In advance of the city’s bankruptcy trial, scheduled to begin Aug. 21, attorneys are taking depositions from a number of people, gathering information that will inform and help shape legal strategies during the confirmation hearing on the city’s Plan of Adjustment.
And lucky for us, the Detroit Free Press has obtained partial transcripts of a few of them, namely Mayor Mike Duggan’s and City Council President Brenda Jones.
Duggan say it’s “entirely possible” that Orr remain in Detroit after Sept. 27, which is the first date the City Council can vote to dismiss him, according to the Michigan emergency manager law. The Freep reports Duggan saying he has discussed the prospect with Jones and some council members.
“Certainly Mr. Orr’s background and expertise are probably going to be needed post Sept. 27,” Duggan testified Friday in a deposition tied to the city’s upcoming bankruptcy trial. “It just would not be in the role of emergency manager.”
Jones, meanwhile, told attorneys she fell asleep several times while reading the 900 pages of bankruptcy documents city attorneys provided her.
“I have tried to review it and fell asleep with that reviewing,” she testified.
Host Christy McDonald asks how Mayor Mike Duggan will respond to the call to oversee the Detroit Water and Sewerage Department. Emergency Manager Kevyn Orr this week announced he would hand over control of the department — with it comes the controversy over the residential shutoffs. MiWeek co-hosts Stephen Henderson and Nolan Finley outline the issues involved with the department, specifically how its operation and finances play into the bankruptcy discussions.
As part of the Detroit Journalism Cooperative effort, Bridge Magazine‘s Mike Wilkinson and WDET‘s Sandra Svoboda teamed up on a couple of reports about Detroit Mayor Mike Duggan’s campaign finance and fundraising strategies. They are:
Today, Detroit Free Press columnists Stephen Henderson and Nancy Kaffer examine the stories and the impact of the mayor’s nonprofit. Kaffer writes:
For the last decade, southeast Michigan politics have been absolutely lousy with nonprofits, the kind that can receive unlimited contributions but don’t have to disclose donors. And thus far, the track record for politicians and those kinds of nonprofits hasn’t been so good.
And Henderson concludes:
…these committees have one purpose, no matter how upfront their propagators pledge to be: They’re intended to operate around the law, to dance outside campaign finance and other tax restrictions, to achieve political aims. Right there, that puts them out-of-bounds in my book. We have campaign finance rules and restrictions for a reason. And we expect that public officials will conduct their business, well, in public. These committees are about undermining those expectations, ostensibly within the letter of the law, but clearly far outside the spirit of it.
Others have weighed in about what issues accompany the modern era of campaign finance. Here are two interviews Svoboda conducted in conjunction with the articles.
Here is a transcription of the Rich Robinson interview.
Here is a transcription of the Peter Quist interview.
As part of WDET’s partnership in the Detroit Journalism Cooperative, WDET’s Bankruptcy Reporter and Next Chapter Detroit Blogger Sandra Svoboda teamed up with Bridge Magazine’s Mike Wilkinson to look at Mayor Mike Duggan’s campaign finances. They look at his Super PAC from last year’s election, and discuss the other fundraising efforts he has underway. Theircollaborative reports are the first to document Duggan’s campaign finances and funding in a transparent way. Wilkinson and Sandra talked with WDET’s Pat Batcheller about their two articles.
Here’s a transcript of the conversation:
Pat Batcheller: A new fund has been created to help raise private money to pay for some of the projects that the Mayor would like to initiate and then also, you’ve taken and extensive look at how Super PAC money played a significant role in the last mayoral election and how that may change municipal elections across the country. Let’s start with you Mike, on the, what you uncovered regarding this new nonprofit called the Detroit Progress Fund. What is that exactly?
Mike Wilkinson: We learned about this about a week ago that Mayor Duggan had a birthday party over on the riverfront where people were invited to bring their checkbooks so that they could put some money into the Detroit Progress Fund, and it turns out that it was created back in February and the goal of it, well, it’s considered a social welfare nonprofit, a 501c4 and they’re going to use the money to promote the mayor’s agenda.
PB: We’ve seen funds like this before, of course, the Kilpatrick Civic Fund and Gov. Snyder’s NERD fund, both of which raised significant amount of controversy for each politician. The mayor obviously is cognizant of the pitfalls of that, I would think, otherwise, he wouldn’t go down this road. What is he going to do to ensure that he doesn’t fall into those traps?
