Detroit demonstration against the city paying debt service to the banks. The demonstration took place outside Bank of America on May 9, 2012. (Photo: Abayom Azikiwe), a photo by Pan-African News Wire File Photos on Flickr.
May 17, 2012
Detroit, state dispute validity of consent deal
By DARREN A. NICHOLS / The Detroit News
Detroit— City officials want a controversial consent agreement that overhauls the city's finances thrown out because it claims the state owes Detroit money, state officials confirmed Wednesday night.
The city's corporation counsel, Krystal Crittendon, sent state officials a letter May 11 — more than a month after the city entered into what Gov. Rick Snyder called a historic agreement — claiming the deal is void because parties cannot enter into an "interlocal agreement" when one entity owes money to the other, referring to a disputed water bill.
State officials quickly countered, saying Wednesday night the Financial Stability Agreement is valid and that the state does not owe the city any money.
"We did receive a letter from Detroit's corporate counsel that claimed the consent agreement was void due to the state being in default to the city," said Caleb Buhs, a spokesman for state Treasurer Andy Dillon.
"The treasurer responded today with a letter (stating) that it is not in default to the city and the Financial Stability Agreement, signed by the mayor and City Council, is valid and enforceable."
The state's response refers to the city's letter citing the debt, saying, "This contention is based on a dispute regarding a water bill from 2010 and the state's past reduction in revenue sharing to the city."
Mayoral spokeswoman Naomi Patton declined to comment. City Council members did not return phone calls seeking comment.
The city has tried to claim other money it says the state owes. Mayor Dave Bing and others have said the state should make good on $220 million they say the state owes the city in unpaid revenue sharing.
The City Council approved the consent agreement, 5-4, on April 4. The deal, made under the threat of a state takeover, keeps Detroit elected officials in place but gives the state significant control over the city's finances.
The plan creates an appointed nine-member Financial Advisory Board to oversee the city's financial restructuring. Five members have already been appointed, but the council has delayed making a decision on its own two picks for the panel.
dnichols@detnews.com
(313) 222-2073
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