CHICAGO - Scandal-plagued Detroit Mayor Kwame Kilpatrick proposed borrowing up to $330 million of casino tax-backed revenue bonds to finance a series of economy-boosting infrastructure projects across the city Tuesday night in his annual state of the city address.
Estimating that Detroit would collect $197 million in casino-wagering taxes during fiscal 2008, Kilpatrick proposed earmarking $29 million to pay debt service on between $300 million and $330 million of new borrowing.
"That means we can do now what it would take us 10 to 15 years to do if we relied only on general obligation bonds," the mayor said.
Kilpatrick said he has spent the last 18 months crafting the plan with advisers from JPMorgan and Loop Capital Markets LLC.
"The final size of the package, and the final size of the projects, will be determined when we take the bonds to market," Kilpatrick said. "We plan to go to the market in early May after approval by the council and final sign-off by the bond rating agencies."
The timing of the transaction likely depends on whether the city is able to release its delayed 2007 certified audited financial results. Michigan in February began withholding a part of the city's bi-monthly state revenue aid payments until the city released its 2006 audit and presented a comprehensive plan to release its 2007 audit. Detroit has since released its 2006 audit and received a $26 million payment from the state in return.
Bond proceeds from Kilpatrick's proposal would fund a series of projects, including the establishment of a budget stabilization fund of at least $75 million, the construction of one new police and two new fire buildings, the demolition of up to 50 abandoned commercial and apartment buildings across the city, in addition to a number of other projects.
In recent months Kilpatrick has found himself facing a series of scandals, including allegations of an affair with his chief of staff, "pay-to-play" contract rigging, and possible perjury charges stemming from his denial of an affair with his chief of staff in sworn testimony in a civil trial. He also faces ongoing questions surrounding the 2003 unsolved drive-by murder of a Detroit stripper who had performed at an infamous 2002 party allegedly held at the mayoral mansion. That scandal, which is currently in civil court, was revived last week after a retired police clerk testified about a 2002 police report that offered an account of the mayor's wife beating the stripper.
Kilpatrick faces a pending City Council vote on a resolution urging his resignation and a citizen-based recall petition drive. Near the end of the address, he veered from scripted comments and attacked his critics, including several City Council members and the media, calling their actions a "hate-driven bigoted assault" driven by an "unethical, illegal, lynch-mob mentality."