News & Commentary

What can be said with absolute certainty about the so-called plan of adjustment Detroit Emergency Manager Kevyn Orr released last week?Almost nothing.It is a plan built on a mountain of ifs.According to a summary of the plan, “police and fire retirees would likely receive in excess of 90 percent of their earned pensions after elimination of cost of living allowances,” and “general retirees would likely receive in excess of 70 percent of their pensions after elimination of cost of living allowances.”But that’s only if they agree to give up without a fight and promise no lawsuits in the future. Otherwise the deal gets more stingy, and will be heaped on top of crushing cuts to medical benefits.Either way, the offer hinges on a promise by Gov. Rick Snyder to deliver $350 million in state money. But that’s a pledge Snyder can’t fill on his own. To actually deliver all those millions, he must convince a legislature that’s controlled by conservatives often hostile to Detroit to actually appropriate the money.On the other hand, it could be that the pensioners won’t have to take any cut at all. Obscured by all the coverage of Orr’s proposed “adjustments” was news that the U.S. 6th Circuit of Appeals had agreed to consider a case, brought by the city’s two pension systems and others, which challenges the legitimacy of the bankruptcy itself.A key component of that case is the contention that the Michigan Constitution guarantees the payment of pensions promised to public employees, and that U.S. Bankruptcy Judge Steven Rhodes grievously erred when he allowed those pensions to be placed on the chopping block along with other unsecured creditors.And just who, really, is an unsecured creditor – meaning one that is subject to the kind of buzz cuts the bankruptcy court will be administering?As the New York Times reported, it seems unlikely that Wall Street is going to willfully roll over and accept pennies on the dollar for debt it is owed. “While we understand that favoring pensioners and discriminating against bondholders and other creditors may be politically popular, we believe this is contrary to bankruptcy law and will result in costly litigation that will hamper the city’s emergence from bankruptcy,” Steve Spencer, a financial advisor to one of the companies that insures several types of Detroit’s debt, told the paper.And then there’s a lawsuit Detroit filed claiming that a disastrous deal involving certificates of participation was actually illegal. If the city prevails in that case, it would free itself of $1.4 billion in outstanding debt.How can any final settlement with anyone be calculated with that big if still hanging out there?Aside from the virtual certainty that Kevyn Orr and company are going to burn through the $95 million that’s been extracted from departments throughout the city to pay for restructuring costs during the current fiscal year – with much of that money going into the very deep pockets at Orr’s former law firm, Jones Day – what else is considered to be a safe bet in this mess of a bankruptcy?Well, for one thing, there are the grassroots efforts by a coalition of activists who gathered at the Historic King Solomon Baptist Church on Detroit’s west side. Despite a dearth of media attention, they can be counted on to keep plugging away with their message, which is gradually finding a broader audience. The group held a press conference on Monday to announce a plan of their own, one intended to counteract what Detroit attorney Julie Hurwitz called a “full-scale assault on our constitutional rights and protections.”The reason they are doing so is laid out in the preamble to the group's People’s Plan for Restructuring Toward a Sustainable Detroit itself, which begins:“The restructuring and rebirth of Detroit will not be delivered by a state-imposed emergency manager, nor through Chapter 9 bankruptcy proceedings, foundation contributions, closed door deals, or other devious and misleading corporate schemes. Detroit’s rebirth will be the result of the people’s unrelenting demand for democratic self-governance, equal access to and management of the natural and economic resources of the city.”Anyone interested in learning more about that plan can visit the web site of the group Detroiters Resisting Emergency Management. That plan will be the focal point of a town hall meeting being held on Sunday, March 2 at 3 p.m. at Central United Methodist Church (the corner of Woodward and Grand Circus Park in downtown Detroit).By Curt Guyette, Investigative Reporter

Across Michigan, cities and townships are passing anti-discrimination policies that respect the rights of LGBT men and women. As of this week, the largest county in Michigan has joined them in standing for equality!

Jay Kaplan, LGBT Project Staff AttorneyShare this on Facebook | Tweet ThisApril and Jayne just wanted to jointly adopt three special needs children they were foster parenting.Without both women adopting the children as a family, the couple worried that their kids would lack the legal protection of both parents.Yet they discovered Michigan had many hurdles that would not permit them to adopt their children together. Many Michigan judges interpret the state's adoption law to mean only married couples can adopt together, using this to discriminate against LGBT couples.Here at the ACLU of Michigan, we don’t agree with that interpretation of the law. Yet that has been the legal reality for LGBT families in many counties.April and Jayne filed a federal lawsuit, DeBoer v. Snyder, challenging the State’s refusal to allow them to be legal parents to their children. The State of Michigan is defending this discriminatory policy. Judge Friedman was assigned to the case and pointed out that the right to adopt hinged on the legal status of marriage. He suggested that April and Jayne should challenge Michigan’s prohibition on the right of same-sex couples to marry as well.Now, with both adoption and marriage laws being challenged, the policies that most obviously deny same-sex couples the same fundamental rights afforded to opposite-sex couples will be on trial.{C}After initial briefings and motions, Judge Friedman decided that such an important case shouldn't be decided without hearing all the facts. He has asked that both sides present experts to testify both in favor and against marriage equality for same-sex couples.This historic hearing will take place on February 25th, where it will be up to the State to provide constitutional justification this legally-sanctioned discrimination.We don’t think they will be able to pull it off and we believe that this case is the vehicle towards marriage equality in Michigan.Today, I'm hosting a free one-hour briefing for anyone curious about this case and marriage equality in Michigan.

