Detroit Council Rejects Contract Tied To Financial Overhaul

DETROIT (WWJ) - The Detroit City Council has rejected a contract to hire an outside law firm to handle parts of the city's financial reform plan -- a move that could delay the release of millions of dollars in state funding.

The contract with Miller Canfield was a key "criteria" in the agreement reached last week between Mayor Dave Bing and the state.

Mayor Dave Bing said it's a huge setback for the financial recovery of Detroit.

"The State has made it very clear that if the City of Detroit did not meet all three milestones as outlined in our agreement, money from the city's escrow account would not be forthcoming," Bing said in a statement. "The Council's rejection of the Miller Canfield contract means the city will not receive the first $10 million scheduled for release today.

"As a result, it will be more difficult for the city to maintain its liquidity until the receipt of property tax revenues beginning in January. Today's vote is one more example of how City Council has stalled our efforts to bring financial stability to the city of Detroit."

Detroit city legal council Krystal Crittendon advised council members against approving the document.

"This contract is still problematic in that it requires that Miller Canfield get a contract as a condition of the escrow agreement " Crittendon said. "That is a conflict for which I would never, ever, ever approve or recommend this contract."

Detroit City Council President Charles Pugh issued the following statement regarding Council's rejection of the contract:

"Mayor Bing put the City at risk by negotiating Miller Canfield into the agreement. Of the four contracts that the City Council must approve to comply with requirements for release of escrow funds, the Council has already approved three.

"We approved a one-year extension of the Ernst & Young contract, the outsourcing of payroll administration to ADP, and a few weeks ago we approved the Milliman contract to audit our pension system. However, there were too many inherent conflicts to approve the Miller Canfield contract. We will work the Mayor to choose another law firm immediately."