DETROIT – The huge task of completing a historic consent agreement with city of Detroit officials to involve the state in city financial affairs was completed Wednesday, setting the stage for the even more monumental task of actually fixing decades of mismanagement that has helped bring the state’s largest municipality to the brink of insolvency.

After the Court of Appeals ruled in the morning that the state-appointed Detroit Financial Review Team could meet – overturning an Ingham Circuit Court judge’s temporary restraining order – the review team unanimously approved the consent agreement. Then the real drama ensued when the Detroit City Council convened about a half-hour later to vote on the consent agreement.

After hearing another round of mostly furious opposition during public comment to the agreement, the council voted 5-4 to approve it.

“This agreement paves the way for a good-faith partnership that will restore the fiscal integrity taxpayers expect and ensure the delivery of services that families deserve,” Governor Rick Snyder said in a statement after the council vote. “While the council’s action is a positive step, there’s no doubt that much work remains. The magnitude of the city’s financial challenges means that many difficult decisions lie ahead. We must build on this spirit of cooperation and be willing to act in the city’s long-term interests.”

Voting yes were Council President Charles Pugh, Council President Pro Tem Gary Brown and Councilmembers Ken Cockrel Jr., Saunteel Jenkins and James Tate. Voting no were Councilmembers Brenda Jones, Kwame Kenyatta, Andre Spivey and JoAnn Watson.

The decision means Snyder will not declare a financial emergency in the city Thursday, the deadline for him to make that declaration or rule that a consent agreement was in place. A financial emergency would have been the precursor to appointing an emergency manager to take over city operations, something Snyder said he did not want to do.

The agreement takes effect once all necessary parties have signed it and is filed with the Wayne and Ingham county clerks as well as the state’s Office of the Great Seal. Key first actions begin seven days after the agreement takes effect, key appointments 30 days after that and then there is a transitional period of 60 days from the effective date before reporting requirements begin. Snyder will sign the agreement Thursday, Communications Director Geralyn Lasher said.

Based on the agreement, its provisions will remain in place for two years and probably much longer.

Amid the drama, Detroit Mayor Dave Bing had to return to the hospital after experiencing what his staff called discomfort as he recovers from surgery to repair a perforated intestine. The mayor’s office had only hours earlier released photos of Bing talking with his staff while recuperating at home.

“The Detroit City Council’s vote tonight represents a pivotal moment in Detroit’s history. It is time now to begin the monumental task of stabilizing Detroit’s financial operations, which is and has always been the mission of Mayor Bing and his administration,” Deputy Mayor Kirk Lewis, serving as acting mayor, said in a statement. “The mayor and his administration worked with the city council and the state to develop a consent agreement that we believe puts us on track to restructure our city financially and reestablish an infrastructure to make sure Detroit never faces these financial conditions again. This agreement also ensures that the future of Detroit is determined by Detroiters and its elected officials.”

Still, the consent agreement faces landmines. Two lawsuits accusing the review team of violating the Open Meetings Act are pending before the Court of Appeals, which could potentially invalidate all actions taken to this point by the review team if the court determines it violated the Open Meetings Act by initially meeting in secret.

And the Department of State by the end of the month will likely certify that activists submitted enough valid signatures to put the Local Government and School District Fiscal Accountability Act, or PA 4 of 2011 (HB 4214 ), up for referendum on the November ballot, suspending the law. Lawsuits in federal and state court challenging the constitutionality of the law remain pending. To address the possibility of the law getting repealed or overturned in the courts, the agreement ties many of the arrangements instead to the Urban Cooperation Act although key elements would still be lost should PA 4 fall.

A DRAMATIC DAY STARTS WITH COURT RULINGS: Wednesday’s events played out in four acts. First came the ruling from the Court of Appeals, then the U.S. District Court, then the vote by the review team and last the vote by the council.

The Court of Appeals action amounted to a thorough rejection of Ingham Circuit Judge Joyce Draganchuk’s ruling earlier this week imposing a temporary restraining order on the review team while she weighed a challenge to whether its authority had expired. The court unanimously ruled that nothing in the Local Government and School District Fiscal Accountability Act prevents a review team from approving a consent agreement after the allotted time for it has expired to make a recommendation to the governor on the entity’s financial status. So not only did it lift the temporary restraining order Ms. Draganchuk imposed, but reversed her ruling as well.

On March 26, the 90 days for the Detroit review team to decide whether the city was in a financial emergency, severe financial stress, or no financial stress expired. Union activist Robert Davis said that meant the Detroit review team no longer has authority to act on a consent agreement, but the court, in an order signed by Judge Michael Kelly, Judge Peter O’Connell and Judge William Whitbeck, said he was simply wrong about the law.

Then U.S. District Judge Arthur Tarnow, an appointee of former President Bill Clinton, denied the American Federation of State, County and Municipal Employees Council 25’s request for a temporary restraining order barring the state and city from entering into a consent agreement. AFSCME had said the consent agreement illegally would prevent concession agreements it negotiated with Bing, and that its members ratified, from going into effect. Tarnow held the union failed to show a likelihood it would prevail on the merits of the case.

CITY OFFICIALS RETAIN POWER, BUT STATE CARRIES BIG STICK: Under the consent agreement, a Financial Advisory Board, jointly appointed by city and state officials, would be set up to oversee the city’s finances. A program manager would be installed in the administration of Mayor Dave Bing to shepherd an overhaul of the city’s bureaucracy. A revenue estimating conference, much like what is done at the state level, would be set up to ensure the city makes mid-year budget adjustments and that the budget enacted by the city is tied to the best possible estimate.

Perhaps most critically and controversially, the agreement calls for new contracts to be negotiated with the city’s employee unions by July 16. If no agreement is reached, then the agreement allows Bing to impose new contracts. Unions are furious that they negotiated concessions with Bing only to see Governor Rick Snyder call those concessions inadequate, leading Bing to walk away from those givebacks.

The new contract must switch new hires to a defined contribution retirement benefit, overhaul work rules, curb bumping rights for laid off employees and treat all employee unions the same.

The review team approved the agreement on a 7-0 vote. Three members were absent, one of whom was former Wayne State University President Irvin Reid, who in a Tuesday column for the Detroit Free Press, said the city needed an emergency manager.

Former Supreme Court Justice Conrad Mallett, a member of the review team, said the deal preserves democratically elec