Category: Breaking News
Published on Wednesday, 13 June 2012 11:27
Written by Huffington Post
UPDATE: 10:35 a.m. -- Ingham County Circuit Court Judge William Collette on Wednesday morning dismissed the lawsuit challenging Detroit's consent agreement. Collette said the Detroit City Council should have passed a resolution declaring the agreement invalid, but now that it was in place the city would have to live with it.
This is a developing story. Check back with HuffPost Detroit for updates.
Detroit Mayor Dave Bing is going to court to block a legal challenge to the city's April 4 consent agreement with the state of Michigan. He's taking on the city's own lawyer, Krystal Crittendon, who brought the suit earlier this month.
The Detroit Free Press reports Bing, represented by attorneys from the private, city-contracted Miller Canfield firm, will appear at a hearing held at the Ingham County Courthouse on Wednesday to block Crittendon's legal action. Lawyers from Miller Canfield have represented the city numerous times of late -- including during the consent agreement dealings and in negotiations over a bond agreement that provided Detroit with cash to pay its bills during restructuring.
Bing's challenge and Crittendon's lawsuit center on both those deals, as the state of Michigan threatens to withhold financing for the bonds if Crittendon refuses to drop her case.
Crittendon alleges the consent agreement is void because of $224 million in unpaid revenue sharing debts the state owes the city, as well as a $4 million unpaid water bill. According to Crittendon, Detroit's charter prohibits the city from entering into contracts with debtors. She says she's carrying out her duties to ensure all parties comply with terms of the city charter and the consent agreement. The state of Michigan denies owing Detroit these debts.
The Detroit News has obtained a copy of a letter from Mayor Bing, dated Tuesday, that was sent to Crittendon. In it, the mayor orders Crittendon to drop the lawsuit, adding, "by taking this action you have exceeded your authority under the Charter and have put the city's financial stability at substantial risk of serious financial consequences."Bing, concerned Detroit will run out of cash this Friday without the state's financial backing, wants Crittendon to stand down.
Those consequences may already be apparent. Bond rating firm Fitch Ratingslowered Detroit's already-junk credit rating to a C grade on Tuesday afternoon, according to Reuters. Fitch warns that more downgrades are in store for Detroit if the city misses a debt payment.
The revised City Charter, which was approved by the residents of Detroit in 2011, states that "the Corporation Counsel shall prosecute all actions or proceedings to which the City is a party or in which the City has a legal interest, when directed to do so by the Mayor."
However, in the event of a violation of the City Charter, it requires Crittendon to submit a written complaint of the violation and a remedy to the offending party, the mayor, City Council and the city clerk's office. If that violation isn't corrected within 14 days,, the Charter also allows that Crittendon, as corporation counsel, "shall take all reasonable actions to secure compliance, including, but not limited to, judicial action."