Jessica Wood of Miller Canfield’s Grand Rapids office
– LEGAL NEWS PHOTOS BY CYNTHIA PRICE
By Cynthia Price
Legal News
Between the new legislation on Emergency Managers and fiscal responsibility, and Governor Snyder’s mandate for increased collaboration and service consolidation, there is a great deal about which municipalities and school districts may need to seek legal assistance.
Miller Canfield, which has offices around the state, has formed a Sustainable Government Initiative to meet those needs.
“Our objective is to acquaint our clients with the continuum of options available for restructuring and opportunities for cost savings way before they get into any kind of fiscal crisis,” says Amanda Van Dusen, a member of the Miller Canfield initiative and leader of its Public Law practice group.
As detailed in the June 22 issue of Grand Rapids Legal News in an article about Warner Norcross and Judd’s similar new team (and below), recently-enacted Public Act 4 gives sweeping authorities to Emergency Managers (EMs) who are brought in when fiscal crisis is determined to be at hand. Act 4 also sets in place a variety of monitoring capabilities intended to spot early warning signs of potential insolvency — a positive move, according to Van Dusen.
“Act 4 is about a whole lot more than just Emergency Managers — one of the state’s objectives is to establish earlier types of interventions. The notion is to have the state be able to intercede earlier and incentivize governments and school districts to right their own ships.
“In the past, we’ve been frustrated by the lack of tools at the state level to intervene before it gets so bad that an EM is needed. We want to equip our clients to use the variety of tools both PA 4 and other legislation provide – service sharing and outsourcing, changes in benefits.
“The act is about so much more there than just receivership.”
Jessica Wood, Senior Counsel at Miller Canfield’s Grand Rapids office, says that the challenges in West Michigan are likely to be quite different than in other parts of Michigan.
“I think that people here aren’t really quite as aware of the issues, since it may not impact the West side quite as much. Many local governments here have been fiscally conservative all along, and have done such a good job of looking to the future.
“I think the focus is going to be on shared service agreements in terms of having to demonstrate best practices in order to get your revenue sharing; that’s where we can help municipalities most on this side of the state.”
At the Michigan Township Association convention in January, before Gov. Snyder finalized his push for intergovernmental collaboration, leaders
expressed concerns that there is potential for local governments who are already sharing services to be penalized. “I think the governor is not aware of the full extent to which collaboration has been occurring,” Van Dusen commented.
Wood, who received her Bachelors degree from University of Michigan and her Juris Doctor from the University of Oregon, added, “The challenge there will be presenting their work to the state such that they get credit for having that forward vision. That’s where we can come in.”
Wood’s practice consists of representing counties, cities, villages, townships, and libraries; she has expertise in tax increment and other financing authority tools, such as brownfields, state Local Develop-ment Financing Authorities, and Special Assessment Districts.
Though Wood is the only Grand Rapids attorney involved in the Sustainable Government Initiative, there are additional team members from Kalamazoo and Lansing. The more than 30 participating attorneys come from Miller Canfield’s Public Law (“predominantly,” according to Van Dusen), Employment and Labor, Litigation, Employee Benefits and Pensions, Bankruptcy and Real Estate practice groups.
These experts can help fashion the consent agreements authorized by Act 4; give counsel on the governmental “best practices” urged by the state; set up agreements for outsourcing, intergovernmental cooperation, and shared services; help with pension and benefit as well as overall labor reviews; make property transfers and advise on alternative uses; and conduct litigation audits.
Regarding the last, Van Dusen says that there may be many opportunities for a financially stressed municipality to recoup some of the losses found as a result of close investigation. She mentioned one client city which discovered that a particular employee had erred in insurance practices, and was able to sue the insurance company to get some of that money back. In another instance, there had been some “diversion of resources” by senior officials which litigation recovered. “One of the things that a troubled community can do is evaluate where some of the problems have been and whether there should be efforts to recover some of the money,” she notes.
Van Dusen, saying that the firm has over 1000 municipal and school district clients around the state, feels it is very important to recognize that one size will not fit all. “The circumstances that lead to financial difficulty can be wildly different from one community to the next.”
This is also true in the complex cases of school district finances, but she says there is a bright spot there. “According to legislation, the Department of Education is supposed to recognize collaboration which already exists. But I don’t think the Department of Education has issued guidance yet on what that means.”
Such guidance is one of many factors that is still uncertain. There are many bills working their way through the legislature that could be game-changers. Van Dusen says, “There’s other legislation that’s designed to help remove some of the impediments to collaboration. What seemed like a good idea in the 1960s may not work now. For example, if shared services entail employee transfers, there are provisions in the existing laws that say you’ve got to cherry pick each collective bargaining agreement for provisions that are favorable to employees. This can impede the realization of cost savings.”
She continues, “Collective bargaining negotiations are a huge part of the fiscal stress local governments currently face. Retiree health cost is, I think, one of the major stressors for a lot of communities.”
The Miller Canfield team does not foresee a greatly increased number of Emergency Manager appointments under Act 4 versus the numbers under predecessor PA 72. “In most cases, before that, local governments will be inspired to take some steps on their own, along with the collective bargaining units, so interventions won’t be necessary,” Van Dusen says.
Adds Wood, “The positive message for the community is that there are new ways to avoid getting into the receivership phase.”
The firm is hosting client workshops in June. For more information, visit the website millercanfield.com/SGI
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