Detroit resurrected, p.27
Detroit Resurrected, page 27
NOTES
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Prologue: 4:06 p.m.
ix July 18, 2013, was a bad day: Author interview with Bill Wertheimer, October 23, 2014.
ix “We pay you enough”: Ibid.
x requested the governor’s permission: Author interview with Kevyn Orr, January 26, 2015.
x “Not uncommonly”: Author interview with David Heiman, January 6, 2015.
xi When Nowling discovered: Details of the race to the courthouse were constructed based on court transcripts, depositions, and personal interviews with several people involved in the bankruptcy who requested anonymity because of the sensitivity of this episode.
xi “We were very nervous”: Author interview with Heiman, January 6, 2015.
xi “I’m committed to my process”: The governor’s remarks and actions on the day of the bankruptcy are based on interviews with sources who requested anonymity because they were not authorized to speak publicly.
xii “Mike, do you think”: This exchange is based on a transcript of Mike Nicholson’s court testimony during Detroit’s bankruptcy eligibility trial in the U.S. Bankruptcy Court, Eastern District of Michigan, November 5, 2013.
xii “We knew damn well”: Author interview with Wertheimer, October 23, 2014.
xiii “Their view was”: Nathan Bomey, John Gallagher, and Mark Stryker, “How Detroit Was Reborn,” Detroit Free Press, November 9, 2014. http://on.freep.com/10QofVG.
xiii “As your legal counsel”: These events are based on sources who agreed to discuss the matter on condition of anonymity.
xiv “I’m standing right by”: Ibid.
xiv “They were concerned”: Ibid.
xiv “Let’s file”: Author interview with Orr, January 26, 2015.
xiv “We only filed sixteen pages”: Author interview with Heiman, January 6, 2015.
xv “Excuse me, your honor”: This exchange derives from an Ingham County Circuit Court transcript, July 18, 2013.
xv “Aquilina, of course, was pissed”: Author interview with Robert Gordon, October 30, 2014.
xv “It was my intention”: Ingham County Circuit Court transcript, July 18, 2013.
xv “I think our heart skipped a beat”: Author interview with Heiman, January 6, 2015.
Introduction
1four out of every ten dollars: City of Detroit Proposal for Creditors, June 14, 2013. http://www.detroitmi.gov/Portals/0/docs/EM/Reports/City%20of%20Detroit%20Proposal%20for%20Creditors1.pdf.
1Without drastic action: Ibid.
2enacted an income tax: Nathan Bomey and John Gallagher, “How Detroit Went Broke,” Detroit Free Press, September 15, 2013. http://on.freep.com/1btfzDr.
2Young . . . slashed spending: Ibid.
2Kilpatrick . . . cut several thousand jobs: Ibid.
3“To have lived through the vibrant Detroit”: Author interview with Shirley Lightsey, January 21, 2015.
3city had more murders: These 2012 statistics were drawn from the FBI’s Uniform Crime Reporting Statistics database. Full figures: Detroit (386), St. Louis (113), Milwaukee (91), Cleveland (84), Pittsburgh (41). Accessed October 6, 2015. http://www.ucrdatatool.gov/.
3By 2013, about 40 percent: Detroit Public Lighting Authority, 2014: A New Era in Street Lighting in Detroit: An Annual Progress Report of the Public Lighting Authority, 2014. http://www.pladetroit.org/wp-content/uploads/2015/09/2014-Annual-Report-FINAL.pdf.
3workers would hit “send”: Deposition of Beth Niblock for the bankruptcy plan confirmation hearing, July 31, 2014.
3About half of the city’s residents: Testimony of Caroline Sallee from a court transcript of the bankruptcy plan confirmation hearing in the U.S. Bankruptcy Court, Eastern District of Michigan, September 8, 2014.
4“Every case is about people”: Author interview with Steven Rhodes, February 19, 2015.
4“We Americans believe”: Steven Rhodes, transcript of Commencement Address, Walsh College, Troy, Michigan, January 24, 2015.
4“Relatively speaking”: Author interview with Ron Bloom, February 3, 2015.
4“Detroit had the misfortune”: Ibid.
5 “one tough nerd”: Nathan Bomey. “Rick Snyder, in Super Bowl Ad, Asks Voters to Embrace ‘One Tough Nerd,’ ” AnnArbor.com, February 8, 2010. http://bit.ly/1KKPpOl.
5“yellow-dog Democrat”: Author interview with Kevyn Orr, January 26, 2015.
6“As I look at the landscape”: Author interview with Darren Walker, December 19, 2014.
