Tag Archives: Detroit bankruptcy

Detroit Cronies Sucking Money out of City to build Red Wings’ Stadium

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Source: Collapse.com and Reason

Though I am usually not a fan of infographics/datagraphics, Reason just published the below graphic which details the horrible deal that the city of Detroit is getting by building this new arena. We see these kinds of deals being struck all around the country as politicians think that any sports team will be a boom to the local economy. What really ends up happening is that the owners of the teams get richer at the expense of the taxpayer.

These programs rarely net a positive result to the local economy. Most economists recognize research that has been done that shows that teams and new arenas do not increase entertainment spending in the region but just divert it from elsewhere that it would be spent. Ultimately, Detroit, a city that is dying already, stands to lose jobs and lose money on this investment and it just might be the straw that breaks the Detroit camel’s back.

Detroit Redwings Stadium Infographic

Sources

The Risky Economics of Sports Stadiums

Pro Sports Stadiums Don’t Bolster Local Economies, Scholars Say

General information about the Stadium proposal

Debunking the Economic Case for Sports Stadiums

War on the Poor Continues With Planned Pension Cuts in Detroit and Illinois

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Yesterday Federal bankruptcy court judge Steven Rhodes ruled that Detroit is insolvent and eligible for a Chapter 9 debt restructuring. This gives the city the go-ahead to cut retirement benefits as part of its restructuring plan, despite pensions being explicitly protected by the state constitution.

Learn more about the situation in Detroit at Detroit Inquiry.

Judge Rhodes’s decision serves as a precedent for city and state governments across the country to carry out a similar policies. Just hours after the Detroit ruling, both chambers of the Illinois legislature also passed an unconstitutional pension reform bill that would steal money from the pension plans Illinois state workers paid for, reduce and suspend cost-of-living increases and limit their salaries.

Such acts of class warfare demonstrate how the government/corporate machine views the 99% as merely a source of wealth and cannon fodder. Once they find cheaper labor and more prosperous markets elsewhere and once soldiers return home after fighting their wars, we’re worth even less to them. Judging from their actions, the corporatocracy has no loyalty, trust and respect for us. Why should we give them any loyalty, trust and respect if it’s not reciprocated?

Detroit Bankruptcy Timeline:

2011

March 16: Michigan’s Public Act 4 emergency manager law goes into effect.

Nov. 16: Detroit Mayor Dave Bing says the city could run out of cash by April 2012 and have a potential shortfall of $45 million by the end of the fiscal year June 30.

Dec. 2: State Treasurer Andy Dillon orders a preliminary financial review of Detroit. The move sparks protests against Michigan Public Act 4, the emergency manager law that expanded EM powers.

Dec. 21: Dillon announces “probable financial stress” in Detroit and recommends Snyder send a team to review city finances.

2012

Jan. 10: Former State Treasurer Andy Dillon gives Mayor Dave Bing until the first week of February to submit a financial plan to avoid an emergency manager.

March 13: A 25-page proposed consent agreement is given to the City Council.

March 21: A state review team declares Detroit in a “severe financial emergency.”

March 23: The Michigan Court of Appeals reverses an Ingham County judge’s ruling that barred the state from entering a consent agreement with Detroit.

April 4: The City Council, 5-4, approves a consent agreement.

April 5: Gov. Rick Snyder and Bing sign the agreement.

June 15: A nine-member oversight board created under the consent agreement holds its first meeting.

Aug. 2: A proposed repeal of Public Act 4 is placed on the Nov. 6 ballot and the law immediately is suspended. Public Act 72, the prior 1990 law that grants fewer powers to emergency financial mangers, is reinstated.

Nov. 7: Public Act 4 is repealed in the general election.

Dec. 10: Detroit’s Financial Advisory Board calls for a 30-day review of the city’s finances under Public Act 72.

Dec. 14: A state review of Detroit finances finds “a serious financial problem.”

Dec. 27: Snyder signs a new emergency manager bill, Public Act 436, which is to take effect March 28.

2013

Jan. 3: An audit shows Detroit has a $327 million accumulated deficit as of June 30.

Feb. 19: A state team reviewing Detroit’s finances determines the city is in a financial emergency with “no satisfactory” plan to resolve it.

March 1: Snyder announces plans to bring an emergency manager to Detroit.

