Attorney: Emergency manager in Detroit could violate sunshine laws, allow for backroom deals

By Evan Dixon 
Columnist & Attorney

Evan Dixon

For better or worse, it looks like Michigan’s governor will soon appoint an Emergency Manager for the City of Detroit.  Some are proclaiming Kwame Kilpatrick’s conviction brings an end to the “culture of corruption” that has plagued the City for so many years.  Maybe.  Maybe not.  But one thing is for certain, if it is true that “power corrupts and absolute power corrupts absolutely” then the citizens of Detroit (and the entire state, for that matter) will have to be more diligent than ever to keep tabs on what this new emergency manager – with unprecedented power over Detroit’s finances – is doing.

This is where the Open Meetings Act (MCL 15.261, et seq) and the Freedom of Information Act (MCL 15.231) come into play.  These laws were intended to ensure tranparency in government, to make governmental decision making open for the world to see and protect against malfeasance and secret/backroom “sweetheart deals” by those in power.  I suspect that the emergency manager may claim exemption from the requirements of these laws.

This is where concerned citizens and determined journalists must step forth and demand accountability by holding the EM to the requirements of the Open Meetings Act and the Freedom of Information Act.

The authority to appoint an emergency manager is based upon the controversial “Local Financial Stability and Choice Act” of 2012.  (MCL 141.1541, et seq)*  Since this is a new law, there is no legal precedent for intepreting how it interfaces with the Open Meetings Act and FOIA.**

As citizens, we must demand open access to the deliberations and decision making process if and when an emergency manager is appointed for Detroit.

* This law, which goes into effect March 28, 2013, replaces the old “Local Government and School District Fiscal Accountability Act” (Act 4 or 2011, MCL 141.1501, et seq), which was rejected by Michigan voters in 2012, and repeals the “Local Government Fiscal Responsibility Act of 1990”.

** Last year, in the case of Davis v Detroit Financial Review Team, the Michigan Court of Appeals ruled that a “financial review team” under the old emergency financial manager act is not a public body under the OMA because it is not a “governing body” as the OMA uses that term. Therefore, the review team was not statutorily required to comply with the OMA. And the state treasurer, whether acting in his or her executive capacity or as a “one-man” committee of a financial review team, is also not a “public body” for purposes of the OMA.  But there is, IMHO, a key distinction to be made between “reviewing” and “managing”. Managing is– for all intents and purposes in this case– “governing” as defined in the OMA.

Evan Dixon, an attorney in Hancock in the Upper Peninsula, is a 1982 graduate of Cass Tech High School. After earning a bachelor’s degree from Wayne State University, Dixon served as a community organizer in Detroit and later graduated from the University of Detroit Law Schoodl. 

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    The State of Michigan has been in charge of the City of Detroit as of April 4, 2012 (Consent Agreement signed) with key staff & high priced consultants responsible for the oversight & implementation of the Financial Stability Agreement (Consent Agreement) & “Milestones” (Costs to the City over $14 million)

    The Financial Review Team Report (FRTR) provides no justification fro the appointment of an EFM, especially when it makes no mention of $800 million in accounts receivable owed to the City & confirmed by State Treasurer Andy Dillon. One prominent business owner owes in excess of $200 million of the $800 million.

    The City of Detroit has no immediate financial emergency! We have “NOT” missed any payroll, failed to make any of our bond interest payments or principal payments and State Treasurer Dillon agreed to this in a meeting held March 5, 2013.

    The State of Michigan owes the City of Detroit $224 million in revenue sharing & the documentation/proof is available but only the Mayor can demand the funds!

    We have “NOT” drawn down our $137 million being held by the State of Michigan to make payroll.

    The City’s water department (DWSD) has over a quarter billion of unrestricted cash!

    The FRTR incorrectly reflects the 36th District Court as a City of Detroit entity failing to collect $279.3 million when in fact it is a State entity that owes the City of Detroit $100.9 million! And the State failed to collect its $76 million from the Court.

    The City has adequate operating cash (and does not have a financial emergency) as it has not drawn down on the remaining $60 million being held in escrow by the State of Michigan.

    The City of Detroit negotiated over $105 million cost savings with the unions in December, 2011; verified by State of Michigan accounting firm. Governor Synder advised Mayor Bing NOT to submit these contracts to City Council for approval.

    The State of Michigan revoked the City of Detroit Residency Ordinance in 1999 bleeding the City of up to $11 million yearly totally $154 million and counting.

    According to Tom Barrow, CPA the FRTR improperly depicted the City’s long term debt according to Governmental Accounting Standards; causing the financial picture to look much more grave than it actually is!

    The City of Detroit’s General Fund has had operating surpluses for a number of years except for “Transfers Out” affirmed by Treasurer Dillon.

    The “Financial Emergency” is based on flawed reasoning, misuse of accounting rules and contrived to enable an appointed EFM to privatize the city’s bus system, public lighting system, bust unions by privatizing city functions, laying off Detroit’s workforce & destroying thousands of city households under the phony guist of rightsizing.
    Facts Compiled from the work of Council Member JoAnn Watson; Attorney Crittendon & Tom Barrow, CPA.

  • The city of Detroit has been compliant with the Open Meetings Act since the law was drafted in the 1970s. And the outcome: corruption and mismanagement. This law, while admirable in theory, just doesn’t do it when it comes to preventing corruption.