his 18-month tenure in Detroit that bankruptcy was a road Detroit and its creditors did not want to tread.
He laid out his plans in June meetings with debt holders, in which his team warned there was a 50-50 chance of …read more
Roy Roberts will be replaced today as emergency manager of Detroit Public Schools by Jack Martin, a finance guru whose last assignment was helping Mayor Dave Bing implement the city’s consent agreement with the state.
Roberts and Martin confirmed reports from sources that the change will be announced this morning by Gov. Rick Snyder in Detroit, and will take effect immediately.
Michigan’s Republican governor, Rick Snyder, was among the many GOP state executives who made national headlines this winter by endorsing Obamacare’s expansion of Medicaid, America’s government-run health insurance program for the poor. But what isn’t making headlines is that Michigan’s legislature, like its counterparts in Florida, Ohio, and Arizona, is not going along.
There was a celebratory atmosphere in the air during the inaugural public meeting of Southeast Michigan‘s new Regional Transit Authority (RTA) governing board on Wednesday in Detroit. The advocacy group Transportation Riders United even brought balloons and sang “Happy Birthday” to commemorate the occasion, after marching several blocks from Detroit’s Rosa Parks Transit Center to the SEMCOG (Southeast Michigan Council of Governments) offices, where the meeting was held.
The gathering was packed. A mixed crowd of over 100 people showed up to witness the new governing board set the stage for the authority, which will coordinate public transit between the counties of Wayne, Oakland, Macomb, Washtenaw County and the city of Detroit.
The occasion went surprisingly smoothly, considering the authority’s contentious history in the region. There have been 23 failed attempts by the state legislature to create an RTA in Southeast Michigan since the 1970s, according to the Metro Times. State lawmakers finally ended this losing streak late last year by passing several bills establishing the authority and its powers, which were later signed into law by Gov. Rick Snyder.
(LANSING, Mich.) — Gov. Rick Snyder announced Tuesday that Fitch Ratings has upgraded Michigan’s general obligation credit rating to AA, the first time Fitch has rated Michigan above AA– since January 2007.
Standard and Poor’s also upgraded Michigan’s credit outlook to “positive,” while affirming its AA– rating. Moody’s announced a similar upgrade last week.
DETROIT, MI – A crowd of about 100 demonstrators gathered outside City Hall just after 11 a.m. Monday in a lively protest against the start of emergency management in city government.
Emergency Financial Manager Kevyn Orr took office today after being named by Gov. Rick Snyder earlier this month.
After two Michigan universities circumvented new anti-union laws to lock in new labor contracts, Republican legislators in the state House are striking back with a new move to slash state funding to both schools.
Right-to-work legislation, which prevents employers from signing union contracts that require all workers to pay union dues, was signed by Gov. Rick Snyder in December. Snyder and state Republicans unexpectedly pushed the legislation through in a lame-duck legislative session after the governor had previously opposed it.
The Detroit Free Press reports that a budget bill sent to the floor by the House Appropriations Subcommittee on Higher Education would cut $27.5 million to Wayne State University and $47.3 million to the University of Michigan’s Ann Arbor, Flint and Dearborn campuses.
Kevyn Orr anwsers a question during a news conference in Detroit, Thursday, March 14, 2013. (Paul Sancya/AP)
DETROIT (AP) – The auto-industry turnaround expert picked to steer Detroit back from the brink of financial ruin had tax liens on his Maryland home, records show.
Kevyn Orr, Detroit’s new emergency financial manager, had two outstanding liens on his $1 million home in Chevy Chase, Md., for $16,000 in unemployment taxes in 2010 and 2011, The Detroit News reported Saturday. The Maryland state records also show that two other liens of more than $16,000 in unemployment and income taxes were satisfied in 2010 and 2011.
Orr, a partner in the Cleveland-based law firm of Jones Day who represented Chrysler during its successful restructuring, was appointed Detroit’s financial manager by Michigan Gov. Rick Snyder on Thursday.
Orr said Friday he didn’t know anything about the liens when shown the records by the News. On Saturday, the Washington, D.C., bankruptcy attorney said he now is paid up on state liens.
“It’s on me – it’s something that fell through the cracks,” Orr told the Detroit Free Press.
Orr, 54, apologized for the oversight, saying he always tries to be attentive to such matters and wasn’t aware of the liens until he was notified about them on Friday.
“It’s remarkably embarrassing,” Orr said. “I called and paid it up Friday. I wanted to make sure I addressed it as soon as I could.”
Sara Wurfel, a spokeswoman for Snyder, said the governor’s office wasn’t aware of the liens until the News asked about them.
“It did not come up in any of the vetting,” she said.
Critics of the emergency manager said the liens are troubling, because one of Orr’s jobs will be to improve Detroit’s tax-collecting operations.
