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untanglingwebs
El Supremo
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CONSENT AGREEMENT WILL SAVE DETROIT
April 8, 2012
By Dawson Bell and Paul Egan
Detroit Free Press Lansing Bureau
LANSING -- In the historic consent agreement between the city and state over the management of Detroit, the city agreed to give up -- at least temporarily -- a good deal of sovereignty over its financial affairs.
PDF: Read the consent agreement.
So aside from the hope of future solvency, what does Detroit get in return?
A modest amount of increased state spending -- and an array of promises.
Those promises, most of them contained in a three-page appendix to the 53-page consent agreement, range from the expansively vague -- "ensure a quality school for every Detroit child"-- to the painstakingly specific: Providing $3 million to clear titles on land with redevelopment potential.
Only a few have such defined price tags, and those that do are often equivocal about the source of money. But a Free Press review of the documents indicates the near-term cost to the state could be $50 million -- or more.
The document includes a list of plans in various stages of completion and already on the state's books. Not all of them are wholly baked.
Some items, falling under the category of state support for transportation infrastructure, are mammoth undertakings, such as the expansion of 7 miles of I-94 and the construction of a 500-plus-acre freight handling facility in southwest Detroit for which there is no identifiable source of funding. About $2.5billion is needed to cover both projects.
Treasury Department spokesman Terry Stanton said the document represents a "new level of state commitment" to Detroit. But negotiators were constrained, he said, by the reality that -- even with a restructuring plan for the city in place -- direct cash assistance from Lansing is close to a nonstarter in the Legislature.
Leaders in the House and Senate called the consent agreement a positive development. But so far, they haven't been asked by the Snyder administration for assistance, in the form of aid for the city or changes in the law that would benefit Detroit.
Many individual members remain highly skeptical.
"I'll believe the change when I see the change," said state Rep. Pete Lund, R-Shelby Township. "I'm glad they got the consent agreement, but I'm a 'No' on any additional money for Detroit, period."
Some of the state assistance contained in the agreement doesn't require legislative approval (some spending projects were already in the pipeline); some of it would be in-kind rather than cash, such as turning Belle Isle into a state park.
Some of it skirts pesky questions altogether.
Under the agreement, for instance, the state promises to "expand and facilitate the Detroit Intermodal Freight Terminal," a project that has been in planning stages for a decade. The massive facility is aimed at overhauling movement of freight in southeast Michigan, now an outdated, irrational mishmash that virtually everyone agrees needs to be revamped. But the project is estimated to cost $539 million, of which only about $32 million has been secured.
Ditto the consent agreement's pledge to "accelerate" the addition of a lane and service drives in both directions on 7 miles of I-94 through the city. That one carries a price tag of about $1.8 billion.
Dave Wresinski, director of planning for the Michigan Department of Transportation, said cutting the construction timetable from 20 years down to eight years would save a lot of money. But it would also mean spending about a quarter of the state's annual road funding on one project in Detroit for eight straight years, another political nonstarter.
"We're going to need to come up with some additional revenue," Wresinski said.
Eric Scorsone, an expert on local government finances at Michigan State University and former senior economist at the state Senate Fiscal Agency, has studied the consent agreement and estimates the state aid for Detroit in it might total $50million-$100million.
That's in addition to the bonding assistance the state has promised that is expected to provide Detroit with about $137million in new cash flow, he said.
Stanton of the Treasury Department said the state has no estimate of how much its commitments will cost.
The agreement also mentions possible funds for Detroit under Public Act 243 of 1980, the Emergency Municipal Loan Act. The law allows financially troubled cities to borrow up to $3 million at a time. But "there is no expectation, at this time, that the city would apply for such a loan, and no application is pending," Stanton said.
The agreement also says the state will provide $3 million to clear titles on land parcels identified by the Detroit Economic Growth Corp. "to ready them for speedy economic development."
Spokesman Bob Rossbach said he didn't know whether the agency has prepared a list of priority projects that could be targeted with the $3 million.
In addition to Belle Isle, the documents call for DNR investment in the dilapidated Globe Trading Co. Building across from William G. Milliken State Park and the Detroit riverfront.
