Detroit Council Approves $137M Bond Transaction
DETROIT (WWJ) – Detroit City Council has voted 6-3 to approve a request from the mayor’s office giving Mayor Dave Bing permission to issue bonds to keep the city from running out of cash this spring.
Chief Operating Officer Chris Brown asked the council on Tuesday to the approve the $137 million transaction.
Bing’s Chief of Staff Kirk Lewis said the city will be pledging future state revenue sharing dollars in exchange for the state releasing the money. He released a statement thanking council members for “acting with necessary urgency.”
“This vote is an important step as we work towards resolving the city’s financial crisis. We also want to thank the State for facilitating this critical transaction,” Lewis said.
City Council President Charles Pugh says the bond deal was the lesser of two evils.
“The prospect of borrowing more money and raising our debt payments is not something we want to do, but at the same time we don’t want any payless paydays,” said Pugh.
Council members, including Ken Cockrel, were critical of the late hour of the request.
“This is arguably the most significant financial transaction that anyone around this table will ever vote on, and the outcome of this vote is potentially going to determine what happens with this city,” said Cockrel. “So, it typically and ideally would be the sort of thing that we would get more advance notice of.”
Many on Council have said they don’t like the fact that the bond revenue agreement is tied to the Financial Stability Agreement that’s still under negotiation.
A state-appointed review team last week declared a “severe financial emergency” in Detroit. – View a copy of the review team’s report – (.pdf format)
Governor Rick Snyder said on Monday that the state and Detroit could have a consent agreement to restructure the city’s long-term finances in place sometime this week. Detroit is likely to run out of money in coming months and could end up in bankruptcy if no state action occurs.
Stay with WWJ Newsradio 950 and CBSDetroit.com for the latest on Detroit’s financial crisis.