Detroit's Consent Agreement with State likely to go forward, as City Attorney loses lawsuit

English: City seal of Detroit, Michigan.
English: City seal of Detroit, Michigan. (Photo credit: Wikipedia)
Ingham County Circuit Court Judge William Collette on Wednesday, June 13, 2012, dismissed a legal appeal Gov. Rick Snyder (R) and State Treasurer Andy Dillon (D) controversial Michigan Statue Public Act #4 Consent Agreement brought forward by city of Detroit Corporation Counsel Krystal Crittendon.


Judge Collette during his ruling on the lawsuit, stated up to the mayor or the City Council to bring a Detroit lawsuit and not Crittendon. With little legal options left, besides an appeal of Judge Collette's decision to Michigan's conservative leaning Supreme Court, its' unknown at the present time if Attorney Crittendon will deploy any additional state judicial court options.
"This lawsuit will not go forward," Collette cited in this ruling according to the Detroit Free Press. "This is such an obvious issue. I saw it from the very first moment." 
State Government officials have threaten to pull funding from Detroit if the Consent Agreement is not in place by Friday, June 15th, and the city would run out of revenue to pay its' workers if no additional revenue is in place by week end. The monies Detroit is scheduled to receive from the state, instead would be diverted to repay $80 million in interim bond financing that the state provided Detroit under the agreement.


Crittendon's June 1, 2012, filed legal argument hinged on a clause in Detroit's city charter forbidding entering into contracts with debtors. Additionally, she states the state owes Detroit more than $230 million in revenue-sharing payments, along with several million dollars in unpaid utility bills.


According to a May 16, 2012, letter written by State Treasurer Andy Dillon, he content Crittendon's lawsuit was wrong on its' merit, as a way to resolve any monies owed by the State to Detroit.
"Assuming for purposes of a response only that MCL 117.5(1)(f) would foreclose a municipality from entering into a contract with another governmental entity that is in "default", there is no basis to the claim that the State has defaulted on its obligations to the City. Consistent with Attorney General Opinion No. 7241, a "default" under that provision arises where "[a] person has failed to meet a financial, contractual, or other obligation to the city after adequate notice of the obligation and opportunity to cure it were provided to the person and the obligation is not subject to a pending judicial or administrative proceeding." 
Dillon also cited that the State does not owe the City of Detroit any past due shared revenue payments at all, although part of the State governmental cash flow received is allotted from taxable revenue receive from Detroit, Michigan -largest populated city- residents.
"With respect to the State's reduction in statutory revenue sharing to the City, there is no legal obligation for the state to maintain statutory revenue sharing to the City at a specific level. The State has no outstanding debt of $224 million to the City. The Administration worked with the City and the Legislature last year to enact Public Act 56 and 57 to enable the City to collect $120,000,000 in city income tax and $42,000,000 utility users tax that they would not have been legal able to given its decrease in (Detroit's) Census population." 
Michael Hodge, a Miller Canfield attorney representing Detroit's Mayor Dave Bing (D) who agrees with terms of the State's mandated Consent Agree, told Collette the charter states that Crittendon can't file a lawsuit without the mayor's authority, according to the Detroit Free Press.

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