FBI probe latest setback for beleaguered Detroit

Now, a mayoral text-messaging sex scandal, federal investigation into a City Council-approved $47 million sludge recycling deal, and poorly run and deficit-plagued public school system have dashed inroads toward respect and reopened Detroit to outside ridicule.

"When we're out doing business and trying to get customers we sometimes get asked 'You're from Detroit? What's going on there?'" Compuware Corp. senior vice president Jason Vines said. "As taxpayers and residents, it has to be disheartening. When your city is used as a public joke, it's not good."

Like most major cities, Detroit is no stranger to scandal. Former City Council members, and even a police chief, have been indicted, arrested or imprisoned.

But the current political crisis threatens to bury the city deeper in an economic grave.

While the mayoral text-messaging scandal has been going on since the end of January, the past week alone has brought a new round of bad news for the city.

On Monday, the same day the sludge contract probe was making headlines, the City Council voted down a plan that would have led to the sale of Detroit's half of the Detroit-Windsor commuter tunnel and averted layoffs of 1,300 city workers. On Tuesday, the council did an about-face and approved the plan to set up a tunnel authority to run the U.S.-Canada border crossing. The city will get $65 million under the deal to fill its budget deficit.

Also on Monday, the Detroit Board of Education approved a school district budget that calls for laying off 518 teachers and 900 other staffers this summer. The 106,000-student district gave pink slips to 300 other teachers earlier this year.

Monday also was the day Council President Ken Cockrel Jr. told colleagues he had been questioned in the sludge contract probe. Federal authorities are looking into a contract with Houston-based waste hauler Synagro Technologies that the City Council approved by a 5-4 vote last November.

The Detroit Free Press, citing people with knowledge of the investigation that it didn't name, has reported that the investigation involves four council members, staffers, City Hall employees and people outside city government. No one has been charged, but Cockrel's chief of staff resigned last week. The Free Press and The Detroit News said he was videotaped accepting cash from a now-suspended Synagro official.