Chapter 1: The Nerd
7Born in 1958: Nathan Bomey, “Profile: Rick Snyder Brings Successful Private-Sector Experience to Gubernatorial Race,” AnnArbor.com, July 4, 2010. http://www.mlive.com/politics/index.ssf/2010/07/rick_snyder_governor_gateway.html.
7At age sixteen: Carol Cain, “Carol Cain: Politicians Should Learn from Milliken, Buck Party Politics,” Detroit Free Press, August 11, 2014. http://bit.ly/18iEf7r.
7But academics were his passion: Bomey, “Profile: Rick Snyder.”
8“The vast majority of people”: Author interview with Rich Baird, January 15, 2015.
9“Frankly, I believe”: Ibid.
9“He came into the Detroit office”: Author interview with Chris Rizik, November 17, 2014.
9population had already plummeted: Kofi Myler, “Detroit’s Population from 1840 to 2012 Shows High Points, Decades of Decline,” Detroit Free Press, July 23, 2014. http://bit.ly/1w9zPER.
9–10 Michigan’s unemployment rate: U.S. Bureau of Labor Statistics, “Current Unemployment Rates for States and Historical Highs/Lows.” http://www.bls.gov/web/laus/lauhsthl.htm. Accessed February 24, 2015.
10“When I moved to Detroit”: Author interview with Governor Rick Snyder, January 16, 2015.
10Rick and Sue Snyder moved to Chicago: Bomey, “Profile: Rick Snyder.”
10“Ted Waitt was a visionary”: Author interview with Baird, January 15, 2015.
10In 1991, the Snyders moved: Bomey, “Profile: Rick Snyder.”
11“Ted was really a marketing genius”: Author interview with Rizik, November 17, 2014.
11grow from 700 employees: Bomey, “Did Rick Snyder Ship Jobs Overseas While at Gateway?” AnnArbor.com, June 24, 2010. http://www.annarbor.com/business-review/did-rick-snyder-ship-jobs-overseas-at-gateway.
11“He was kind of the adult supervision”: Vickie Elmer, “Rick Snyder’s Run: From Gateway to the Governor’s Race,” Ann Arbor Observer, May 2010. http://annarborobserver.com/articles/rick_snyder_s_run_full_article.html.
11Snyder cut personal checks: Bomey, “Profile: Rick Snyder.”
11$200 million to Johnson & Johnson: Nathan Bomey, “Johnson & Johnson Renames HealthMedia Unit after Mix of Ann Arbor Layoffs, Hiring,” AnnArbor.com, January 27, 2012. http://www.annarbor.com/business-review/johnson-johnson-renames-healthmedia-unit-after-mix-of-ann-arbor-layoffs-hiring/.
11Rick and Sue were on a dinner date: Susan Demas, “The Nerd Shall Inherit the State?” Dome Magazine, June 16, 2010. http://domemagazine.com/features/f20610.
12“The moment that happened”: Interview with Rizik, November 17, 2014.
13flow of cash from Lansing: Joan Hunault, Jim Stansell, Mary Ann Cleary, Bethany Wicksall, and Ben Gielczyk, “Legislative Analysis: Local Government and School District Fiscal Accountability Act,” House Fiscal Agency, February 24, 2011. http://www.legislature.mi.gov/documents/2011-2012/billanalysis/House/pdf/2011-HLA-4214-6.pdf.
13handshake deal: David Ashenfelter, “Handshake Deal with State Haunts Detroit,” Bridge, March 15, 2013. http://bridgemi.com/2013/03/handshake-deal-with-state-haunts-detroit/.
13Ken Buckfire lived on Frisbee Street: Author interview with Ken Buckfire, October 9, 2014.
14“the turnaround king”: Interview with Ken Buckfire, “The Turnaround King,” Power Lunch, CNBC, June 29, 2010. http://nbcnews.to/1EOrpHV.
14“When the city had problems”: Author interview with Buckfire, October 9, 2014.
14“to provide our insights”: Quotations are from a copy of the letter from Ken Buckfire to Andy Dillon, December 9, 2010.
15“deficit elimination bonds”: Suzette Hackney and Naomi R. Patton, “Bing to Seek Council’s OK to Sell $250M Bond,” Detroit Free Press, November 20, 2009. http://archive.freep.com/article/20091120/NEWS01/911200474/Bing-seek-council-s-OK-sell-250M-bond.
16“That’s good business”: Author interview with Buckfire, December 16, 2014.
16In April 2012, the City Council signed: Details of the consent agreement between Detroit and the State of Michigan are found in the city’s “Financial Stability Agreement.” http://www.michigan.gov/documents/treasury/Detroit_Fiscal_Stability_Agreement_382287_7.pdf.
