Wednesday, June 5, 2013

Hamtramck Under The EM Knife

The State of Michigan has descended upon Hamtramck as its next target for Emergency Management through Public Act 436 of 2012. The step by step process is documented on the State Treasury page. At this point a hearing of the Emergency Financial Assistance Loan Board (ELB) is scheduled for June 11, 2013 at 10am in the Richard H Austin Building (Treasury), 430 W Allegan, Lansing, MI 48933. City executives can request a hearing in advance of the state scheduled meeting.

Hamtramck has previously declared a Financial Emergency with assistance from the State of Michigan under Public Act 72 of 1990. The date of that filing was December 2000. Hamtramck requested to file for bankruptcy in November 2010, but Governor Snyder denied that request deferring the city to a series of loans to assist it through tough times. According to Hamtramck City Manager Bill Cooper in 2010, receiving a loan would merely delay the city's financial problems. “We do not need an EFM (Emergency Financial Manager) to look for cost savings within our operations, which was done under the previous EFM, and has continued under my direction,” Cooper said in his letter.

Now Hamtramck faces new rules that will play out differently even under Chapter 9 bankruptcy since the passage of Public Act 436. Did the State prolong this decision to allow them to move into bankruptcy until they could get a law in place that would ensure the State of Michigan holds a controlling position.

Choices under the new law which are to be made by Governor Snyder with a recommendation from the ELB include: a consent agreement; an emergency manager; a neutral evaluation process; or
Chapter 9 bankruptcy. Even if the choice of Chapter 9 municipal bankruptcy managed by the Bankruptcy Court of the Eastern District US is selected, the following provision of Act 436 maintains State of Michigan control rather than allowing local officials direct interaction through the bankruptcy.
"The Governor may place contingencies upon a local government, including the selection of an individual to act exclusively on behalf of the local government in any Chapter 9 proceedings."

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