Nov 13 Detroit is projecting it will run out of
cash next month unless the state of Michigan releases money due
it from a debt sale, the city told its financial advisory board.
The city's report to the board, created as part of a consent
agreement Detroit approved in April, said that "absent the
availability of escrow proceeds, the city will need to employ
other working capital solutions to avoid liquidity crises."
Projections show the city's weekly cash flow at just $4.1
million in mid-December before dropping to a negative $4.8
million at the end of the year.
The city submitted the report to the board on Monday.
The Michigan Finance Authority sold $129 million of bonds
for Detroit in August, completing a debt sale aimed at raising
$137 million for the cash-strapped city. While Detroit received
some of that money, Michigan Treasury officials tied the release
of another $30 million this year to Detroit's progress on
"The Department of Treasury is working with city of Detroit
to establish milestones that will allow the release of bond
funds being held in escrow and will continue to move the city
forward in an expeditious manner," Caleb Buhs, a spokesman for
the department, said on Tuesday.
Detroit faced a cash crisis this summer that led to warnings
it could default on some bonds, as well as to subsequent
downgrades that pounded the city's credit ratings deeper into
the junk category.
The cash crunch and a default were subsequently averted by
the bond sale.
Detroit also told its oversight board that it began a
process last week to find a restructuring adviser to aid the
city in analyzing strategies for swap agreements,
recommendations for long-term cash flow and other matters.
In October, Moody's Investors Service said it was keeping
Detroit on review for potentially another downgrade, citing in
part the possible repeal of Michigan's 2011 emergency manager
law by voters on Nov. 6. Parts of that law, which was repealed
by voters, were used to craft Detroit's consent agreement.
A spokesman for Moody's said on Tuesday that the review will
be concluded later this month.
Detroit Mayor Dave Bing announced on Monday that the city
lost Chief Operating Officer Chris Brown, who left to join a
private wind power systems company. Bing said a process to
replace Brown will start immediately.