Detroit City Council voted Tuesday to approve a bond sale and immediately free up $19 million in cash for the financially beleaguered city.
In a press conference earlier Tuesday, Deputy Mayor Kirk Lewis said the city and Michigan Treasury officials worked out a debt refinancing plan with the aim of finding $137 million in cash.
"It's important that we don't lose any opportunity to improve our cash flow," Lewis said. "We can't do a turnaround without money. This is one vehicle to get money. At some point later we'll have a discussion with the state about other types of cash infusions to help the city with turnaround."
The bonds approved Tuesday will bring in $19 million for the city by April 2 and an additional $17 million by May 1, council aides said. Council also approved a debt refinancing package. All in all, the city will see $137 million in cash added to its coffers.
"This vote is an important step as we work towards resolving the City's financial crisis," Lewis said after the package was approved.
The Treasury Department originally sought to tie the bond sale to City Council's signature on a financial stability agreement or consent agreement that officials say is still in the works. But Council Members balked at the arrangement, noting Treasury already has the discretion to approve how Detroit spends funds generated from the bond sale.
"They still control how we spend these dollars," said Council Member Saunteel Jenkins. "It doesn't need to be connected to a financial stability agreement because that safeguard has already been put into the agreement [on the bonds]."
In addition to approving the bonds, Council Member Kwame Kenyatta suggested the city ask the state for an advance on its projected revenue sharing. "Advance me my revenue sharing," he said. "Give us a loan on what you owe us, and then allow us to move forward in this whole process. That way we're only borrowing on what's coming back to us."
City and state officials have until April 5 to come to an agreement on a financial plan for Detroit, otherwise Gov. Rick Snyder may appoint an emergency manager. The city's state-appointed financial review team found "severe financial stress" Monday, noting a projected a general fund deficit of $270 million for the current fiscal year.
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