16“It could have worked”: Author interview with Andy Dillon, February 2, 2015.
16“It became clear Detroit”: Author interview with Buckfire, October 9, 2014.
16“The condition of the city”: Author interview with Buckfire, December 16, 2014.
17On Election Day in November 2012: Details of the election can be found on the Michigan Department of State website. http://miboecfr.nictusa.com/election/results/12GEN/90000001.html. Accessed October 6, 2015.
17But on the day after Christmas 2012: Enrolled Senate Bill No. 865, State of Michigan, 96th Legislature, regular session of 2012, December 26, 2012. http://1.usa.gov/1PnpbI6.
Chapter 2: Deal of the Year
18“How did you go bankrupt?” Ernest Hemingway, The Sun Also Rises (New York: Simon & Schuster, 1954), 141.
18total value . . . of private property: Nathan Bomey and John Gallagher, “How Detroit Went Broke,” Detroit Free Press, September 15, 2013. http://on.freep.com/1btfzDr.
19“pushers”: Steven Gray, “Coleman Young, Revisited,” Time, December 2, 2009. http://ti.me/1WpGxoy.
19city enjoyed a period of relative stability: An analysis of the City of Detroit Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2002, shows a city government in remarkably good health compared to what would happen just a few years later. Debt, pensions, and retiree health care costs represented only 13 percent of the budget, and the pension funds had a collective surplus. http://www.detroitmi.gov/Portals/0/docs/finance/cafr/2002_CAFR.pdf.
19city’s pension funds: City of Detroit Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2002.
20“hip-hop mayor”: Steven Yaccino, “Kwame M. Kilpatrick, Former Detroit Mayor, Sentenced to 28 Years in Corruption Case,” New York Times, October 10, 2013. http://nyti.ms/1AqDcMT.
20Kilpatrick had lied under oath: Jim Schaefer, M. L. Elrick, Joe Swickard, and Ben Schmitt, “Kilpatrick Admits Guilt, Resigns Office,” Detroit Free Press, September 5, 2008. http://archive.freep.com/article/20080905/NEWS01/809050375/Kilpatrick-admits-guilt-resigns-office.
20“I want to tell you, Detroit”: Mike Wilkinson, “Detroit ‘Set Me Up for a Comeback,’ ” Detroit News, September 5, 2008. http://bit.ly/1zFkxck.
20FBI discovered that Kilpatrick: Details on the FBI’s bust of the criminal activity of Kilpatrick, Jeffrey Beasley, Bobby Ferguson, and Ronald Zajac are available in three FBI press releases: U.S. Attorney’s Office, Eastern District of Michigan, “Jury Convicts Former City Treasurer, Pension Officials of Conspiring to Defraud Pensioners through Bribery,” December 8, 2014, http://1.usa.gov/1AB0JZf; “Former City of Detroit Treasurer Jeff Beasley Indicted for Taking Bribes and Kickbacks in Return for Approving Investments by the Two City Pension Funds,” February 28, 2012, http://1.usa.gov/17wz2b2; and “Former Detroit Mayor Kwame Kilpatrick, Contractor Bobby Ferguson, and Bernard Kilpatrick Sentenced on Racketeering, Extortion, Bribery, Fraud, and Tax Charges,” October 17, 2013, http://1.usa.gov/1IaYQUL.
21On December 6, 2005: Details of the award Kilpatrick received are documented in the City of Detroit Comprehensive Annual Financial Report for Fiscal Year Ended June 30, 2005. http://www.detroitmi.gov/Portals/0/docs/finance/cafr/CAFR2005.pdf.
21“fiscal stabilization bonds”: Bomey and Gallagher, “How Detroit Went Broke.”
22shortfall of $1.7 billion: City of Detroit Comprehensive Annual Financial Report for Fiscal Year Ended June 30, 2005.
22He threatened to lay off: Bomey and Gallagher, “How Detroit Went Broke.”
22“I remember Council members saying”: Author interview with Joseph Harris, November 14, 2014.
23complex borrowing scheme: Details on the pension obligation certificates-of-participation (COPs) deal and the structure of the deal are found in numerous city documents, including the City of Detroit Comprehensive Annual Financial Report for Fiscal Year Ended June 30, 2005.
23cities cannot carry: Ibid.
24In a rare moment of political lucidity: An account of the City Council’s ruminations, statements, and votes regarding the COPs and swaps deal is found in the Council’s minutes: City of Detroit, Journal of the City Council, January 5, 2005. http://www.detroitmi.gov/Portals/0/docs/City%20Clerk/2005%20Council.pdf.