March 9: The council makes a formal request for an appeal hearing in Lansing.

March 12: Detroit officials fail to convince the state’s Emergency Loan Board that a satisfactory plan in place to address Detroit’s fiscal crisis without an emergency manager.

March 14: Snyder appoints Kevyn Orr as Detroit emergency manager. He takes office March 25 for the job, which pays $275,000 per year. State officials hope he can complete his job within 18 months.

March 26: Public Act 436 goes into effect and opponents file a lawsuit in U.S. District Court in Detroit, arguing the legislation deprives citizens of “constitutionally protected rights” and dilutes their vote.

May 13: Orr submits a preliminary financial and operating plan to the state Treasury Department, saying Detroit’s cash-flow crisis makes it “insolvent.”

June 14: Orr unveils to creditors his plans to restructure the city’s finances and avoid bankruptcy.

June 20: Orr holds closed-door meetings with union officials to discuss a restructuring proposal that includes health care and pension cuts and launches a probe of the city’s pension funds amid concerns about corruption, spending and management.

July 5: The city files a lawsuit against Syncora Guarantee Inc., in an attempt to recover $11 million a month in casino payments and taxes that Detroit claims are being improperly withheld by the insurance company.

July 15: Orr submits a quarterly financial report to the state saying the city’s financial condition “continues to be dire.”

July 17: The city’s two pension funds sue Snyder July 17 to block him from authorizing what would be the biggest municipal bankruptcy in U.S. history on claims it would violate retirees’ constitutional right to a pension.

July 18: Orr files a petition for municipal bankruptcy in U.S. District Court’s Eastern District in Detroit.

July 19: The case is assigned to U.S. Bankruptcy Judge Steven Rhodes.

July 24: Rhodes freezes all lawsuits against the city challenging the legality of Detroit’s bankruptcy filing.

Aug. 2: Rhodes creates a committee to represent city retirees.

Aug. 5: Orr announces he has contracted with Christie’s, the New York-based international auction house, to appraise the collection of the Detroit Institute of Arts.

Aug. 13: Chief U.S. District Judge Gerald Rosen is appointed to mediate disputes between the city and creditors.

Sept. 26: An audit commissioned by Orr reveals the city’s pension funds lost more than $125 million on real estate deals and gave questionable bonus payments to employees.

Oct. 9: Gov. Rick Snyder is questioned under oath about his decision to authorize the largest municipal bankruptcy in U.S. history. Snyder is the first sitting governor in modern Michigan history to face a sworn deposition.

Oct. 11: Orr announces the city has secured a $350 million loan agreement with Barclays to pay off a pension related-debt and finance city service improvements while Detroit is in bankruptcy.

Oct. 15: In a report to Dillon, Orr says the city’s financial condition remains dire but cash flow improved during the first quarter since the bankruptcy filing.

Oct. 25: Detroit’s eligibility trial begins before Judge Rhodes in Detroit’s federal courthouse.

Nov. 6: Judge Rhodes denies the NAACP’s request to pursue a lawsuit against Gov. Rick Snyder’s administration over the constitutionality of the emergency manager law.

Nov. 8: The city’s nine-day eligibility trial ends.

Nov. 8: Orr postpones a proposed health care initiative for retirees until Feb. 28 under an agreement with the city and retiree committee created through bankruptcy proceedings.

Nov. 13: A city union representing Detroit’s EMTs reaches a five-year, out-of-court contract agreement with Orr.

Nov. 25: Rhodes in a court filing announces he will decide Dec. 3 whether Detroit can proceed with its Chapter 9 bankruptcy filing.

Nov. 26: A group of creditors ask for an independent evaluation of the Detroit Institute of Arts collection.

Nov. 27: Judge Rhodes halts Detroit’s efforts to fix its broken streetlight system after discovering one of the city’s law firms involved in the bankruptcy case also represents the new Public Lighting Authority, a potential conflict of interest.

Nov. 27: A trial over Detroit’s plan to seek a $350 million bankruptcy loan is pushed back amid new objections by creditors. Judge Rhodes and attorneys representing the city and several creditors agreed in principle to delay the trial to Dec. 17-19.

Dec. 3: Rhodes delivers decision on bankruptcy eligibility.

