%1

The Michigan Senate unanimously passed a bill that would make the board members who oversee investments of the city of Detroit health care funds more transparent and subject to dismissal for incompetence, the Detroit Free Press reported today. The bill is a leftover from the package of bills the Legislature passed in 2014 to bail out the city of Detroit as it went through bankruptcy. It would allow the authority that oversees the board to remove a trustee without cause with 30 days notice or immediately if the trustee is found to be incompetent. The board of trustees would have to meet at least quarterly in meetings open to the public and the board would be subject to the Freedom of Information act. In addition, the board would have to do annual reports detailing any travel or other expenditures made by board members and their pay would be approved if they actually attended meetings and would be limited to a maximum of 45 hours per month. The action on H.B. 5421 comes after Detroit pension boards were plagued by members who took elaborate trips to conferences.

Bracing for hefty pension and debt payments that each will exceed $100 million a year for several years, the city of Detroit is preparing a first-of-its-kind 10-year financial report that will include potential revenue from the Pistons' expected move to Detroit and other downtown projects, the Detroit Free Press reported today. The report, expected by February, will be crucial to the city maintaining its post-bankruptcy financial health, and fulfilling its goal to get out from state oversight by 2018, Detroit Chief Financial Officer John Hill said. Pension payments could start at $167 million in 2024 and increase by 2 percent each year for the next 20 years. About the same time, in 2025, Detroit begins a six-year stretch of annual debt service payments of between $101 million and $117 million, according to recent data.

Wayne County, Mich., the home of once-bankrupt Detroit, won release from its consent agreement with the state as its finances improved after 14 months of oversight, Bloomberg News reported yesterday. The county received formal notification from the state approving its request to be released from the pact, the county said yesterday. Michigan Treasurer Nick Khouri found the county met terms of the agreement by fixing its deficit and restoring fiscal stability. In June 2015, County Executive Warren Evans asked the state to declare a financial emergency to help Michigan’s largest county fix its budget crisis. He requested the consent pact, an initial step toward state oversight. That agreement, which became effective in August 2015, allowed the county to avoid bankruptcy. At the time, the county of 1.8 million residents faced a $52 million annual deficit because of rising costs and a declining population. Since then, county officials moved to reduce retiree health care bills, cut labor costs and turned once-chronic deficits into surpluses.

A divided federal appeals court on Monday rejected claims by Detroit retirees that their pensions were unfairly cut to help the city end the largest U.S. municipal bankruptcy, Reuters reported today. The U.S. Court of Appeals for the Sixth Circuit in Cincinnati said that restoring the pension cuts would "unavoidably" unravel Detroit's reorganization plan, which helped the city shed $7 billion of debt and end its 17-month bankruptcy in December 2014. "The harm to the city and its dependents — employees and stakeholders, agencies and businesses, and 685,000 residents — so outweighs the harm to these appellants that granting their requested relief and unraveling the plan would be impractical, imprudent, and therefore inequitable," Circuit Judge Alice Batchelder wrote in the opinion.

Marking a milestone in Detroit's recovery from insolvency, the state commission that oversees the city's finances today declared the city in substantial compliance with the terms of its exit from municipal bankruptcy — a step toward ending state oversight, the Detroit Free Press reported on Saturday. The declaration came after certification of an audit of the city's 2014-15 budget. Detroit now must get similar approvals of the next two fiscal years before the city can be removed from state oversight as early as 2018, under a state law passed in 2014 that governs how the city must operate. Detroit has posted surpluses in recent years on the city's annual budget of roughly $1 billion, and the Duggan administration also projects a balanced budget for 2016-17. If the city stays within budget, and an audit is certified in 2018, Detroit could end a period of direct oversight and go into a period when the review commission would be mostly dormant. It would mean the city would be free to operate without getting required approval from the review commission on matters including budgets, budget amendments, contracts and labor agreements. Detroit still faces risks in the long term, including a $490-million shortfall in pension funding the city will have to pay in the coming years, in addition to unforeseen events like an economic downturn. If Detroit runs a deficit before 2018, it would restart a three-year period of oversight by the review commission.

Detroit, currently under post-bankruptcy state oversight, is planning to sue mostly banks and for-profit companies for some $12.2 million dollars in unpaid taxes from investment properties they purchased, Reuters reported yesterday. Nearly 600 lawsuits will be filed later this month mainly in Michigan District Court in Detroit to recover tax money owed from 2010 to 2012 on 1,543 properties if demand letters the city sent this week to property owners do not result in payment. Detroit said that it plans to go after delinquent taxes for other years with a subsequent effort. Detroit exited the biggest-ever U.S. municipal bankruptcy in December 2014, shedding about $7 billion of its $18 billion of debt and obligations. The city aims to be released from post-bankruptcy state oversight by January 2018, according to Mayor Mike Duggan.