News Hits: Detroit's top lawyer steps back on land deal issue

Oct 14, 2014 at 12:07 pm

Earlier this month, Detroit’s top lawyer found himself at the center of a potential scandal. A city councilwoman asked Detroit’s inspector general to investigate the actions of Melvin “Butch” Hollowell, after he unilaterally withdrew a Detroit City Council proposal tied to the proposed bridge between Windsor and Detroit.

Councilwoman Raquel Castaneda-Lopez asked for the investigation because, she says, Hollowell incorrectly misrepresented the council’s position on the $1.4 million sale of city-owned properties tied to the bridge project. The state’s Emergency Loan Board (ELB) had to pick between Detroit Emergency Manager Kevyn Orr’s plan, or the council’s alternative, which included direct financial benefits for the community of Delray, where the new bridge will land on the U.S. side.

Under the state’s emergency manager law, the decision by council to reject Orr’s proposal requires the board to then craft an alternative plan, which would go before the state Emergency Loan Board (ELB) — a three-member panel of state officials appointed by Gov. Rick Snyder.

At that point, the ELB has to weigh the decision on which proposal to choose. It’s unheard of the ELB voting against a proposal put forth by a state-appointed emergency manager.

When it came time for the ELB to meet, Hollowell passed along a statement to Detroit Finance Director John Naglick to read before it considered the deal.

The statement said this: “The Detroit City Council understands that it has not submitted a viable alternative proposal to the land transfer that was submitted by [Orr].”
Whether or not that was indeed the case, it knocked the Hits crew off our feet after we learned that City Council never directed Hollowell to make that move. We’ve never heard of a municipality’s lawyer making a unilateral decision like that.

In a statement, Hollowell wrote that, “the Law Department, in consultation with the City Council’s Legislative Policy Division, jointly concluded that the city’s submission to the Emergency Management Board was not a direct alternative to the Emergency Manager’s proposal.”

Set aside the fact that City Council’s alternative to the $1.4 million land sale may not have been viable to the ELB (and, for that matter, that the ELB only consists of Snyder appointees.) Is Hollowell, as the city’s lawyer, in a position to represent the board in that capacity — without any direction through a vote by City Council? Is that the “process”?
Turns out, it’s not. Last week, in a letter to Detroit’s inspector general, James Heath, Castaneda-Lopez explained that Butch came to his senses. Hollowell sent along a statement in the letter, saying this:

“In hindsight, I recognize that I should have received council’s approval of the statement submitted to the emergency loan board prior to submitting it. I understand that the council stands in support of their alternative proposal and did not withdraw it from consideration.”

That’s unfortunate it took Hollowell until now to recognize that. After the council’s alternative was withdrawn, the ELB approved Orr’s deal.