(Timeline: Associated Press)

American Apartheid Starts in Detroit

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A recent op-ed from Glen Ford, executive editor of Black Agenda Report, describes the situation in Detroit as the nexus of a new American apartheid in which inhabitants of largely Black urban centers are denied meaningful votes and ability to defend collective and individual property from the wealthy elite. In reaction to this alarming trend, on October 5 and 6, the International People’s Assembly will hold a conference, Against Banks and Against Austerity, in Detroit. Ford describes the goals of the conference in greater detail in this excerpt:

The International Peoples Assembly conference demands that the so-called debt to the banks be canceled – not just for Detroit, which supposedly owes Wall Street $22 billion, but for cities, school systems, states and countries around the world that have been purposely made into debt slaves for the rich. Workers pensions and jobs, and the vital services they provide to the community, must be guaranteed. This is a critical demand, since the emergency management regime in Pontiac, Michigan, has stripped the municipal workforce down to only 20 people for a city of 60,000. The unemployed must be put back to work repairing the damage inflicted on Detroit by the bankers’ foreclosure and disinvestment policies. Public education, which is rapidly being privatized, must be restored to the public sphere and fully funded.

Read the full article here: http://www.blackagendareport.com/content/detroit-nexus-new-american-apartheid

For those not familiar with the “emergency management regime” Ford referenced, it has been a topic of intense debate in Michigan for at least the past couple of years. The so-called emergency management legislation first introduced in 2011, was supposedly designed to help local government survive financial crises but also removed all powers from democratically elected officials and transferred governing power, including the power to make local laws, to appointed emergency managers (who are not required to obey local laws such as city charters or ordinances). Though the law was voted down by Michigan voters, a revised version was passed in December of 2012 during a lame duck session.

More details about Michigan’s “emergency manager” law here:

http://sugarlaw.org/projects/democracy-emergency/

http://www.huffingtonpost.com/david-alexander-bullock/detroit-elections_b_1442049.html

This past September 11th, citizens of Detroit experienced a harmful consequence of the emergency management powers when the city lost power during a heat wave that week. As described by Randa Morris at Addicting Info.:

In the city of Detroit, power outages left people stranded in elevators, trapped four hours in the blistering heat. Hundreds were evacuated from buildings in the downtown area, traffic lights did not function, public transportation was disabled and 1,400 sites across the city were without power. Wayne State University and other key buildings still remained closed, the following day. All of this after the city’s power supply supposedly failed.

…The problem is that the city’s power supply never failed.

On September 12th, 2013, Bill Nowling casually stated that the city’s power outages were intentional. Officials and citizens working in the city were given no warning before the electricity was cut off. Law enforcement officials working in the Hall of Justice had no time to prepare. Senior citizens and disabled citizens using elevators in the city’s downtown district had no way to know what was coming. The entire criminal justice system was shut down without notice. Wayne State University Campus was just one of many sites evacuated under emergency conditions. Traffic lights across the city stopped working. 1,400 public and private locations were left without power. And the entire thing was intentional, to “send a message” to the people of Detroit. Bill Nowling works in the office of Kevyn Orr, Detroit’s Emergency Manager.

Read the full story here: http://www.addictinginfo.org/2013/09/14/detroit-blackout/

So this unannounced power shutdown which endangered the health and safety of an entire city can be attributed to a single individual only accountable to Governor Rick Snyder, who appointed him as Emergency Manager in March. And what are Kevyn Orr’s credentials? He was the lead attorney who collected over a million dollars representing Chrysler during its bankruptcy proceedings in 2009. Private emails uncovered by labor activist Robert Davis indicate that Orr stood to make millions more in legal fees by facilitating Detroit’s bankruptcy which was filed on July 18, 2013. Orr has also been behind efforts to privatize Detroit’s energy grid according to this WSWS.org article by Khara Sikhan:

The Detroit Public Lighting Department (DPLD), has been systematically defunded for decades, and Democratic Mayor Dave Bing proposed to fully privatize the lighting department in 2012.

In mid-August, Kevyn Orr fired DPLD director Richard Tenney as part of his plan to restructure the city government. Orr announced in June that the city would sell off the public lighting grid to DTE Energy, in line with Bing’s proposal.

The drive to privatize the city’s lighting department, far from benefiting the city’s residents, would be only another means of extracting profit from the city.

Read the full article here: http://www.wsws.org/en/articles/2013/09/14/powe-s14.html?view=print