Vicki Anthes, planning section chief for the parks and recreation division of the DNR, said plans have been in the works for about two years to locate an Outdoor Adventure and Discovery Center and department offices in about 45,000 square feet of the building. Most of the $12.5-million project cost is already appropriated, with construction scheduled to start this fall.
DNR officials said they weren't aware the project was included in the consent agreement and didn't know whether that would affect their plans.
The agreement also includes a proposal for Eastern Market that appears to call for state investment in a building called Shed One that was dismantled years ago.
"There is no Shed One," said Randall Fogelman, Eastern Market's vice president of business development. Fogelman, who was unfamiliar with the details of the consent agreement, said the building is in pieces at Greenfield Village and there is a parking lot where the building once stood.
Asked about the discrepancy, Snyder administration officials said they would have to look into it.
Among other legislators, state Sen. Tupac Hunter, D-Detroit, sounded a more hopeful note about future assistance from the state to the city.
"I feel more confident with an agreement being in place that we'll get state support, but with this Legislature, I still don't think it's a done deal," he said.
"Detroit has always been a convenient punching bag for many in the Legislature and kind of an easy political football."
"The state is in it now," Hunter said. "In order for Detroit to be successful, the state definitely has to step up and help us."
Maybe that will happen. Maybe it won't. It's hard to tell from what's on paper right now.
Contact Dawson Bell: 517-372-8661 or dbell@freepress.com
Last edited by untanglingwebs on Sun Apr 08, 2012 5:05 pm; edited 1 time in total |
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Sun Apr 08, 2012 11:03 am |
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untanglingwebs
El Supremo
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SNYDER HAS MADE SOME PRETTY BIG PROMISES-BUT CAN HE KEEP THEM.
Flint has also had promises made and so far they are promises not kept. It would appear the Legislature has no desire to save the predominantly black urban areas. To think that these urban areas will not impact the suburbs is short sighted and frankly somewhat ignorant.
The minority population has not had their lives improved by the changes in Benton Harbor and only the corporations have benefitted. last night the news broadcast had a story about saginaw and the Saginaw leaders asking if the state help would come and would it come in time.
Don't these politicians realize the crime will spill into their suburbs and the suburbs will in some ways absorb the costs of not treating all populations in an equitable and reasonable manner/
Andrew Highsmith did an excellent dissertation on how racism and segregation in housing and education played a role in creating many of the problems Flint faces today. Today's state legislature wants to continue to perpetuate those sins of our past. |
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Sun Apr 08, 2012 11:13 am |
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untanglingwebs
El Supremo
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Detroit's work force lacking job skills; it's called a 'huge problem'
April 8, 2012 |
By John Gallagher and Jeff Seidel
Detroit Free Press Staff Writers
They're students, retirees, people living on disability and those laid off, too discouraged to look anymore.
Whatever their background, they're among the 1 of every 2 Detroit adults neither holding a job nor looking -- the worst percentage for 2010 among 41 major U.S. cities.
This vast segment -- some 174,000 Detroiters ages 16-64 who do not work -- poses a serious challenge for a city on the brink of fiscal ruin.
If Detroit is to pull out of its fiscal mess, a higher percentage of adults needs to have the skills necessary to enter the work force and join the local economy, ultimately adding to Detroit's income tax base, said Kurt Metzger, director of the Data Driven Detroit demographic research firm.
"These are not necessarily people who have chosen not to work," he said. "Some of them have been beaten down for years. It's a huge problem for the city. It's a huge problem for the region."
The labor force participation rate is based on different criteria than the traditional unemployment rate, which counts people who want to work but cannot find jobs. The jobless rate is 17.8% in Detroit.
The participation rate, tracked by the federal government, is a much broader count of any adult who has a job or is trying to get one. The higher the rate, the healthier the city and its economy, generally speaking.
Most major cities see at least 60% of adults participating in the work force, either by working jobs or actively applying for them. In several cities -- Seattle, Charlotte, N.C., and Denver, for example -- more than 70% of adult residents are in the labor force.
Detroit's rate is the lowest among big cities: 49.8%.
