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Obama aides, Mich. leaders to discuss Detroit help

September 26, 2013
Associated Press

DETROIT (AP) — Four of President Barack Obama's top advisers will converge on Detroit Friday to meet privately with state and local leaders about ways the federal government can help the bankrupt city short of a bailout.

The White House said Thursday that top economic adviser Gene Sperling will join U.S. Attorney General Eric Holder, Transportation Secretary Anthony Foxx and HUD Secretary Shaun Donovan in the closed meeting.

"There is not going to be a bailout," Democratic U.S. Sen. Carl Levin told The Associated Press Wednesday. "We have enough problems with the federal deficit. We need to be creative and look at existing programs. There are still some funds there."

The gathering follows a series of meetings with the White House to plot ways to pull Detroit from a fiscal pit that this summer made it the largest U.S. city to file for bankruptcy protection.

Some of the earlier meetings focused on federal grants and programs that could patch holes in existing services due to Detroit's cash crunch, but the city has had a poor record in making sure grant money is used properly and even spent at all.

In 2011, Mayor Dave Bing fired the director of the city's Human Services Department after an internal investigation revealed $200,000 intended for poor residents was spent on office furniture for staff members.

Bing then began a review of block grant spending procedures. But the following year, his office had to scramble to use about $20 million in Community Development Block Grants that had been left sitting for demolitions of thousands of vacant houses. The city's police department also allowed a $400,000 grant to lapse for a new armored vehicle.

Levin said he sent Sperling the list of possible funding sources at the end of July that cited "everything from neighborhood stabilization programs to transit programs to community development, brownfield grants to COPS programs, highway construction, new market tax credits."

Only historic deals with bond holders, insurance companies and other creditors — or a huge infusion of cash — will wipe out Detroit's $18 billion or more in debt.

Grants only can pay for things the city otherwise couldn't afford. Several businesses even pitched in $8 million earlier this year to help pay for a new fleet of emergency vehicles, including 23 EMS units and 100 police cars, to boost public safety and reduce response times.

Police Chief James Craig said Thursday that he was in Washington a few weeks ago in search of federal resources for his department.

"Our work together is critical in achieving our goals of making Detroit a safe city and providing the necessary resources in raising the morale of our most valuable asset, our people," Craig said.

The grant troubles have rankled Kevyn Orr, the emergency manager Gov. Rick Snyder appointed to lead the city out of its financial mess. Orr has said Detroit is so poor that it can't afford to lose out on any resources, adding that federal grants available to the city could be in the hundreds of millions of dollars.

Detroit is in bad shape and even millions in federal grants "probably will not be enough to help fix things," said Bridgette Shephard, 47, a social worker who lives in Detroit.

"But something is better than nothing," she said. "A bailout would have been better, but if we can sustain some of our needs with grants that would be a start. Let's take it. Whatever kind of money it is to benefit the city, I'm all for it."

The Obama administration is trying to show its support without trying to send any message about a bailout, said Peter Henning, a Wayne State Law School professor.

Officials, especially those from HUD and Transportation, can commit funds for infrastructure projects, while Holder can chip in resources for fight Detroit's high violent crime rate, Henning said.

"So these are back door ways to provide federal funding and support without having to seek a bailout, which would be dead on arrival from both parties," he said. "The goal is to strengthen Detroit, but only indirectly. This is at best a muted commitment because what Detroit really needs is dollars and not just support that might be beneficial in three to five years. But any hope of that is a pipe dream."

 
 

 

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