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East Cleveland, a city of 17,000 people, is considering whether to file for municipal bankruptcy, which would be a first for an Ohio municipality, the Columbus Dispatch reported today. The Cleveland suburb has been under a state-ordered fiscal emergency since 2012, which means a fiscal commission oversees the city’s finances and works with officials to devise a recovery plan. East Cleveland was under a fiscal emergency from 1988 until 2006, the longest in state history. The city’s financial woes have reached a point where the head of the fiscal commission doesn’t think bankruptcy would even help. Sharon Hanrahan of the Office of Management and Budget said that she’s concerned the city won’t have enough cash in the bank to make payroll for the first pay period of 2015. Mayor Gary Norton said a bankruptcy filing is being considered.

Municipal bankruptcy is in Detroit’s rearview mirror, but a new challenge looms: a wave of foreclosure notices for unpaid property taxes, the Wall Street Journal reported yesterday. After years of delay, Wayne County, which includes Detroit, is informing residents in an estimated 35,000 occupied homes that they are delinquent in their city taxes, which could lead to their houses being auctioned off. That could affect about one in seven Detroit residents, or 97,733 people, according to an analysis of Wayne County’s foreclosure list by Detroit-based Loveland Technologies. Experts say homeowners struggling in a recovering job market and saddled by depressed home values make property-tax delinquencies a persistent problem, especially in aging urban cores. National estimates for the amount of property-tax delinquencies are hard to come by, but the National Tax Lien Association pegs the annual total at $14 billion. Advocates fear that a new foreclosure wave would only accelerate decay and vandalism in a city plagued by abandoned houses and hamper its rebound from the financial crisis and its bankruptcy. For residential properties subject to foreclosure in Detroit, the average amount of taxes and fees owed is $7,067. The average assessed value of homes entering into foreclosure this year is $20,930, which might be significantly higher than what they would fetch on the market, according to Sean Jackson, who tracks blight and tax-foreclosure issues for Rock Ventures, an umbrella organization for companies owned by Quicken Loans founder and Detroit booster Dan Gilbert.

The state-appointed receiver for a small fire district in Central Coventry, R.I., filed a petition to put the district into chapter 9 protection, Reuters reported yesterday. The Central Coventry Fire District had been negotiating with the firefighters union for about a year and a half. Receiver Steven Hartford has said the district cannot afford to keep operating without a revised labor contract. The fire district has its own taxing power and is independent of the town of Coventry. The district's board of directors, elected by taxpayers, asked to put the district under court oversight in 2012, according to bankruptcy documents. The district had overestimated revenues by 15 percent of its total budget — for two consecutive years — resulting in a more than $1.6 million deficit. Despite the shortfall, the district hired new employees and leased new equipment, bankruptcy documents said. The state appointed a receiver in May.

A Michigan board yesterday agreed to send nearly $195 million in state funds to Detroit's two retirement systems on Feb. 9 as part of a pivotal deal that helped to end the city's historic bankruptcy, Reuters reported yesterday. Jeremy Sampson, a spokesman for Michigan's Treasury Department, said that the three-member Michigan Settlement Administration Authority took the action after the city's bankruptcy reached certain triggers, including the dismissal of legal claims against the state that were related to the bankruptcy. The state funds are part of the so-called grand bargain, which includes $366 million from philanthropic foundations and $100 million from the Detroit Institute of Arts pledged over 20 years to ease cuts to pensions for Detroit retirees and save artwork from being sold to pay city creditors. The first payments by the foundations and the museum to the retirement systems totaling $23.3 million were made on Dec. 10, the effective date that marked Detroit's exit from the biggest-ever U.S. municipal bankruptcy.

Stockton, Calif., won permission to exit bankruptcy by paying certain investors less than they’re owed, and as a result, other localities in the state may see borrowing costs increase, Bloomberg News reported yesterday. In the proposal approved by a judge in October, Stockton’s certificates of participation, which are securities backed by leases, stand to deliver varying recovery rates as the city shields pensioners. By deterring investors in this type of debt, the outcome may raise interest rates for some California governments using the financial tool, said Matt Fabian at Municipal Market Advisors and James Iselin at Neuberger Berman. The municipal market has earned 9.4 percent this year, the most since 2011, Bank of America Merrill Lynch data show. With lower-rated credits and projects that may not be essential, “it’s going to be much harder for them without adding a meaningful yield premium to entice investors,” said Iselin, who helps manage about $10 billion as head of munis in New York.

