CHICAGO -- J. Edward Hannan, the pointman for Detroit's bond issuance, will become the new budget director for the city, which is wrapping up a search for a new financial adviser to fill Hannan's role.
Mayor Dennis Archer announced Hannan's appointment along with seven other appointments at a news conference yesterday.
Hannan, who was executive assistant director of the city's Finance Department, replaces Ed Rago, who retired in September after serving as budget director for nearly three years.
Detroit plans to replace Hannan in the Finance Department with an outside financial adviser. Last month, Detroit put out a request for proposals that was due back Nov. 4. Hannan said there were nine responses to the request and that the city hopes to make a selection before mid-December, when the city is scheduled to meet with the rating agencies.
He said the new financial adviser would probably serve two years and would have greater responsibilities than past advisers have had.
During the administration of Mayor Coleman Young, who left office in January after live terms, Government Finance Associates Inc. was the city's financial adviser for a number of years. Hannan said that the firm's responsibilities were limited mostly to advising on matters dealing with the rating agencies.
The new financial adviser will have an expanded role that will include planning and structuring debt issues, Hannan said.
One of the first things the new adviser will have to deal with is a bond issue that will help eliminate Detroit's $63 million budget deficit and restructure outstanding deficit funding bonds. In addition to the $125 million bond issue proposed by Archer in May, the city may also issue some of the approximately $150 million of voter-approved general obligation bonding authority it has for capital projects, Hannan said.
Meanwhile, Hannan has taken on continuing negotiations with Detroit's uniformed unions over a two-year, 10% wage cut worth $26 million a year.
"Our goal is to have [an agreement] by the end of the calendar year," he said, adding that progress has been slow.
The lack of an agreement with the unions was one of the elements contributing to Detroit's $63 million budget deficit at the end of fiscal 1994.
The city's GO debt is rated Bal by Moody's Investors Service and BBB with a negative outlook by Standard & Poor's Corp.