The Detroit City Council voted 5-4 Wednesday to approve a consent agreement with the state that avoids the imposition of an emergency manager and offers hope of setting the city on a path of fiscal reform.
A city with strong finances and functioning streetlights along with improved street and other infrastructure repairs could start to attract more businesses and residents who work, increasing city income tax receipts and pushing up the labor force participation rate.
Link to the suburbs
City, state and federal officials, along with nonprofits and others, have been trying to turn that rate around.
For years, they have tackled many of Detroit's social problems that have kept residents from developing necessary job skills, including high dropout rates.
Despite a spate of programs -- worker retraining initiatives, a restructuring of Detroit Public Schools and projects to tackle the widespread problem of adult illiteracy -- none has helped to make a dent in Detroit's low participation rate.
Meanwhile, the city's dysfunctional bus system makes it difficult for low-skilled residents without cars to get to jobs in the suburbs.
Civic leaders say they are working to improve regional transportation options to help city residents commute to jobs in the suburbs.
"People are really going to need to think about how you link city residents with suburban jobs," said Teresa Lynch, senior vice president of the Boston-based nonprofit Initiative for a Competitive Inner City, which is working with Mayor Dave Bing's Detroit Works planning effort.
"Lower-income workers just don't have real options in terms of buying their own reliable transportation," she said.
Thousands of city residents ride the sometimes unreliable public buses to the suburbs for low-wage service jobs.
"You have people undertaking these arduous commutes for very low wages," Lynch said. "It's great proof of the desire of Detroiters to have jobs."
Money for treasury
The low participation rate in Detroit helps explain the city's dire fiscal condition, with just 15% of total revenue coming from the municipal income tax. Many are retirees whose pensions or other benefits are exempt from the city income tax.
If a significant portion of the nonworking adults found jobs, it could add tens of millions to the city's treasury each year, Metzger said.
"If you were to employ a third of them, or half of them, you think about taxes or the basic economic structure of Detroit, it would make a big difference," he said.
The labor force participation rate is an important characteristic that can help define a city's near-term prospects and inform action plans.
"We always talk about unemployment in the city of Detroit and worry about those, rightfully so, but very seldom do people talk about labor force participation rates," Metzger said. "And that really has been an issue with the city of Detroit for a long time."
The nonparticipants in the work force do not bear all of the responsibility, of course.
Adding to Detroit's money problems are uncollected income taxes, possibly $155 million a year, suggests a report by international consultants McKinsey & Co.
The report found that Detroit collects just half the income tax it should because many suburban employers fail to withhold city income tax from the Detroit residents they employ and the city or state does not go after it.
This issue for Detroit, or any city, is not just about lost tax revenue.
Unemployed people often lack the money to keep up their houses or pay tuition for their school-age children. That can lead to a cycle of low property values and young people poorly prepared for the job market.
Looking for work
The stories of some Detroiters who don't work and have become too frustrated to look reflect the economic hardships of the city.
Michelle Zepeda, 38, of southwest Detroit is unemployed. She left her job as a medical receptionist when she had surgery in September 2010 on tumors in her throat.
"It's so hard to find a job," she said. "When you have been out of work for so long, they want to know why you don't have a job, even though you have these medical conditions. There is so much competition out there right now. It's extremely frustrating. You want to be out there working, and it's really hard to find a job where they actually give you a chance."
Zepeda has seven children; two are now adults. She receives food stamps and child support.
Lisa Gollman, a resident of the city's far west side, does not have a job and is not looking. The 41-year-old mother of three daughters said she is trying to get a degree and move to a better neighborhood.
She lost her clerical job with the Internal Revenue Service in a layoff six months ago. She now attends computer classes as she works toward an associate's degree at Henry Ford Community College.
Mostly, though, she hopes she can sell her home and move her family out of the city as soon as possible.
"The crime around here is so bad," she said. "The neighbors on both sides of me got robbed in the daytime. I've got really good neighbors, but the neighborhood is really bad. I'm just trying to my girls out of here."
Steve Holeman, 18, graduated from Ecorse High School last year, but he hasn't been able to find a job. He said he has applied to several fast-food restaurants and stores.
