Wayne County Asks for Financial Emergency Declaration

CHICAGO -Wayne County, Mich. Executive Warren Evans is asking for state intervention to help tackle the county's fiscal woes.

Evans on Wednesday submitted a formal request that a financial emergency be declared.

The announcement comes as the county that is home to Detroit is poised to sell $187 million of notes as soon as Thursday. It was not immediately clear whether the request would impact the timing of the sale.

Bank of America Merrill Lynch is the underwriter.

The county's offering statement laid out for potential investors how its debt might fare in a Chapter 9 filing.

Evans made the announcement in a statement, reporting that he had submitted a letter with the request to state Treasurer Nick Khouri. Evans portrayed the request as a step needed to aid in the execution of his proposed recovery plan to rid the county of a $52 million structural deficit.

Evans is seeking a consent agreement with the state that he said would allow the county to continue negotiations with stakeholders while also "providing the ability, if necessary, to make difficult decisions," the statement said.

"Our Recovery Plan provides a clear path to financial stability for the county, but we are keenly aware that our time frame to get the job done is quickly fading," Evans said. "Throughout this process we are constantly evaluating where we stand and proactively seeking solutions to work ourselves out of this massive deficit. I am requesting this consent agreement because the additional authority it can provide the County may be necessary to get the job of fixing the county's finances done."

Bond documents and an online investor road show on the deal both feature discussions on bankruptcy in the sections about investor risks. Standard & Poor's assigned a rating of SP-1 to the notes, denoting a "strong capacity to pay principal and interest."

Evans has publicly warned of the risks in several high-profile press conferences. A February audit showed that the county's finances are so weak that it could run out of money by this summer and be in a negative liquidity position by next summer.

Wayne County faces a $74 million negative general fund balance as of September 2014 and is expecting a negative balance of $64 million by September 2015, according to bond documents.

The bond documents describe Evans' proposed recovery plan.

"Without these or similar measures, the county executive indicated that the state of Michigan would likely appoint an emergency manager," the documents say, adding that the emergency manager has the power to recommend a Chapter 9 bankruptcy filing.