24“Throughout all my research”: Ibid.
25“have decided to gamble the city’s future”: Ibid.
26“made no financial sense”: Author interview with Ken Buckfire, October 9, 2014.
26Lewis & Munday wrote: The law firm’s letter supporting Detroit’s COPs deal was included on pages G-1 and G-2 of the “$1,440,000,000 Taxable Certificates of Participation Series 2005 Issued by the Detroit Retirement Systems Funding Trust 2005” circular distributed to investors, 2005. http://bit.ly/1Ozn7N3.
26“The obligation of the city”: This quote is taken directly from Lewis & Munday’s letter cited in the previous note.
26initial ratings on the insured COPs at a pristine AAA: These ratings were included in the offering circular, “$1,440,000,000 Taxable Certificates of Participation Series 2005 Issued by the Detroit Retirement Systems Funding Trust 2005.”
26“The challenge for Baird”: Marianne Foster, “Robert W. Baird & Co.: Baird Public Finance Deal Recognized as the Bond Buyer’s Midwest Regional Deal of the Year,” Wisconsin’s Business News Service, December 8, 2005. http://www.wisbusiness.com/printerfriendly.iml?Article=50551.
27city’s eroding finances: Karen Pierog, “S&P Downgrades Detroit Bonds to Junk Status,” Reuters, January 6, 2009. http://www.reuters.com/article/2009/01/07/us-detroit-sp-idUSTRE50608720090107.
27“What we told UBS was”: Author interview with Harris, November 14, 2014.
28“I remember the discussions”: Ibid.
28banks could cancel the swaps contracts: Author interview with Buckfire, October 9, 2014.
29“This is what really got the city”: Ibid.
Chapter 3: Kevyn Orr
30Kevyn Orr’s path: Kevyn Orr’s biographical details are based on an author interview with Kevyn Orr on January 26, 2015, and the State of Michigan’s biography of the emergency manager. http://www.michigan.gov/detroitcantwait/0,4839,7-293--297207--,00.html. Accessed October 6, 2015.
30“My dad came and picked me up”: These recollections are based on author interview with Orr, January 26, 2015.
31“Some white surfer boys”: Ibid.
31first black member of the local yacht club: Brian Dickerson, Matt Helms, and Todd Spangler, “New Detroit Emergency Financial Manager Kevyn Orr Takes on Challenge of a Lifetime,” Detroit Free Press, March 24, 2013. http://bit.ly/1LjEPl7.
32helped lead the agency’s role in the Whitewater investigation: Michael A. Fletcher, “The Man Who Is Trying to Save Detroit,” Washington Post, July 20, 2013. http://wapo.st/1wmpRFS.
33Jones Day’s competitors for the job: Author interview with Ken Buckfire, December 16, 2014.
33Jones Day attorneys conducted extensive research: Details about the firm’s background research on Detroit are contained within an internal document titled “Presentation to the City of Detroit,” January 29, 2013.
33“We couldn’t find anybody”: Author interview with Buckfire, December 16, 2014.
34“I think I used the term”: Author interview with Rich Baird, January 15, 2015.
34“burn down the city of Detroit”: Charlie Langton, “Shabazz Discusses Why He Said Burn the City Down,” CBS Detroit, March 30, 2012. http://cbsloc.al/1DQJoAo.
34“And I just went off”: Discussions between Orr, Baird, and Jones Day managing partner Steve Brogan, at the January meeting and later concerning Orr becoming the emergency manager, are based on author interviews with Orr on January 26, 2015, and Baird on January 15, 2015.
35“Baird’s eyes lit up”: Author interview with Buckfire, December 16, 2014.
37“Here’s your call to action”: Author interview with Orr, January 26, 2015.
37“He saw this almost as a calling”: Author interview with Baird, January 15, 2015.
37Despite their political differences: The conversation between Governor Rick Snyder, Orr, and Baird about the emergency manager job is based on independent author interviews on January 16, 2015, January 26, 2015, and January 15, 2015, respectively.
38“The governor is sending an emergency manager”: Joe Guillen and Kathleen Gray, “Detroit City Council Appeals Financial Manager Decision, Requests Modified Plan,” Detroit Free Press, March 12, 2013. http://bit.ly/1A4BuvZ.
38“I don’t want to pull that cudgel”: Kirk Pinho, “Detroit’s Emergency Manager Says He’s ‘All In’ for the ‘Olympics of Restructuring,’ ” Crain’s Detroit Business, March 14, 2013. http://bit.ly/1VGgcFO.
