The Ecorse Building Authority was established to construct the municipal offices through a debt issue and then, fund the operations and debt service from reimbursements and lease payments received from the, General Fund. At June 30, 1986, the Building Authority had $255,000 in equity which was comprised of cash, investments and a delinquent receivable of $210,000 due from the General Fund. Ecorse had failed to pay the Building Authority the required $70,000 lease payments due on June 1, 1985, December 1, 1985 and June 1, 1986.

The suspension of the lease payments violated the bond covenants, but had not affected the Building Authority's debt service responsibilities. The Building Authority had sufficient cash on

hand to fund the January 1, 1987 interest payment, but would not have been able to pay the July 1, 1987 principal and interest payment absent the payment of the deliquent lease payments.

Ecorse's 1986 audited financial statements erroneously excluded the $1.1 million in outstanding Building Authority debt.