MW: One of the things when we asked the mayor’s staff about this, they were very quick to respond that it’s going to be different in terms of transparency. By IRS rules they only have to give a limited amount of data every year when they make their filing but they’re going to disclose, unlike what Snyder did initially with the NERD fund and Kilpatrick with the Civic Fund, they’re going to disclose who their donors are, they say, and they’re going to disclose what the money gets spent on. Kilpatrick did not do that and part of what he did end up spending it on, golf clubs and some other personal stuff, ended up adding to his time that he’s now spending in federal prison. And in the NERD fund’s case, the revelation of the fund led to a lot of embarrassment for the governor and he shut it down and said that if he creates a new fund he will disclose.
PB: What kinds of things could this fund be used for?
MW: It’s limited by IRS rules. You can’t get involved in the direct partisan politics. What Kilpatrick had aid he was going to do and what is allowed is I think some of the voter education efforts, but what we can see from the records that are filed with the state, the Detroit Progress Fund is not going to be going into that. It’s more to support the mayor’s agenda, and the one example that John Roach, a spokesman for Duggan gave us, is in the event when they have a high-ranking official somewhere else in the country who’s coming to Detroit to interview for a job, that the fund would be able to pick up the travel and defray the costs so that the taxpayers would not have to.
PB: And of course as we learn more about the Detroit Progress Fund, we know that a significant amount of money was raised for the last mayoral election to support Mike Duggan and his opponent last November, Benny Napoleon. Sandra, you looked into this as far as the influence that Super PACs had on this.
Sandra Svoboda: It was reported during the election last year that both candidates, Benny Napoleon and Mike Duggan, had Super PACs, What I don’t think we realized is how truly unusual that is. In the wake of the 2010 U. S. Supreme Court ruling, Citizens United, which really changed the game of campaigns because of the campaign finances restrictions being loosened on who can pay for what, candidates across the country have been able to use these Super PACs. Or, well, I shouldn’t say it that way. The candidates themselves don’t use the Super PACs because they’re not directly coordinated. But it’s clear when you look at the donors and even more so the expenditures in the Super PACs that they are clearly supporting certain candidates. It happened during the mayoral election which is kind of unique around the country. We don’t see that many big city mayor although the experts, the advocates for campaign transparency that we interviewed expect this to be a much bigger trend.
PB: And you’ve put together a database on Bridge so people can see who the big contributors were and there were some interesting but not necessarily surprising names of some of the biggest donors to the mayoral campaigns, names people are familiar with like Roger Penske, for example.
MW: Mr. Penske, who has long been a supporter of Detroit politics. He’s been a supporter of the city. He’s committed $10 million to the grand bargain in bankruptcy court. He personally gave the Turnaround Detroit Fund for Mr. Duggan $500,000. His corporation gave him another $500,000. He also gave $3500 to his direct campaign committee. So you have people who are able to give huge sums of money and what it does, what I find interesting, if you look back at what was considered the most expensive mayoral election before this one, you go back to, I think it’s 2005 and with Freman Hendrix and Kwame Kilpatrick, it was $5.4 million between two men. Here, Mike Duggan raised himself $2.8 million, another $3.1 million was raised in support of him but the $3.1 million was from only 246 people. They average well over $12,000 a donation. It took him 3,600 people to raise the $2.8 million. So you really narrow your focus of fundraising if you have several big backers. You don’t have to have the wide spread of support at least financially to run a campaign.
SS: And that’s the difference in the post-Citizens United era. There can be these unlimited amounts of fundraising going to campaigns through the Super PACs, not coordinated through the campaigns but certainly supporting. And we as voters, we as the public don’t necessarily know where that money’s coming from.
PB: So that’s why you created this database to give people an avenue to find out where the money came from. How does it work?
MW: If you were a regular citizen and you wanted to know who supported Mike Duggan, you would have had to go to two different places: to the Wayne County Clerk’s election database, contribution database, and to the Secretary of State at the Michigan level. What’s interesting about Duggan’s Super PAC is it started in Wayne County and then it moved to the state and unless you combine the two, you wouldn’t get a full picture. What we did was take that in addition to his campaign contributions and clearly identify which money was going directly to him and which was going to his Super PAC so you can see a fuller perspective and then you can see that the people who gave to the Super PAC, most likely, in most case also gave to the campaign. So you can tell there are these veins of support that run both ways.
SS: And thanks to the Internet and technology, this information is available to the public. What Mike did was put it in one site that you can get at BrigeMI.com where people can look themselves. They can see who contributed from their hometowns. They can run certain names. It really helps give a picture, a more complete picture of what’s going on in our politics.