 

Earlier this week, the Michigan House of Representatives hastily passed a bill that ignores U.S. Supreme Court rulings, abandoning over 360 men and women serving cruel and unusual sentences in Michigan.Recently, the U.S. Supreme Court ruled that the sentencing of children to mandatory life without parole is unconstitutional.Yet Henry Hill, Barbara Hernandez and hundreds of others still sit behind bars for crimes they committed when they were too young to vote, buy a lottery ticket, or sit on the very jury that convicted them.

Jay Kaplan, LGBT Project Staff AttorneyShare this on Facebook | Tweet ThisAcross the country, we are seeing incredible progress made in terms of marriage equality and relationship recognition.To talk about the sweeping changes we've seen in the last decade and look at some upcoming challenges, we're talking about Marriage Matters this month. This series of blogs will range from the history of the fight for LGBT rights in Michigan to an in-depth look at the upcoming DeBoer case, which could impact marriage equality in Michigan when heard later this month. To date, 17 states as well as the District of Columbia permit same-sex couples to marry, and more will soon join with almost 50 current legal challenges in both state and federal courts regarding the issue. At the ACLU of Michigan, we maintain that a legal civil marriage is a fundamental constitutional right, recognized by the United States Supreme Court.These marriage certificates are more than just a piece of paper or the opportunity to celebrate love. They are the legal recognition of the dignity and worth of same-sex couples and their love and commitment to one another.In Michigan, we still have a long way to go. Current Michigan law denies same-sex couples the fundamental right to marry. The right to marry has significant impact on both the financial and emotional stability of LGBT families. It affects the relationships of parents and children, leaving children without the legal protections and security of two parents.The right to marry also determines the eligibility of loved ones to access important financial securities, such as social security benefits and health insurance. Without this fundamental right, LGBT families suffer the indignity of being legally fragmented in the most basic of ways.The ACLU of Michigan is unique in that it one of the only ACLU state affiliates that has a project specifically devoted to the legal issues and concerns of the LGBT community, established in 2001.For the past 13 years, the ACLU of Michigan has worked tirelessly to ensure that LGBT couples and families have the rights or will gain the rights to practice their love and raise their families the same as everyone else. We will continue to work tirelessly until every couple and every family in Michigan is considered equal under the law, from the schoolhouse to the altar.Follow us on Facebook and Twitter to read more in our Marriage Matters series.Key News & DocumentsLearn more about issues you care about and take action: become a member, subscribe to our email action alerts, follow us on Twitter, and like us on Facebook. 

In 2005, the city of Detroit faced a monumental dilemma: It desperately needed to borrow more than $1.4 billion to help shore up its two pension systems, but doing so would far exceed the legal limit on the amount of debt it could amass.The solution arrived at by the administration of then-Mayor Kwame Kilpatrick was to sidestep the law by turning to something called certificates of participation, or COPs, which are similar to municipal bonds.But instead of borrowing the money directly, Kilpatrick and his crew – following the advice of investment bankers who would reap massive profits from the deal – set up two nonprofit “service corporations,” which in turn created trusts that would sell the COPs to investors. Technically, it was these two nonprofits that were obligated to ensure repayment of the debt. The city then entered into a contract with the nonprofits – both of which were controlled entirely by city officials -- agreeing to pay them for services rendered.In other words, they were mere shells.

In 2005, the city of Detroit faced a monumental dilemma: It desperately needed to borrow more than $1.4 billion to help shore up its two pension systems, but doing so would far exceed the legal limit on the amount of debt it could amass.The solution arrived at by the administration of then-Mayor Kwame Kilpatrick was to sidestep the law by turning to something called certificates of participation, or COPs, which are similar to municipal bonds. But instead of borrowing the money directly, Kilpatrick and his crew – following the advice of investment bankers who would reap massive profits from the deal – set up two nonprofit “service corporations,” which in turn created trusts that would sell the COPs to investors. Technically, it was these two nonprofits that were obligated to ensure repayment of the debt. The city then entered into a contract with the nonprofits – both of which were controlled entirely by city officials -- agreeing to pay them for services rendered.In other words, they were mere shells.“At the time, it was seen as a clever legal circumvention of the debt limit,” says Laura Bartell, a Wayne State University Law School professor who specializes in bankruptcy.Last Friday, lawyers representing the city filed a federal lawsuit claiming that the deal was illegal from the start, and because of that Detroit should not be required to continue paying off the debt. The case is now in the hands of U.S. Bankruptcy Judge Stephen Rhodes.The lawsuit came as a complete surprise to most people, even those who have been following the bankruptcy proceedings closely. Until this point, attention in this aspect of the bankruptcy proceedings has been focused instead on interest rate swaps, a controversial side deal to the COPs transactions.A type of hedge, these swaps were essentially a very high-stakes gamble. In effect, the city bet that interest rates were going to rise over time. If they did, the banks would be on the hook for the increased costs. Instead, the economy crashed in 2008, and interest rates fell to almost nothing. As a result, the cost to the city has been about $300 million in payments to what are known as the swap counterparties – Bank of America/Merrill Lynch and UBS, an investment bank based in Switzerland.For the better part of a year, the city has been trying to end the swaps. The banks claim that the cost of doing so should be about $300 million, and that the city is in a bad negotiating position because, even in bankruptcy, the swap payments are secured by casino tax revenues (as a result of another deal, struck in 2009).This is where the weeds thicken.