"I've been putting in a lot of applications, but still no luck," said Holeman, who lives in southwest Detroit. He said he has considered going to college but doesn't know what he would study.
"Nothing is going right in Detroit," he said. "No jobs or money. The city is going broke."
Schools and crime
Experts say the problem is stoked by Detroit's poor-performing schools. That feeds into a crime problem that lands some able-bodied residents in jail or prison, cutting them off from the labor market and hurting their chances for future employment if they end up with felony records.
A reform effort over several years has attempted to overhaul DPS, which is currently under an emergency manager and suffering with budget deficits. The reforms have included innovative education programs and redesigned schools meant to produce more graduates with marketable job skills, including DPS's Ben Carson Academy, a high school that trains students in areas to help them get jobs in health care.
On Wednesday, Roy Roberts, a former General Motors executive who serves as DPS's emergency manager, announced a major education reform, giving 10 schools quasi-charter status so they can hire and fire and launch innovative programs with strong track records. Each school will have its own five-person governing board.
The point of education reform is to create more college-ready students better prepared for the working world.
Roberts said that the school system must improve in order for the city's economy to rebound.
"We're not preparing enough students who are college- or career-ready ...that's a sin," he said. "We've got to change that."
Population loss
Charles Ballard, a professor of economics at Michigan State University, said several factors contribute to the low percentage of Detroit adults working.
"Educational attainment in Detroit is not very good," he said. "Since Detroit has been losing population, I think it is probably true that the city's population is older, and that would be consistent with lower" participation rates in the labor market.
Ballard also cited a rise in the number of people living on disability incomes as another potential reason people are no longer in the work force.
[b]Rosie McCalister, 55, who lives on the city's near east side not far from Eastern Market, had a stroke in 1989. She has been on Social Security disability since 1993. She has no family, and mostly leaves her apartment to go to physical therapy.
She enjoys her neighborhood and said she "wouldn't live nowhere else." But "I do think they need to get rid of (Mayor) Dave Bing and (Gov. Rick) Snyder, and everything else would be OK."
Sharon Wallace, 60, who lives with family on the east side, has been without a job or income since 2005. She retired from DPS after 24 years.
"I'm terribly frustrated," she said of applying for restaurant, clerical and retail jobs. "There is nothing to go into. Nobody is hiring."
She called her early retirement a mistake because she is not yet eligible to receive retirement benefits. She said she left her job because "things were changing. I didn't trust the schools."
Trisha Pauley, 31, is an unemployed medical assistant looking for work. She was laid off three years ago. "It's very frustrating," she said.
"There's so much crime, and we are hurting for money right now," said Pauley, who lives in southwest Detroit. "I heard a lot of schools have closed. That's sad. Where are our kids going to go to school?"
Peter Rhoades, 56, who lives in the city near 8 Mile Road and Woodward, retired from the City of Detroit a couple of years ago after working for 25 years as a city attorney and later for the buildings department. The only legal work he does now is for family and friends, he said, but he takes an active interest in issues in his neighborhood.
"The streetlights work only half the time," Rhoades said. "We have a dangerous house about four doors north of me, and it's been dangerous for at least three years and the city hasn't taken it down yet."
Contact John Gallagher: 313-222-5173 or gallagher99@freepress.com. Staff writer Chastity Pratt Dawsey contributed to this report.
More Details: Getting help
[b]The State of Michigan and the City of Detroit operate a number of work force training centers and programs to help residents gain skills needed to find a job.
• For information on the training programs, go to www . mycareereducation.org /guidedtour.asp , visit your nearest Michigan Works service center or call 800-285-96757.
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Sun Apr 08, 2012 11:24 am |
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untanglingwebs
El Supremo
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Detroit union leaders say workers are scapegoats in city's financial crisis
April 5, 2012 |
Comments
By Matt Helms and Kathleen Gray
Detroit Free Press Staff Writers
Leaders of Detroit's powerful municipal unions said Wednesday that their workers are being made the scapegoats of the city's financial crisis and will take the brunt of the punishment of a consent deal that almost certainly will mean more cuts in pay and benefits.
