CHICAGO - A judge has denied Detroit corporation counsel Krystal Crittendon's motion to reconsider an earlier dismissal of her challenge to the city's consent decree with Michigan, clearing one hurdle from Detroit's plan for a badly needed bond transaction.

Ingham County Circuit Court Judge William Collette's decision comes three weeks after he originally dismissed the lawsuit, saying the city's top attorney lacked authority to bring the challenge without the consent of the mayor or City Council.

Crittendon now has 21 days to appeal with the State Court of Appeals.

Mayor Dave Bing has repeatedly asked Crittendon to drop the lawsuit, which claims the consent agreement that gives the state more control over Detroit is invalid because Michigan owes the city money.

Bing has also asked her to resign, which she refused to do, but he lacks sufficient support on the City Council to force her out.

Crittendon's lawsuit has halted a planned refinancing through the Michigan Finance Authority that would raise money for the city's coffers and pay off an $80 million debt privately placed in late March with Bank of America Merrill Lynch.

The state says Crittendon's challenge makes the refinancing impossible and would require that all of the city's revenue aid through December be used to pay off the $80 million of debt. Crittendon also refuses to sign the bond documents enabling the deal, according to the state.

The $80 million of notes were originally due July 27, but local and state officials negotiated with the bank to push back the due date until Aug. 15. The interest rate spiked to 6.25% from 2.97%.

State Treasurer Andy Dillon said Crittendon's challenge is close to derailing the refinancing.

"I think it will be virtually impossible to get an agreement executed in time," Dillon said recently on a local radio show. He added that Detroit could be forced to go to market with only its own junk-rated credit, "which I think will be difficult."

The City Council was reportedly set to meet in private Wednesday to discuss Crittendon's actions.

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