City Hires Bankruptcy Counsel
June 7th 2008 09:00
When I first saw that headline, I thought to myself, "Uh.oh, another Vallejo in the works." The City of Vallejo filed for bankruptcy on May 23.
But, the city Molly Tippen of The Journal Newspapers is writing about is Romulus, Michigan, a city of about 24,000 and a suburb of Detroit. The city is not considering bankruptcy, but worried about the effects on the city's finances from local business and personal bankruptcies.
Bankruptcy claims filed by Romulus businesses have increased so much in the last year that city council members have voted to hire private legal counselors to help collect money owed to the city.
The mayor of Romulus Alan Lambert said
“There are several cases where businesses have filed for bankruptcy to avoid paying us money that is owed to us,” he said. “There are also situations where we have given (the companies) abatements, and obviously we, want to collect any money that is owed to us.”
Michigan has been hard hit by unemployment, the highest in the country and mortgage and tax foreclosures. Mayor Lambert is very concerned that if the city is owed money, it will not be able to pay for essential services like, police, fire and public works.
This is the first I've read about the ripple effects of the mortgage crisis on the cities in this way and i will be monitoring its potential spread
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