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Throughout the receivership, short-term notes (collateralized by property tax and State revenue sharing distributions) were borrowed to enable Ecorse to meet its operating requirements. The reliance on these notes as a means of financing operations subsided as the fiscal distress was resolved. A summary of the short-term notes outstanding at various year ends follow:
|
June 30 |
Principle Balances Outstanding |
|
|
1986 |
None |
|
|
1987 |
$2,430,000 |
|
|
1988 |
$2,400,000 |
|
|
1989 |
$1,600,000 |
|
|
1990 |
$800,000 |
|
|
1991 |
None |
At June 30, 1986, which preceded the receivership, no short-term notes were outstanding from the banks. However, Ecorse had used restricted funds and withheld payments from vendors and the Pension Plan to sustain the General Fund’s operations. By the end of the receivership, the level of the short-term borrowing requirements had been reduced to $800,000. The Receiver assigned the October 1990 property tax collection from Great Lakes of approximately $1.3 million to an escrow account for the payment of the $800,000 and related interest due in November 1990. After the debt was liquidated, the excess property taxes were remitted to Ecorse.
At the time of the Receiver’s resignation on August 31, 1990, cash projections reflected no need for further borrowings throughout the 1991 fiscal year. At June 30, 1991, no short-term notes were required.
The amount due to other funds in the General Fund and cash on hand at June 30, 1990, which was for normal operations, was $387,000 and $1,470,000, respectively. The General Fund amounts owed to other funds and cash on hand at June 30, 1986, which preceded the receivership, was $3,877,000 and $17,000, respectively. Interfund borrowing of restricted cash and investments by the General Fund had been resolved at the end of the receivership.
Prior to resigning on August 31, 1990, the Receiver and Controller were satisfied that the cash flow was sufficient to enable Ecorse to pay $100,000 towards the Emergency Loan Board notes. This principal payment, which was paid two years prior to its due date, was one of few principal payments by a governmental entity of such debt since the State established the Emergency Loan Board.