PB: Were there any surprises that you found in the data?
MW: I think we all have known from the 2012 presidential campaign the vast amount of money that has poured into Super PACs. I don’t think I really understood there was this amount of money being spent locally. Kwame Kilpatrick had a leadership PAC called Generations. Some people Karmanos, Penske, well, I’m not sure about Penske, had given him a significant amount of money. So we saw it there. That money, he was allowed to give to other candidates but here we’re able to see people like Karmanos. We see Vanguard Health, which bought the DMC where Mike Duggan worked before. You see DTE putting in a lot of money. A Quicken Loans PAC. And you see there are people who have these reserves of wealth that they wanted to share on Mike Duggan’s vision, and I think it’s important going forward as Mike Duggan spends a lot of money to make the city, to improve the city to see if there’s any correlation. And it’s a transparency issue he’s talked about. He wants to be transparent and with our database on BridgeMI.com, we’re going to kind of help make it transparent.
SS: I think on a related issue, one of the things I hear in covering the bankruptcy is the number of people outside of the area, attorneys especially, and financial consultants, who are working on the bankruptcy. We see the same thing with Duggan’s campaign contributions. There is a lot of money coming from outside the city of Detroit and there is some criticism from within the city, people who don’t like that outside money is helping determine the outcome of elections.
PB: Not just the outside money but one could reasonably ask, I suppose, if these donors are giving these donations through the Super PAC and also through the Detroit Progress Fund, if they’re giving donations to these, are they getting something in return, and you’re not necessarily alleging that that’s taking place, but it is something that would certainly be a reasonable question.
SS: I think journalists call that “job security.” We have our work cut out for us in the next few years to look at this.
MW: One thing I find really interesting about the Super PAC and the transparency issue, is the wealth of electronic data has allowed us, we get to see who has sported Mike Duggan, now the Super PAC is not coordinated and it’s independent, but because of that transparency, Mike Duggan knows who supported him. And what I wonder if Roger Penske’s assistant calls up and wants a meeting with the mayor, does that meeting gets scheduled as a guy who gave $3,400 to his campaign committee or is it as a guy who gave $1 million to the Super PAC? I’m presuming the latter.
SS: And I think one of my favorite quotes in the story is Rich Robinson from the Michigan Campaign Finance Network, who of course is our statewide watchdog and compiles a lot of information campaign finance around the state he says nobody writes four-, five- and six-figure checks out of good humanitarian reasons.
PB: You can assume they’re wanting something in return. What do these funds tell us about where things are with Mayor Mike Duggan?
MW: He has a lot of support from people who have deep financial interests in the city. He also had a lot of support from people in the city. There were a lot of people who gave him $5, $10, $25. I think what we have to make sure as journalists and as watchdogs is just to keep an eye on: does anyone benefit more because of those contributions. We will be able to look at that as contracts are let, as decisions are made. I think when a guy like Roger Penske gives $1 million between himself and his corporation, I’m not sure he wants Belle Isle paved for the Grand Prix, I think he wants a voice in government. And I’m going to guess that he’s going to get it.
SS: I think also what it shows us is that the dynamics of national politics and the so-called dark money going through Super PACs is coming to local elections, and that’s something that as a journalist, the one agenda I’m allowed to have is the transparency and openness in government, and it kind of scares me that we might see that dynamic determining some of the smallest, most local elections.
MW: The good thing is because of the records that are out there. Because of databases like we were able to compile on BridgeMI.com, we are going to be able to keep an eye on it. Five years ago, this was a pdf at the Wayne County building. That was electronic but then a couple years before that you were given folders that were three, four, five inches thick for Kilpatrick. You would have had to wade through just tens of thousands of pages and people didn’t have the ability to do that. Well, now they do.
Detroit is known by its most unwelcome attributes: It has one of the highest murder and violent crime rates in the country. And it currently is known as the most populous U.S. city to ever seek bankruptcy protection. Can it also enjoy the biggest recovery? In a comprehensive piece, Bridge’s Mike Wilkinson answers questions about the city’s recent past to get a hint at its future: Does the city generate enough money to fix what ails Detroit if billions in debt are cut? Are the city’s costs too high? Does it pay its workers too much? Are pensions too generous? Can the city endure a reduction in both spending and revenue and revive what is by most measures the most dysfunctional large city in America?