San Bernardino, Calif., has a “work plan” to prepare its bankruptcy exit plan, and it’s been reviewed by the entire City Council — not just the small team that previously was allowed to know details of the confidential mediation where much of the city’s bankruptcy plan has been ironed out, the San Bernardino Sun reported today. City Attorney Gary Saenz, who revealed those two changes in a statement Monday, said that the council will now meet regularly with the bankruptcy team. “That order (by mediation Judge Gregg Zive) has now been revised so that Council will now be part of those negotiations and will significantly become a part of bankruptcy team discussions,” Saenz said. Previously, the majority of the council was unable to know firsthand what the city had to work with. That hamstrung those who were asked to trust the bankruptcy team, said Councilman Henry Nickel. U.S. Bankruptcy Judge Meredith Jury, who’s overseeing the city’s case, has expressed increasing frustration with mediation and suggested that she will begin to loosen its confidentiality requirements. Although she has spoken with Zive, she too has been outside the gag order. In November, Jury gave the city a deadline of May 30 to come up with a complete bankruptcy exit plan, known as a plan of adjustment.

Bankruptcy Judge Steven Rhodes yesterday said that Detroit must reveal later this month the total cost of fees charged by lawyers and consultants as part of the city's bankruptcy case, Crain’s Detroit Business reported today. Judge Rhodes yesterday told the city's attorneys and advisers to submit final invoices within a week. He approved Detroit's historic reorganization in November, and state and city officials declared the bankruptcy over last Wednesday. Fees charged to the city exceed $140 million. Mediators last week reached agreements with all parties on fees, but the judge still needs to approve them. Mediators led by Detroit's chief federal judge, Gerald Rosen, say that their work appears to be over as they played a crucial role in striking deals between Detroit and its many creditors during the bankruptcy.

Jefferson County this week filed a motion with the U.S. Court of Appeals for the Eleventh Circuit asking it to take an appeal on a matter relating to a lawsuit by group of sewer customers who want to see the county's bankruptcy exit plan unraveled, Al.com reported on Friday. County lawyers are asking the court to take up whether the sewer ratepayers' challenge of the bankruptcy judge's confirmation of the bankruptcy exit plan is moot, either constitutionally, statutorily, and/or equitably. U.S. District Judge Sharon Blackburn last week ruled the county can appeal her refusal to toss out a lawsuit by the sewer ratepayers. The county asks the Eleventh Circuit to accept the appeal because if the District Court ruling stands "it will cast a pall over municipal bankruptcy cascades throughout the nation and chill the market for the exit financing that facilitates successful emergence from bankruptcy," according to the Petition for Permission for Interlocutory Appeal.

Federal court mediators said yesterday that law firms and consultants reached agreements with Detroit over fees that they charged the city for work on its historic bankruptcy, Reuters reported. The mediators said in a statement that the agreements, which were not disclosed, are subject to approval by Judge Steven Rhodes, who oversaw the city's bankruptcy, which ended on Wednesday. As of Oct. 24, fees and expenses totaled nearly $141 million, with law firm Jones Day submitting the biggest bill, totaling $52.3 million. The deals were reached "after intensive negotiating sessions over the past several weeks" involving representatives of the law firms and consultants, as well as the city's emergency manager, mayor, council and Michigan Governor Rick Snyder, the statement said.

The judge in the bankruptcy case for the city of Stockton, Calif., denied a motion by a holdout creditor that would slightly increase the amount it would receive on its claim, Reuters reported yesterday. Attorneys for Franklin Templeton Investments had filed a motion for a stay pending appeal of a ruling by the judge in October that confirmed the city's plan to exit chapter 9 protection. In the city's plan, Franklin would receive just over $4 million of the $36 million it said that it is owed. The remaining $32 million of the total was considered unsecured, for which Franklin would receive less than a penny on the dollar.