Changing Gears is a public media project about the future of the industrial Midwest. Each week, reporters Dan Bobkoff in Cleveland, Niala Boodhoo in Chicago and Kate Davidson in Ann Arbor cover issues of interest to the Great Lakes region. Changing Gears also sponsors public events and conversations.
Detroit’s deal Last night, the Detroit City Council voted to approve a consent agreement with the state to avoid takeover by an emergency manager. That means, as long as the governor signs the deal as expected and the courts don’t strike the deal down, Detroit finally has the first step in a plan to avoid bankruptcy. Partner station Michigan Radio reports on what it all means.
Chicago’s debt problem The Chicago Sun-Times went looking for reasons why Chicago would turn to private partnerships to fund its new multi-billion dollar plan to rebuild infrastructure. One major reason: the city’s staggering debt. Chicago can’t take out any more bonds to pay for improvements because the city spends almost 23 percent of its annual budget paying off the $7.3 billion in debt it already has.
No more coal ash The Ludington Daily News reports the city’s historic car ferry has received a grant to convert its fuel source. Without the grant, the coal powered ferry would have been forced to shut down by the EPA. The historic vessel dumps about 500 tons of coal ash into Lake Michigan every year.
Groupon’s bad week It’s been a rough couple of days for Chicago-based Groupon. The coupon website was forced to revise its previous financial statements, and admit it has “material weakness” in its accounting practices. The SEC is reportedly looking into the problems. And now, the Chicago Tribune says a shareholder has filed a class action lawsuit.
By the time you read this, Detroit leaders may have already reached a deal to avoid a state takeover. Or not. City council was scheduled to meet as of this posting to decide whether to sign a consent agreement with Michigan Governor Rick Snyder’s administration.
The agreement could still be blocked in the courts, causing further confusion and panic in a city that’s already had plenty of both. According to state statute, a deal must be signed by midnight Thursday, or the governor will be forced to appoint an emergency manager.
It is against this political and economic backdrop that the Detroit-based electronic indie-pop band Dale Earnhardt Jr. Jr. has decided to release its latest video for the song “We Almost Lost Detroit.”
“We Almost Lost Detroit” began for us as an homage to one of the great artists of our time, Gil Scott Heron. We were so affected by its continued relevance as a piece of work some 30+ years later that just simply attempting to reinterpret it as a creative exercise seemed like a good enough idea on its own. While the song was originally penned as a reaction to a partial meltdown of a nuclear reactor halfway between Detroit,MI and Toledo,OH, so much of the imagery contained in Gil’s words seemed to ring true with the news of today.
Fewer people on welfare Partner station WCPN reports Ohio’s welfare rolls dropped 18 percent in one year. One reason is the improving economy. But the station reports that a bigger reason is tighter welfare rules.
Skeptical city council Detroit City Council members got a look at a new proposal from the state to resolve the city’s financial crisis, and it didn’t go well, according to partner station Michigan Radio. The two sides have five days to reach a deal, before the governor is forced to impose a restructuring plan, which would likely include the appointment of an emergency manager. But as Michigan Radio reports, “it’s clear the two sides are still a long way apart.”
NATO … more like “NO-DOUGH,” amiright? The Chicago Tribune reports that the federal government usually covers all of the security costs related to hosting a NATO summit. But in Chicago, the government is only covering half the cost. Corporate donors are picking up the rest of the tab.
On Monday, the state appointed financial review team for Detroit held its final meeting, and members got an earful from Detroiters who are worried that their city could face a takeover. Today, governor Rick Snyder is speaking in the city, and he’s expected to take questions. The governor has until April 5th to reach a consent agreement with Detroit leaders. If that doesn’t happen, he’ll likely appoint an emergency manager to run the city.
Amazon’s deal Amazon will build a $150 million distribution center in southern Indiana. The decision to build came after Indiana agreed to let the retailer go two more years before forcing it to collect Indiana sales tax. BussinessWeek reports the distribution center could eventually have 1,000 jobs.
Ask Snyder Partner station Michigan Radio reports that governor Rick Snyder will take questions from Detroiters today. The governor says he wants people to know the facts about the state’s negotiations to fix the cities finances. Many Detroiters worry they’ll lose local control.
The state-appointed financial review team for the city did hold a meeting, as expected. It was a pretty raucous meeting, as our partner station Michigan Radio reported. The reviewteam was required by law to make a recommendation to the governor about how to handle Detroit’s “fiscal crisis.”
There were basically two options: Recommend a consent agreement with the city, or recommend appointing an emergency manager who has the power to toss out union contracts, sell assets and balance the books. At the time of the meeting, no consent agreement had been reached with the city, so the emergency manager option – an option no one really wants – was starting to look more likely. But instead of taking option 1 or 2, the review team took option 3: Restate that there is a fiscal crisis in the city, restate that the team prefers a consent agreement and restate the obvious fact that there is currently no consent agreement. Not exactly a historic decree.
One way or the other, today is likely to go down as a historic – and possibly transformative – day for the city of Detroit. The city is burning through its cash, and fast approaching bankruptcy. By the end of the day, we could know more about what approach the state will take to help avoid that bankrupcty.
But the negotiations over Detroit’s future have taken a lot of confusing turns in the past couple of weeks, so we’ve tried to put together some answers to the city’s most pressing questions.
What’s happening today? Today is the deadline for the city to sign off on a proposed consent agreement with the state. The agreement would lead to the creation of a new panel to restructure Detroit’s finances.
What happens if the consent agreement isn’t signed today? Some say the state’s financial review team will be forced to recommend that Gov. Snyder appoint an emergency manager. Then, the governor will have 10 days to do so. But the Detroit Free Press says some of the details are still up for debate.