As Mayor Mike Duggan works to revitalize Detroit, a Detroit Journalism Cooperative project looks at who’s giving him money. Here’s a new, searchable database of his donors…and the first look at his new “Detroit Progress Fund,” which Duggan says will be different than Mayor Kilpatrick’s civic fund and Gov. Snyder’s controversial NERD fund. It’s original reporting by Bridge Magazine and WDET.
At exactly 4:06:22 p.m. today, Detroit’s bankruptcy hits the one-year mark. Detroit News business columnist Daniel Howes said it well:
“There will be no celebrations at 4:06 p.m. Friday, only quiet acknowledgment that the largest municipal bankruptcy in American history is marking its first year.”
The Detroit Free Press marked the anniversary with a package of stories last weekend that explored the year in court, the effect in the communities and the new political structure at city hall. Later this week, the Freep published a report predicting a population decline that will make the future even more challenging.
The costs of this municipal bankruptcy itself are high, to be sure, the highest in history. As of June, the city had been billed $75 million by 19 law firms and financial consultants involved in the case, Crain’s Detroit Business reported.
While not everyone likes the negotiated terms that are emerging in the settlement, there is no doubt Detroit’s bankruptcy is moving toward resolution faster than anyone could have expected a year ago. It still faces a confirmation hearing, scheduled to begin Aug. 14, and Judge Steven Rhodes will undoubtedly see in the mirror the proverbial King Solomon as he tries to find the fairness and reasonableness to creditors, including city retirees, in the plan. He also knows he’ll be setting legal precedent as he crafts the settlements and restructuring plans, which will be used in future municipal bankruptcy cases across the country.
We can describe with relative certainty a few elements of the next stage of this case: The pensioners will take cuts to their monthly checks and pay hundreds of dollars more out of pocket for health care. International media will print, broadcast and post more photos of blight juxtaposed against the RenCen as they try to chronicle the decline and possible resurgence thanks to bankruptcy of this city. Courts will decide the legality of the state’s emergency manager law, the remaining pre-trial issues in the Chapter 9 case and future appeals. Lawyers will make more money. Mayor Mike Duggan and the city council will eventually assume control of the city’s departments with “clean” balance sheets and a responsibility to all the city’s neighborhoods, residents, business owners, investors and oversight committees created by the state in the terms of the $195 million pension contributions.
Whether we see real improvements in access to jobs, quality education for children and adequate public safety for everyone remains to be seen. Lansing, quick to congratulate itself for the package of bills providing money and oversight, could do more and should be pressured to do so. What could possibly be on that agenda? How about statewide reform to municipal finance and a re-examination of revenue sharing, regional transit to help Detroiters get to jobs in the suburbs and help with collecting income tax from Detroiters who work outside of the city. Those three elements would be a start but the governor and the Legislature have been silent on those issues.
Many of us will continue to frame the city’s bankruptcy with the competing if extreme truths that “there will be a course change to reroute Detroit’s economic decline, failure of public institutions and creating protections against corruption” and “the bankruptcy is undermining unions, codifying the legality of slashing public benefits and creating huge billing tallies for silk-stocking law firms.” Hopefully how we define the bankruptcy’s causes will not limit our ability to emerge from it and restore city services, improve life for residents, ensure fiscal stability and make countless other improvements.
As for the Emergency Manager’s future plans when his term expires later this year? He told WWJ radio’s City Beat Reporter Vickie Thomas that he’ll “leave quietly,” saying he was surprised by the level of public scrutiny the case brought to him and the city.
“I think it’s appropriate for me, when this does come to an end, to exit quietly — I’m off the stage — and let the regular order return and let the city’s sort of healing process take; and let the patient recover on their own,” Orr told Thomas.
Mayor Mike Duggan wants former Detroiters to visit the city for a homecoming. The idea is to attract people who wrote off their relationship with the city. The “Detroit Homecoming” is aimed to bring them back for a visit, a little flirtation. Detroit Journalism Cooperative member Michigan Radio has this report.
Detroit emergency manager Kevyn Orr has given the city’s leaders a pay raise. Orr signed an order hiking city appointees and elected officials’ pay by 5 percent at the end of June. It went into effect July 1. Michigan Radio’s Sarah Cwiek reports on the pay increases, which are part of the bankruptcy restructuring plan.
There seems to be little doubt that Mike Duggan is making his mark. His bulldog nature and savvy political instincts have combined to make the new Detroit mayor a force to be reckoned with, even as he serves under a state-appointed emergency manager. On Michigan Radio’s Stateside program, Detroit News Business Columnist Daniel Howes reviews Duggan’s progress in his first six months. He says that people should not expect that he change the world in six months. What’s important here is the process and the direction.