Detroit Financial Review Commission

Detroit Financial Review Commission
Name	Detroit Financial Review Commission
Formed	2014
Jurisdiction	City of Detroit, Michigan
Headquarters	Detroit, Michigan
Chief1 name	Financial Review Commissioner
Chief1 position	Chair
Parent agency	State of Michigan

Detroit Financial Review Commission

The Detroit Financial Review Commission was established in 2014 following Detroit bankruptcy, intended to oversee fiscal plans and municipal operations during Detroit's emergence from Chapter 9 bankruptcy and interact with state and local institutions such as the Governor of Michigan, Michigan Legislature, Wayne County, City of Detroit Charter Commission and municipal creditors. It operates at the intersection of state oversight, municipal administration, and municipal finance markets including interactions with entities like Moody's Investors Service, Standard & Poor's, Fitch Ratings, Detroit Water and Sewerage Department, and municipal unions represented by American Federation of State, County and Municipal Employees and International Union, United Automobile, Aerospace and Agricultural Implement Workers of America.

History

The commission was created after the 2013 filing in United States Bankruptcy Court for the Eastern District of Michigan that led to judicial oversight of Detroit's restructuring, involving parties such as Kevyn Orr as emergency manager, the Detroit Free Press, The Detroit News, and bondholders including Syncora Guarantee and Ambac Financial Group. It was formed pursuant to legislation enacted by the Michigan Legislature and signed by the Governor of Michigan, reflecting precedents from oversight boards like the Emergency Financial Manager law (Michigan) and echoing oversight structures in cities such as New York City Financial Control Board and Puerto Rico Oversight, Management, and Economic Stability Act. Early interactions included negotiations with the Detroit Police Department, Detroit Public Schools Community District, and municipal pension systems including the Detroit General Retirement System and the Detroit Police and Fire Retirement System.

Structure and Membership

Composition follows statutory terms involving representatives appointed by the Governor of Michigan, the Mayor of Detroit, and ex officio seats tied to statewide offices like the State Treasurer of Michigan. Membership has included officials, appointees, and experts with ties to institutions such as Brookings Institution, Goldman Sachs, University of Michigan, Wayne State University Law School, Kessler & Solomiany-type advisory firms, and nonprofit actors like Kresge Foundation and Rockefeller Foundation grant networks. The commission's staff has coordinated with municipal officers including the Detroit City Council, Detroit Department of Transportation, and the Detroit Economic Growth Corporation, and has convened stakeholder meetings with representatives from Detroit Regional Chamber and neighborhood organizations including Focus: HOPE and United Community Housing Coalition.

Powers and Responsibilities

Statutory authority requires review and approval of five-year financial plans, multi-year budgets, and capital improvement programs presented by the Mayor of Detroit and the Detroit City Council. The commission can require corrective actions, monitor compliance with plan metrics, and liaise with creditors including U.S. Department of the Treasury programs and municipal underwriters such as Bank of America and J.P. Morgan Chase. Its responsibilities intersect with regulatory bodies like the Michigan Attorney General and federal courts including the United States District Court for the Eastern District of Michigan when oversight implicates litigation over municipal liabilities or consent decrees involving agencies like the United States Environmental Protection Agency in water infrastructure matters.

Relationship with City Government

The relationship is both supervisory and collaborative: the commission reviews submissions from the Mayor of Detroit and provides guidance affecting departments such as the Detroit Police Department, Detroit Fire Department, Detroit Water and Sewerage Department, and cultural institutions like the Detroit Institute of Arts. Interaction with elected bodies including the Detroit City Council and offices such as the City Clerk of Detroit involves negotiated amendments to budgets and capital plans. The commission has coordinated with redevelopment partners such as Bedrock Detroit, Dan Gilbert (businessman), and philanthropic stakeholders like the Ford Foundation while balancing obligations to creditors like municipal bond insurers and institutional investors including BlackRock.

Major Actions and Impact

Notable actions include approval of post-bankruptcy financial recovery plans that enabled Detroit to exit Chapter 9 bankruptcy and restore credit ratings from agencies including Moody's Investors Service and Standard & Poor's. The commission oversaw implementation of structural reforms affecting pensions, legacy liability settlements involving entities such as National Public Finance Guarantee, and capital projects funded with bond issuances underwritten by firms like Morgan Stanley and Goldman Sachs. It influenced fiscal policy choices that affected service delivery in neighborhoods covered by organizations such as Detroit Land Bank Authority and economic development projects tied to QLine transit and Renaissance Center investments.

Criticisms and Controversies

Critics have argued that oversight diminished local autonomy and amplified influence of creditors and financiers including Alden Global Capital-type hedge funds and bond insurers like MBIA, with commentators in outlets like The New York Times and The Atlantic debating tradeoffs between fiscal discipline and democratic accountability. Labor groups such as American Federation of State, County and Municipal Employees and civil rights organizations including NAACP and ACLU raised concerns about impacts on pensions, public services, and housing policy enforced under oversight. Legal challenges and public disputes involved parties such as Kevyn Orr's emergency management team, municipal unions, and bondholder plaintiffs represented by law firms linked to major public finance litigation in federal and state courts.

Category:Government of Detroit Category:Public finance in the United States