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The city’s largest union wants Detroit’s bankruptcy judge to allow a direct appeal to the 6th U.S. Circuit Court of Appeals regardless of whether the city is ruled eligible for chapter 9 relief, citing public interest in the case and the likelihood of a precedent-setting ruling, the Detroit News reported today. The request from the American Federation of State, County and Municipal Employees, if granted, threatens to slow down the biggest municipal bankruptcy case in U.S. history. The case is expected to have broad implications on the nation's municipal bond market and sanctity of public pension funds. The request coincided with a deadline yesterday imposed by Bankruptcy Judge Steven Rhodes, who wants unions, retirees and pension funds to file briefs about whether he should consider labor or bankruptcy law standards for good-faith negotiations. Normally, an appeal would be handled first by a U.S. District Court judge. AFSCME’s request would bypass the district court and take the appeal directly to the Sixth Circuit in Cincinnati, Ohio.

Desert Hot Springs, a resort town in California, warned yesterday that it will run out of money by March due to burdensome salary and pension costs and could join other U.S. cities that have recently filed for bankruptcy protection, Reuters reported today. The problems in Desert Hot Springs came to light last week when a new finance director reviewed the city's records and discovered a $3 million shortfall in its budget of $13.5 million. Amy Aguer, the town’s interim director of finance, did not have details on how the shortfall occurred but said that it was the result of higher-than-expected pension and salary costs, especially in the police department, and overly optimistic estimates of revenue.

Richard Cordray, director of the Consumer Financial Protection Bureau, said he wants more "openness and transparency" for the agency's oversight of auto lending, but added that the agency still has strong concerns about how dealerships arrange loans, AutoNews.com reported today. The remarks, made during a Senate Banking, House and Urban Affairs Committee hearing yesterday, were Cordray's most detailed public remarks on the subject, and showed an effort to strike a balance in the way the bureau regulates transactions in the auto market. On the one hand, the agency is looking to flex its muscle in the market to protect consumers from abusive loan practices. But it also wants to extend an olive branch to dealers and auto lenders, who say that the CFPB is pushing them into changing their loan practices without showing the data to explain why.

A Michigan emergency loan board yesterday approved a plan for the state of Michigan to lease Belle Isle Park from Detroit for 30 years, with possible extensions up to 60 years, rejecting a competing plan from Detroit's city council that would have limited the initial lease period to 10 years, Reuters reported yesterday. The three-member panel, which was appointed by Michigan Governor Rick Snyder, unanimously approved the lease, which is for 30 years with two optional 15-year renewals. The state also has said it will spend up to $20 million to improve facilities on the island park in the Detroit River in the first 18 to 36 months of its management, which will begin in 90 days. The state said that it hopes to finance the improvements through grants, bonds and private donations, and the longer lease will be helpful in seeking funding for the upgrades to the island's public facilities.

The judge overseeing Detroit's historic bankruptcy filing has made it clear that he expects full disclosure of professional fees billed in the case, but the city will ask tomorrow for an exception: fees paid to its banker, Reuters reported yesterday. Detroit has argued that Barclays Capital, a unit of Britain's Barclays PLC, needs to keep the fee structure of a $350 million loan confidential because it is commercially sensitive information. The city also argued that if the fee arrangement were public, it might drive up the cost of the loan. "Since it's a public entity with so many diverse stakeholders, it's important for the general public to feel that the process was fair," said John Penn, a bankruptcy attorney with Perkins Coie in Dallas. "I would not be surprised if the judge required disclosure." Barclays' DIP loan to Detroit is typical of loans that come with confidential fee letters. After the bank advances the money to the city, Barclays plans to carve up the loan and sell it to investors rather than hold onto it.

While he has rescued a county, a bus system and a 14,000-worker hospital network, Detroit Mayor-elect Mike Duggan wants to get involved in Detroit's restructuring process sooner rather than later, Bloomberg News reported today. “The only authority I’m going to have is the authority I can convince the governor and emergency manager to assign me,” Duggan said. “I’m attempting to persuade them. We’ll see.” With plans to combat blight, crime and population losses, Duggan must remake a dysfunctional government that’s in the hands of Emergency Manager Kevyn Orr, a former classmate at the University of Michigan law school. Orr can be ousted by Detroit’s City Council — with the mayor’s approval — as early as September 2014, though Duggan said he hopes to manage operations well enough to take control even sooner.

National Public Finance Guarantee Corporation and Assured Guaranty Municipal Corp. — both of which insure Detroit bonds — filed a complaint seeking to block the city from diverting bondpayments to other activities, including paying for services, the Detroit Free Press reported on Saturday. Ambac Assurance, another bond insurer that backs Detroit debt, also filed a similar complaint seeking to force the city to pay its bond obligations. It marks the first big direct showdown between the city and its bondholders, which did not object to the city’s eligibility for chapter 9 bankruptcy. An eligibility trial is wrapping up today, with only labor creditors and retiree groups objecting. The bond insurers argued in a court filing that the city is unlawfully taking tax revenue that was meant for unlimited-tax general obligation bonds and is using it for other purposes. They asked Bankruptcy Judge Steven Rhodes to force the city to redirect the taxes to bondholders.

Michigan Governor Rick Snyder (R) is optimistic that Detroit's bankruptcy case can be wrapped up during the remaining tenure of the emergency manager he installed to run the cash-strapped city, Reuters reported yesterday. Snyder appointed bankruptcy attorney Kevyn Orr to an 18-month posting as the city's emergency manager. Then in July, with Snyder's approval, Orr filed the largest municipal bankruptcy in U.S. history, citing a mountain of debt and liabilities in excess of $18 billion. Orr has said that he expects to depart by September 2014 at which point he also expects Detroit to emerge from bankruptcy. The federal judge presiding over Detroit's bankruptcy also has indicated he is seeking to move the case speedily through bankruptcy court.