State OKs loans for troubled cities
Lansing — A state board on Tuesday approved emergency loans for Highland Park and Allen Park to help the financially troubled Wayne County communities deal with retiree legacy costs.
The Local Emergency Financial Assistance Loan Board approved a $2.6 million loan for Allen Park to catch up on overdue payments to its pension fund.
The three-member board also approved a request from Highland Park for a $3 million loan that the city intends to use to settle a long-standing pension debt with Fifth Third Bank, said Terry Stanton, spokesman for the state Treasury Department.
Through third-party mediation, Highland Park officials have been able to negotiate a $4.5 million settlement with the bank on nearly $18 million in debt used to prop up the city’s pension funds.
A $3 million emergency loan will be applied toward the settlement, Stanton said.
Under the loan terms, Highland Park has 25 years to pay back the loan at an interest rate of 2.45 percent.
In April, Gov. Rick Snyder declared a financial emergency in Highland Park.
City officials chose to pursue neutral mediation with creditors instead of allowing Snyder to appoint an emergency manager with the power to tear up labor contracts.
Allen Park’s 10-year loan carries an interest rate of 2.3 percent and requires the city to submit quarterly financial reports to the state treasurer while the loan is outstanding.
Allen Park is one of five Michigan cities under control of a state-appointed emergency manager.