Why does Orr ignore escape hatches?
There are potential legal problems swirling around the city’s pension swaps — those agreements the city signed in 2005 in order to borrow money to pay their liabilities to the pension fund. The legal problems represent an opportunity to get out of harmful and large debt incurred by the city.
Since the city was already in great debt at the time, it needed to create two entitiesable to borrow. There is uncertainty as to the city’s legal ability to do so. The city was also over its limit for borrowing, which by state law can be no more than 10 percent of the property value of the city. So the banks and the city developed a document — certificates of participation — as a way to overcome the property value limits. A few years later, when in money trouble again, the city pledged casino revenue as collateral to secure the loans.Yet, Michigan gaming law may disallow this. The gaming laws envisioned community enhancement as the benefit of gambling and guaranteeing bank loans does not seem to meet the criteria.
If the loans were illegal for any of these reasons, the loans could become unsecured debt. Then, the banks are left with their creative documents but not cash. If the casino money cannot secure debt, then the banks become equal with pensioners, they become unsecured creditors with paper worth a dime on the dollar, according to Orr.
So why isn’t Orr investigating these escape hatches, these possible ways to get out from under or lessen the city’s obligations?
Conflict of interest is one sure answer.
His former law firm Jones Day is now the city’s bankruptcy lawyer. There is the fact that Jones Day has as clients the very banks to which the city owes money. Jones Day has been paid more than a million dollars a month from the city in this bankruptcy proceeding, a proceeding initiated by Orr without any vote or approval from the council or mayor.
There is the question of the NERD fund that pays for Orr to live in luxury atop the Book Cadillac at more than $4000 a month. The NERD fund is the campaign coffer of the Gov. Rick Snyder — who fancies himself a nerd — that is not required to disclose its donors. Who is donating money so that Orr can live high on the hog? The public knows nothing of whom Orr is really working for. They only know of the NERD payments because of news reports; there was no transparency in this deal from the governor who promotes himself as pushing transparency in government.
Would a manager who is hired to work for the city, represent the city, work first to repay the banks when he had three good legal challenges to explore? We believe retirees in old age and ill health should be protected first and if there were ways out of the bank debt, those would be pursued before robbing the elderly. Who does Orr really represent?