Detroit is saddled with a $327 million budget deficit and more than $14 billion in long-term debt. City records estimate that Detroit collected $32 million less in income taxes than it was owed in 2011.
“It’s quite interesting that (Orr) feels he could manage the city of Detroit, and he’s having trouble managing his own affairs,” said the Rev. Charles Williams II, president of the National Action Network of Michigan and an opponent of Orr’s appointment.
Many residents of the majority African-American city feel the appointment of an EFM is a form of political disenfranchisement. In Detroit, some are now engaging in political protest and civil disobedience in an effort to make their voices heard.
During Snyder’s Thursday press conference at the Cadillac Place building in Detroit’s New Center district, a crowd of picketers from Good Jobs Now, the National Action Network and other groups made clear their opposition to the EFM appointment.
By John JohnsonA DC bankruptcy lawyer now has more say over Detroit’s future than its mayor or city council. Michigan Gov. Rick Snyder today named Kevyn Orr as the city’s emergency manager, following up on his unprecedented move to put the city’s finances under state control , reports the Detroit Free Press . “In… …read more Source: FULL ARTICLE at Newser – Home
Lansing — Republican legislators have long been cold to sending Detroit a taxpayer rescue package, but they are warming to the idea of giving aid to Gov. Rick Snyder‘s impending emergency manager.
The development angers some Detroiters, who note the Detroit City Council and Mayor Dave Bing have repeatedly requested aid to heal the city’s structural deficit.
By Micheline Maynard, Contributor Late last week, Michigan Gov. Rick Snyder decided to name a financial overseer for the city of Detroit, whose operations are nothing less than a mess. In doing so, Snyder ended a political debate that has raged for months, and opened the door to a semblance of order in the troubled city. …read more Source: FULL ARTICLE at Forbes Latest
DETROIT — It appears the appointment of an emergency manager to take over Detroit’s failing finances is all but a done deal. But one question remains: Who will get the difficult, thankless job?
Gov. Rick Snyder is being coy about his selection, saying only the person is “top notch.” Michigan’s Emergency Loan Board will do the official hiring of the candidate, who will provide state oversight on spending and restructuring.
There will be resistance from city officials, but the governor of Michigan, Rick Snyder, will appoint an emergency financial manager to run the virtually bankrupt city. He commented to a local TV station that “I look at today as a sad day, a day I wish had never happened in the history of Detroit, but also a day of optimism and promise.” Only sad to the extent to which, over decades, Detroit had the chance to fix its own trouble. As car companies pulled management and production out of Detroit, the city government did very little to react with lower costs and reduced services. Now, the emergency financial manager can gut city services, and probably re-negotiate contracts between Detroit, its workers and outside parties. The Detroit Free Press summed up the money part of the problem
A state review team concluded last week that Detroit could not do so on its own, facing $14 billion in long-term liabilities and a $327-million accumulated deficit at risk of growing by $100 million by July.
The announcement came on a day on which the Big Three released spectacular results, at least compared to those during the recession. Analysts expect 14.5 million cars and light trucks to be sold in the U.S. this year. That is not quite like the over 16 million sold in 2005 and 2006, but the car companies have cut costs so much the sales will make their North American operations profitable. February sales for GM (NYSE: GM) reached 224,313 vehicles, up 7.2% from the same month last year. GM‘s market share is 18.8%, far short of the 50% of fifty years ago. Ford (NYSE: F) sold 195,210 vehicles, up 9.3%. Chrysler sold 139,015.
The Big Three employ very few people in Detroit. GM‘s headquarters is downtown. Ford and Chrysler have headquarters outside the city. Car production within the city limits is negligible. As each of these pulled more and more facilities out of Detroit, the city had the chance to lower its budget. Perhaps, over the years, the city council and mayors hoped the car companies would return, or be replaced by other large industries. That was a bad mistake.
The American car companies did not absolutely have to leave Detroit. They could have kept headquarters inside the city, despite the rise in unemployment, poverty, and a drop in city services. GM stayed, so the other two could have as well.
Factory presence is more complicated. Detroit’s educated labor force sized dropped. It was less expensive to locate manufacturing facilities elsewhere. But, the labor force might not have fallen so much if car production had stayed in Detroit. And the taxes from the car companies would have helped prop up city services.
The exit of the car companies from Detroit can certainly be justified by financial means. The three firms did what they believed was best to boost profits. But, as they left Detroit, they could watch the city crumble behind them. Not much of a legacy for three companies that …read more Source: FULL ARTICLE at DailyFinance
Michigan Gov. Rick Snyder declared a financial emergency in Detroit on Friday, pushing the city closer to becoming the largest in the country to have state control over its finances.
Gov. Rick Snyder plans to announce Friday whether he will appoint an emergency manager for Detroit but likely won’t immediately name the person if he does, Mayor Dave Bing said.
A DC bankruptcy lawyer now has more say over Detroit’s future than its mayor or city council. Michigan Gov. 