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This is not going to help the city," Henry Gaffney, president of the Amalgamated Transit Union Local 26, which represents bus drivers at the beleaguered Detroit Department of Transportation, said Wednesday night.
Gaffney said the consent deal approved Wednesday by the state, the City Council and Mayor Dave Bing "doesn't say how the city will be restructured. There's no money in it. So how's it going to get any better?"[b]
Union pay and benefits have been central to the debate about Detroit avoiding the state's appointment of an emergency manager. Gov. Rick Snyder said concessions the Bing administration negotiated with the unions last month were not deep enough, and he urged the council not to approve them before they expired June 30.
Richard Mack, an attorney who represents 33 city unions with roughly 5,000 employees, said he hadn't seen the final agreement and wasn't sure whether concessionary contracts ratified last month will be thrown out or honored.
"We're looking at everything," Mack said. "We have to figure out what's what."
Union leaders were angry with the deal.
[b]"All it's going to be is more exploitation of the citizens," said John Riehl, president of the American Federation of State, County and Municipal Employees Local 207, which represents about 1,000 water department workers. "I think they're trying to turn the unions into nothing but punching bags for the city's problems."
Gina Thompson-Mitchell, president of AFSCME Local 1642, said unions were betrayed.
"We opened our contract in good faith," she said. "Here we are today with the citizens of Detroit and the coalition of unions looking at a financial stability agreement that's going to cut our throats."
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Sun Apr 08, 2012 11:31 am |
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Adam
F L I N T O I D
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| Flint elected Walling who apparently wanted a takeover and not a "saving" consent agreement. |
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Adam
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Mysearchisover.com
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FB
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Tue Apr 10, 2012 4:48 pm |
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untanglingwebs
El Supremo
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Walling has publicly spoken against the Emergency Manager. Remember when council refused to agree to a consent order?
The Michigan Legislature could vote on the measures that would help, but they have not passed them.
So no money for the jail to reopen and other measures Snyder offered.
What I am hearing is there is a rcial component to the voting and many in the legislature do not want to support a predominantly black community.
Even the authors of the article about the consent agreement are unsure if Snyder can pull off the promises made to detroit. |
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Tue Apr 10, 2012 5:14 pm |
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untanglingwebs
El Supremo
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The loss of revenue shating is definitely impacting all communities. Detroit public oficials told Snyder if they received the promised revenue share money, there deficit would be manageable. Detroiters point to Flint as a reason not to have an emergency manager.
The state is snatching every resource they can to balance their budget, but that strains the cities. Flint's revenue sharing appears to have been cut by more than two-thirds. That would have been general fund money to pay for police and fire! |
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Tue Apr 10, 2012 5:18 pm |
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Adam
F L I N T O I D
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quote:
untanglingwebs schreef:
Walling has publicly spoken against the Emergency Manager. Remember when council refused to agree to a consent order?
Did Walling speak out before the takeover? I don't remember the council voting against a consent order. I do remember them voting for the takeover though. |
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Tue Apr 10, 2012 7:19 pm |
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untanglingwebs
El Supremo
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Most of the deal making was behind closed doors. Some council went to Lansing to ask for the takeover. Neeley asked to fight the takeover, but you are right as council voted to allow the takeover.
Walling and his lack of accountability made council realize the problems that would remain with him in charge.
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Flint likely to get Emergency Manager.
by Michigan Messenger on Tuesday, November 8, 2011 at 10:47pm ·
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A review board voted unanimously to recommend that Gov. Snyder appoint an Emergency Manager for the city of Flint and the Treasury Department says the governor agrees with that recommendation.
The recommendation accompanies the review team’s report to Gov. Rick Snyder, which says a “local government financial emergency” exists in the city, and “no satisfactory plan exists to resolve the emergency.”
The review team declined to pursue the option of a “consent agreement” with local elected leaders to resolve the financial problems because “it would not afford an efficacious remedy to the financial emergency,” according to the team’s 10-page report.
Michigan Department of Treasury Spokesman Terry Stanton said Snyder concurred with the unanimous opinion by the financial review team.
The city has seven days to request a hearing in front of the governor or his designee, Stanton said.
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Wed Apr 11, 2012 6:46 am |
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