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Bing orders city's lawyer to drop lawsuit

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Mayor Dave Bing addresses the Detroit City Council on June 11.  (Credit: WJBK | myFOXDetroit.com) Mayor Dave Bing addresses the Detroit City Council on June 11. (Credit: WJBK | myFOXDetroit.com)
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DETROIT (AP) -

Mayor Dave Bing on Tuesday ordered his chief lawyer to drop a lawsuit she filed contesting the legality of a consent agreement that enabled Detroit to avoid having the state appoint an emergency manager to oversee the city's troubled finances.
 
In a letter obtained by The Associated Press, Bing says Corporation Counsel Krystal Crittendon "exceeded" her authority and failed to follow Detroit's charter when filing the lawsuit.

Click here to read the letter in its entirety »
 
"The Corporation Counsel shall prosecute all actions or proceedings to which the City is a party or in which the City has a legal interest, when directed to do so by the Mayor," he wrote in the one-page letter, which was dated Monday and delivered Tuesday.
 
"By taking this action you have exceeded your authority under the Charter and have put the City's financial stability at substantial risk of serious financial consequences."
 
The lawsuit, which was filed this month through Crittendon's office and was not brought on behalf of Bing or the City Council, claims the consent deal reached in April between Bing and Gov. Rick Snyder is invalid because the state owes Detroit $220 million in past revenue sharing and other unpaid bills.
 
Snyder has said the state does not owe Detroit the money. An Ingham County judge is expected to hear the lawsuit Wednesday.
 
The state Treasurer's office told Detroit Chief Financial Officer Jack Martin last week that if Crittendon's suit isn't dropped, the state could withhold millions of dollars in revenue sharing that would help the city pay its short-term bills and make payroll. The city is due to receive a $25.1 million revenue sharing payment later this month,
 
Bing told council members Monday that Detroit will run out of money this month without the revenue sharing. He also has said Crittendon earlier told him she would not drop the suit.
 
The Associated Press left a message Tuesday with Crittendon's office seeking comment.
 
Crittendon has said that the new charter, approved last year by Detroit voters, gives the corporation counsel the authority to investigate violations of the document. It takes six votes from the nine-member council to remove her, but there has been no movement toward relieving Crittendon of her duties.
 
The lawsuit, the state's direct response to it and Bing's order to Crittendon are the latest tangles in Detroit's near-futile attempts to turnaround decades of bungled finances and millions of dollars of debt.
 
Detroit accumulated budget deficit is more than $200 million. Structural debt is over $13 billion.
 
Through a contract with the state, the city authorized $137 million in bonds this spring to help shore up Detroit's shrinking cash flow and pay city workers and vendors who provide products and services.
 
The state is concerned that the legal conflict posed by Crittendon's suit could scare off potential buyers of those bonds. Deputy Treasurer Thomas Saxton warned Thursday that the bank could intercept the revenue sharing money that was used to secure the loan if the bonds are not sold by June 27.
 
The bond issue is not part of the consent agreement, but continued failure by the city to work toward improving its fiscal condition threatens that agreement. If Detroit is found to be in default of the consent deal one of the remedies is state receivership.
 
Snyder on Tuesday said he's ready to "take action" if city officials don't keep their promises or the municipality runs out of cash.
 
"I want the city to work through this," he said. "It's an internal Detroit issue, largely, that they have real issues between the mayor, City Council and the corporate counsel and I hope they resolve those."

Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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Letter Mayor Dave Bing Sent to Corporation Counsel Krystal Crittendon

Mayor Bing's Letter to Corporation Counsel Crittendon
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