Mayor Mike Duggan’s charge that former Emergency Manager Kevyn Orr misled him and his CFO about the city’s pension exposure has one convenient attribute: it’s an insurance policy.
In an election year, where the mayor’s chief rival (so far) carries the most potent political name — Coleman Young — in the post-war era, Duggan’s allegation fuels a political narrative in which the EM and his white-shoe law firm, Jones Day, fleeced the city and its retirees.
It also serves to inoculate the mayor from insinuations that he secretly supported the state’s controversial emergency manager law. Or that he conspired with a Republican governor and a Republican-controlled Legislature to wrest control of the minority-majority city from Detroiters.
The mayor says Orr “concealed” pension-fund assumptions that are likely to prove more costly to the city than first expected. Last week, Duggan said “we’re very much looking at how much discretion did the emergency manager have, how much obligation did he have to disclose, and is this a lawsuit we can win.”
Orr declined comment, as did the mayor’s office. Jones Day “categorically denies ... there was any effort or intent to mislead anyone. The firm will vigorously defend itself against any claim in this regard and pursue any and all remedies that are available as a result of these false claims.”
Bill Nowling, a former spokesman for Orr, added: “I would direct you to the court record, which is publicly available and explicitly clear about what happened.”
The mayor acknowledges he and his lawyers ultimately could decide against filing a lawsuit if they deem the chances of winning remote. He also says he would not file suit to score “political credit.” Of course not.
The reality of Detroit politics is that it’s the charge and its media amplification that matter. Lawsuit or not, the charge would continue resonating across the neighborhoods, at least until Election Day, which may be the point of legal shadow boxing that may never land an actual punch.
Despite the unambiguous revival of downtown Detroit since the city exited Chapter 9 bankruptcy in December 2014, Duggan’s term has been dogged by complaints that the comeback is skewed too heavily toward the central business district at the expense of the neighborhoods.
The mayor’s bias for pragmatic bi-partisanship is an asset in the post-bankruptcy era of Dan Gilbert, surging investment, Republican-controlled Lansing and President Donald Trump’s Washington. Duggan understands how to manage political and business relationships, how to exercise power to benefit the city and key constituencies.
But the mayor’s flexible pragmatism, coupled with his ties to business leaders and Republicans, could prove a liability in a re-election campaign. Challengers and their supporters are likely to stoke resentment against the EM law, its power over organized labor and ability to dictate democracy because they are the handiest political clubs to wield against the incumbent.
Publicly undermining the EM law, and the credibility of Orr, has tactical advantage for Duggan. It potentially answers simmering suspicion among would-be voters in this summer’s Democratic primary; bolsters his standing with labor; and positions the mayor to lead a push to dismantle the EM law during a second term, especially if the balance of power in Lansing shifts after 2018.
And if the campaign tactic tarnishes the reputations of Orr and Jones Day in the process? Well, that’s just politics in Detroit, proving once again that good deeds around here seldom go unpunished.
There all sorts of legitimate criticisms to level at the EM law, starting with the state-appointed messes that are Detroit Public Schools and the Flint water crisis. Orr’s stewardship of the EM process, however, is the standard by which all others in Michigan could be judged — and all are wanting, by comparison.
The irony here is that Duggan’s remarkable first term owes a measure of its success to two things the mayor could not control: Orr, a University of Michigan Law School classmate appointed EM by the governor, and Gilbert, the chairman of Quicken Loans Inc. and owner of the NBA’s Cleveland Cavaliers.
Without Gilbert’s prodigious wallet and appetite for risk, the Detroit that Duggan wants to lead for another four years would look different and be less economically robust. Without the financial restructuring Orr led as EM, the city would be saddled with more debt and more assets it could not afford to maintain.
Put another way: bankruptcy enabled by the EM law addressed immense financial and operational challenges that would have been difficult, if not impossible, for the mayor to negotiate under normal governing processes.
Of the 44 orders issued by Orr, according to a source familiar with the process, roughly 25 percent of them were issued at the behest of Duggan. Among them: placing Chief Financial Officer John Hill in charge of the city’s financial cluster; establishing a chief communications officer position; suspending the Detroit Police Commission; and validating the Great Lakes Water Authority deal.
The plan that Detroit agreed to follow when the city exited bankruptcy largely protects lawyers and other professionals from litigation. But it doesn’t bar anyone, including the mayor, from alleging misbehavior in hopes the charge proves its usefulness.
Daniel Howes’ column runs Tuesdays, Thursdays and Fridays. Follow him on Twitter @DanielHowes_TDN, listen to his Saturday podcasts, or catch him 3 and 10 p.m. Thursdays on Michigan Radio’s “Stateside,” 91.7 FM.