DETROIT—City Council members decided Tuesday to table a vote on major contracts that are crucial to a financial agreement between the City and the State of Michigan.
In an 8-1 decision the council voted to hold off a vote on approving key contracts that are necessary in order for the cash strapped city to receive $30 million in bond sales that the State is holding in escrow. City officials including Mayor Dave Bing have warned that the city could run out of cash if the council did not approve the contracts as quickly as possible.
The City’s head lawyer, Crystal Crittendon, advised the council not to vote on a $300,000 contract with the law firm Miller Canfield.
“I did not prepare [the contract]. I did not approve it. In my opinion, that [vote] would be a violation of the city charter,” Crittenden told council members in Tuesday’s meeting.
After hearing from Crittendon, Council members decided to table the Miller Canfield vote along with the second major contract, one that would hire the financial consulting firm Ernst & Young to advise the city on cost-saving audits and restructuring.
Last Thursday, the Bing administration and State Treasurer Andy Dillon announced an agreement on key “milestones” that needed to be reached in order for the city to receive the remaining $30 million withheld by the state.
State officials have urged the City to move faster on financial reforms to prevent the city from running out of cash by the end of the year. The reform deal between Bing and Dillon needed approval from council by Tuesday in order for the City to receive $10 million to the city this week.
Bing said the council’s decision would further damage the city’s financial outlook.
“The State has made it very clear that if the City of Detroit did not meet all three milestones as outlined in our agreement, money from the City’s escrow account would not be forthcoming,” Bing said in a statement after the Council declined to vote on the contracts Tuesday afternoon. “The Council’s rejection of the Miller Canfield contract means the City will not receive the first $10 million scheduled for release today. As a result, it will be more difficult for the City to maintain its liquidity until the receipt of property tax revenues beginning in January.”
Council members brought up a number of concerns with the contracts.
Councilman Kenneth Cockrel, Jr. said he wanted to know why the city’s auditor general would have to sign a confidentiality agreement before conducting an audit on invoices associated wit the contracts.
“That may be appropriate for private companies but this is public money,” Cockrel said, noting that public funds deserve more transparency.
Meanwhile, the city could face payless paydays if no additional funds come in from the state, a threat that has loomed over many city council decisions over the past year.
“Today’s vote is one more example of how City Council has stalled our efforts to bring financial stability to the City of Detroit,” Bing said Tuesday.
More than a hundred people crowded into the hallway outside of the council’s meeting chamber Tuesday to express concern on various issues that were up for vote, namely the milestone contracts but also a massive proposed land sale to a private developer.
Some said they waited three hours before getting the chance to comment before the council. Most of those in attendance did not support the Milestones agreement or the land sale.
In Tuesday’s meting which ran more than seven hours, Council members decided to delay a vote on the sale of nearly 150 acres of city land to developer John Hantz until Dec. 11 pending a public hearing from residents of the neighborhoods affected by the sale.
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