Detroit city council on Tuesday narrowly voted to approve five key restructuring contracts necessary for the city to receive $30 million in state funds. The council also approved a controversial land sale of more than 1,500 city parcels to a private investor.
With growing likelihood of the instatement of an emergency financial manager, council members approved auditing and advisory contracts including a $300,000 contract with law firm Miller Canfield. The council also elected to explore pay cuts for non-union city hall staff.
After Tuesday’s votes all narrowly passing 5-4, Mayor Dave Bing appeared briefly before the council to thank the panel for approving the contracts and meeting the milestones of an agreement between the City and the State. Bing said he believed that with the right management choices the city could avoid an emergency financial manager.
“This is a good beginning,” Bing said in a statement. “Today’s action demonstrates the kind of cooperation between City Council and my Administration that will better serve the citizens of Detroit.”
But even with the Tuesday’s votes triggering the release of the $30 million in escrow money, State Treasurer Andy Dillon has already commissioned a 30-day review of city finances that could result in the appointment of an emergency financial manager under Public Act 72.
Tensions ran high at Tuesdays meeting as residents spoke before the council mostly in disapproval of a controversial land sale of approximately 140 acres on Detroit’s lower East side to Hantz Woodlands, a subsidiary of the Hantz Group, a financial services firm based in Southfield.
Councilman Ken Cockrel, Jr., who voted to approve the $600,000 land sale, said he didn’t understand why people were so passionate about the sale when other, more pressing, issues faced the city including the possibility of an emergency financial manager.
Councilwoman JoAnn Watson voted “No” on all of Tuesday’s contracts and said she believed they were illegal and a conflict of interest.
Hundreds of Detroit residents and activists gathered on Detroit’s East side to dispute the sale on Monday evening. Among them was Gail Elam who owns a home in the area of the sale.
“My main concern is that the property taxes will go up and drive me off of my property,” Elam said. “I think that the land should be developed but they should let more citizens buy the lots and buildings.” Bing released a statement Tuesday applauding the massive land sale.
“Today’s City Council approval of the sale of city-owned land to Hantz Woodlands is in line with my vision of transforming portions of Detroit by taking vacant, underutilized land and putting it back into productive use,” Bing said.
The city council on Tuesday also approved contracts with accounting service provider Plante & Moran; a Worker’s Compensation fraud audit provided by Kessler International, and a dependent eligibility audit provided by Hewitt Associates.
Bing had warned that without the approval of the contracts and the corresponding release of state funds, he would have to fire as many as 500 workers and place others on unpaid furloughs in January.
Since the $30 million won’t stop the city’s cash gap, it is unclear whether the Bing Administration will continue to hash out details to implement unpaid furloughs and layoffs.
The city faces a short-term deficit of more than $200 million, one that is expected to double over the next year without deep restructuring of city services.