Catching up, out of court

Catching up, out of court

Detroit’s bankruptcy trial had a few days off, but that didn’t stop related news from happening. Here are some of the events:

Approval of the Great Lakes Water Authority

As part of the bankruptcy settlements, county executives and Detroit Mayor Mike Duggan last month announced an agreement to form a regional water authority. It only required one county commission’s approval, which came from Wayne County, but last week both the Oakland County Commission and the Macomb County Commission came on board.

It wasn’t unanimous. In this article in Hometown Life, the two dissenting Oakland County commissioners explain their “no” votes. Meanwhile, Reuters reports the deal, reached through the court-supervised mediation in the bankruptcy case, eases risks for bondholders.


Three major creditors remain without settlements in the case but have been in closed-door mediations. They are:

The Macomb County Public Works Commissioner, Anthony Marrocco, who also opposed the regional water deal, has a $26 million claim as part of a lawsuit he’s pursuing against the city related to the Macomb Interceptor Drain Drainage District.

Financial Guaranty Insurance Co., which insured the Certificates of Participation (COPs) as part of the 2005 pension financing deal. FGIC’s claim is about $1.1 billion in the case. Mediation has been ongoing; Reuters reported last week the talks moved to New York.

The financial institutions (including hedge funds) that hold the actual COPs are also without a deal in the case.

More information about attorneys for the three creditors can be found here.

Investigation Cancelled

Earlier this month, the Detroit City Council ordered an investigation into the city’s top attorney, charging that he lied to a state loan board. That request has been dropped. Here’s what happened:

Detroit Corporation Council Melvin “Butch” Hollowell is the head of the city’s law department, meaning he is the chief attorney for the Mayor. But the Corporation Council also represents the City Council, and Council Member Raquel Castaneda-Lopez said Hollowell misrepresented Council’s wishes regarding a proposed sale of land in the Delray community that the state wants for a second bridge crossing between Detroit and Windsor. She asked Detroit’s Inspector General to formally investigate the legality of Hollowell’s actions, saying Council never said its plan was not viable and that the Corporation Counsel acted solely on his own.

Last week, she dropped that assertion. “Although we are different people from different backgrounds with different opinions and strategies, we are united by our shared goals and a commitment to serve the city,” she wrote in her request to halt the investigation after Hollowell explained his actions.

Meanwhile, in the neighborhoods…

While all the court proceedings and administrative actions continue, the Detroit Free Press published a piece reminding the world about how innovative the city’s residents are while they wait for city services to improve. Building off court testimony about firefighters using pop cans to notify them of calls and other examples, Tresa Baldas today reports about original efforts to replace missing manhole covers and re-route water from fire hydrants to businesses. Perhaps when the bankruptcy is resolved, the $1.7 billion the Plan of Adjustment calls for to fund city services will make such stories impossible.