06/07/2012 03:38 pm ET

State To Detroit: Drop Lawsuit Over Consent Agreement Or Face Loss Of Funds

The state today warned Detroit that it will withhold state revenue-sharing payments to the city unless a lawsuit challenging the consent agreement is dropped.

The money would instead be diverted to repay $80 million in interim bond financing that the state provided Detroit under the agreement, state officials said in a letter to the city today.

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