Consultant: Many Detroit departments 'couldn't perform some of the most basic functions'

Source: Detroit Free PressOct.mini storage 24--Several of Detroit's departments were not able to perform some of the most basic functions when Conway MacKenzie began providing work for the city in 2012."Simple things such as getting bills out on time to the right addresses with the right staffing ... were both significant deficiencies," Charles Moore, a managing partner for the Birmingham-based restructuring firm, said during a bankruptcy court trial today."Many of the departments couldn't perform some of the most basic functions."The operations of the city's property tax division and its public lighting department have improved, but both were struggling to properly bill customers last year and additional operational improvements are under way.Moore also said Detroit owns parking garages that are in disrepair and cannot be fully used because some areas are blocked off.Moore was the second witness to testify today in a trial that will determine Detroit's eligibility for Chapter 9 bankruptcy. Detroit became the largest city in U.S. history to file for bankruptcy protection on July 18 with more than $18 billion in debt.However, the city must prove that it is eligible for bankruptcy before it can propose a plan to force creditors to reduce its debt. Most of Detroit's unions, its retiree associations and a retiree creditors committee have objected to the city's bankruptcy.On Wednesday, hundreds of protesters opposed to Detroit's bankruptcy filing staged a rally outside of the federal courthouse.Today, there were few, if any, protesters outside but several residents did attend the trial. Many residents, retirees and employees fear that their pensions, salary and benefits will be slashed by the bankruptcy process.Sarella Johnson, 54, of Detroit, said she believes that the approval of the emergency manager law that allowed Gov. Rick Snyder to appoint Kevyn Orr as the city's emergency manager usurps the democratic rights of the city's residents."If our governor bypasses the constitution of the United States and bypasses the power of the people to vote ... that destroys democracy," Johnson said.To be eligible for bankruptcy, the city must show that it negotiated in good faith with creditors before it filed, is insolvent and had the proper authority to file from the governor.Orr is expected to testify on Friday and Snyder is scheduled to testify Monday in what is expected to be at least a five-day trial.Moore said Conway MacKenzie estimates that it would cost the city $500 million over six years to fully address blight. He estimates that the city needs to spend $1.25 billion over 10 years to improve the operations of all of the city's departments.Cleaning up property and removing abandoned homes reduces crime, improves the appearance of the city and helps with property tax collection, Moore said.Gaurav Malhotra, a managing director for儲存Ernst & Young, said in testimony today that he is part of a team of accounting experts that have been working with the city for nearly two years to improve the city's cash management and to better track how much money the city has.Malhotra said he warned Detroit officials frequently that the city would not be able to fix its long-term financial problems unless it restructured its pension liabilities and obligations"During this time frame, I made it very clear that based on the experience I had over the past 18 months working with the city that the options that the city was undertaking to preserve cash ... were predominantly based on short-term solutions and not actual cash savings," Malhotra said.At times, as the city prepared a presentation for creditors on June 14 to press for concessions, Detroit explored the possible sale of a variety of assets including Belle Isle, parking garages, Joe Louis Arena and Coleman A. Young International Airport.But Malhotra said the sale of assets would have had no effect on the city's structural financial problems."In my view, those are one-time proceeds .... that do not address the issues with respect to the ongoing operating disbursements and the legacy cost disbursements," he said. "The core structural problems and cash flow problems were that disbursements continued to exceed receipts."By definition, asset sales increase the amount of cash available to the city, he said, but don't fix fundamental problems."If you sell something you would have more cash," he said. "Cash is cash, so if you have more cash, you have more cash."John Sherwood, an attorney for AFSCME, repeatedly asked Malhotra if the city, its advisers and law firm of Jones Day ever considered postponing sales of assets until after it filed for bankruptcy."I do not recall any conversations like that," Malhotra said.Malhotra also said he did not recall any conversations in May 2011 with unions where promises were made for contract concessions that would only be temporary.The city's financial picture started to become especially dire in December 2012, Malhotra said."We were looking at different alternatives for improving cash flows," he said.At that time, Malhotra was reporting to Detroit Mayor Dave Bing.That changed shortly after Snyder appointed Orr as the emergency manager in March"We report to Kevyn Orr," Malhotra said.Attorneys for the state of Michigan said earlier this morning that Snyder has agreed to testify on Monday without any time limitations. On Wednesday, the state had asked to limit Snyder's testimony to two hours.U.S. Bankruptcy Judge Steven Rhodes said he would extend the court's session on Monday to 5 p.m. so that all of Snyder's testimony could occur on one day.Copyright: ___ (c)2013 the Detroit Free Press Visit the Detroit Free Press at .freep.com Distributed by MCT Information Services迷你倉