The Plan of Adjustment and Financial Oversight
On Monday, November 10th, 2014 Judge Stephen Rhodes approved the eighth version of the Plan of Adjustment. This brought Detroit’s bankruptcy to a close and ended Emergency Management of our municipal government. Detroit Public Schools remain under Emergency Management and have been since 2009. The Plan of Adjustment is intended to prevent Detroit from going into bankruptcy again and to establish the means for Detroit to continue to provide basic city services.
While some power has been returned to the city’s Mayor and Council with Kevyn Orr’s exit, state oversight continues through the Detroit Financial Review Commission that will handle the city’s books and large contracts for at least the next 13 years. The 9-member commission was established by the “Grand Bargain” that brought law makers, private investors, and foundations together to “rescue” the Detroit Institute of Arts from the threat of liquidation to cover pension obligations and that removed it from municipal ownership.
The Rise of Authorities
The Governor’s Declaration of a State of Emergency in Detroit in 2013 and use of Emergency Management to facilitate the city’s Bankruptcy has greatly changed the structure of our municipal government. These changes were accomplished through many means, three being:
- Executive Orders from Emergency Manager Kevyn Orr that altered aspects of the recently ratified Detroit City Charter. The dissolution of the CDCs being one example.
- Legislation from Lansing signed by Governor Snyder that created or made way for the creation of authorities like the Regional Transit Authority and the Great Lakes Water Authority.
- Changes in executive administration made by both Mayors Bing and Duggan shifted power and responsibility from city departments to Authorities that have little or no such accountability.
Authorities are used to:
- Transfer public assets into corporate profits
- Work around local power by inserting regional and state oversight
- Shift policy from the “common good” to what’s good for business
- Shift public dollars and resources to for profit entities through operations and management contracts; often displacing public workers and union contracts in the process
- Acquire investment and funds through the writing of bonds unavailable to municipal departments due to negative credit ratings.
- Overcome ethical or moral issues, like mass water shut-offs by replacing the social contract with the bottom line.
Anatomy of an AUTHORITY
In-depth information on 4 of the many Authorities that have been created or empowered during Detroit’s restructuring.
Great Lakes Water AUTHORITY
The Great Lakes Water Authority will be funded by a $50 million annual lease for 40 years. Detroit will continue to own and control its local water mains and sewer system. Roughly $20 million will come from Detroit.
The regional authority will be governed by a board made up of two members appointed by the Mayor of Detroit and one appointed from each from Wayne, Oakland and Macomb Counties and the Governor. Major decisions, such as rate increases, will require five of the six votes to be approved.
The authority will provide public disclosure of all contracts on the authority’s website as well as competitive bidding on contracts.
There is not currently a way for citizens to file complaints. The authority does not currently have a website or contact information posted.
Public Lighting AUTHORITY of Detroit
The legislation that created the authority allocated $12.5 million annually from the City’s Utility Users Tax, which originally was levied to pay for public safety activities. That source was chosen because the marketability of the bonds required a secured revenue stream and public lighting is clearly an important part of insuring public safety. The law also allocated a portion of the City income tax to public safety to ensure that funding for the Police Department remains whole.
This dedicated revenue stream and its independent status enabled the PLA to sell $185 million in bonds to fund the relighting of the city. The original goal was to sell $160 million worth of bonds, but a very favorable interest rate of 4.53 percent enabled the authority to sell $185 million in bonds, providing funds for an additional 10,000 lights, meaning a total of 65,000 lights will be installed.
The PLA is run by a five-member board, all of whom are Detroit residents. Detroit Mayor Mike Duggan and the Detroit City Council each appointed two board members and the fifth member was picked by council from a list of candidates provided by the mayor. Current members of the PLA board are Dr. Lorna Thomas, who serves as chair; Eva Garza Dewaelsche, vice chair; David Jones, secretary and Nicole Spieles. The CEO is Odis Jones, a Detroit native who has extensive experience in managing urban initiatives.
The PLA website (pladetroit.org) has the 2013-2014 audit as well as the 2014-2015 annual budget. They also have their construction schedule through 2015 available via a map of Detroit and a legal description of the work.
Under the contact us portion of their website, visitors can report a street light outage via phone, email, or online form. They provide a PDF that informs visitors whether or not they should contact them or DTE.
The PLA can be reached at firstname.lastname@example.org, by calling (313) 324-8290, on twitter.com/DetroitPLA , and on facebook.com/PublicLightingAuthority
The board published their meeting minutes on their website in PDF format. They also post meeting times and locations updating the website with cancellations and location/time changes. There is a community meetings tab on the website with no upcoming events.
Detroit Land Bank AUTHORITY
The Detroit Land Bank Authority is financed through property sales, government grants, philanthropic support, donations, and fees for service.
The Detroit Land Bank is governed by a board of five directors. Four are appointed by the Mayor of Detroit and approved by Detroit City Council, and one is appointed by the Executive Director of the Michigan State Housing Development Authority (MSHDA). The current board members include Erica Ward Gerson (Chair), Marsha Bruhn (Vice Chair) Richard Hosey (Treasurer), Patricia Pernell Shelton, and Larry Lipa.
The Detroit Land Bank publishes meeting times and locations on their website along with some meeting minutes. Though they meet every month (subject to cancellation) they provide minutes from only 3, non consecutive, months. Additionally, they publish quarterly reports as well as all contract and auction information.
There is no way to file a formal complaint. You can fill out an inquiry/question form on their website buildingdetroit.org, call 1-844-buy-dlba, or email email@example.com or firstname.lastname@example.org.
Regional Transit AUTHORITY
The RTA funding includes State Revenue, Charitable Contributions, seven percent of administrative fees from a Federal Transit Administrative Planning Grant, and State Match funding to support the FTA grant.
Its 10-member board is appointed for three year terms by the county executives of Wayne, Oakland and Macomb counties, the chair of the Washtenaw County Board of Commissioners, the Mayor of Detroit, and the Governor of Michigan. The Governor’s appointee serves as chair and without a vote.
The RTA seems to be the most transparent of all four authorities. They have all of their policies published online as well as meeting information.
The RTA can be contacted by filling out a form on their website (rtamichigan.org), by phone (313) 402-1020, and by email email@example.com
The RTA provides access to all of their information on Rtamichigan.org. This includes fiscal budgets, bylaws, expense policies, and information regarding meetings.