Letter may result in EFM for Allen Park

Sunday Times Newspapers

ALLEN PARK – The city might be the next in Michigan to fall under emergency financial management after a council vote Tuesday.

Councilors unanimously voted to ask City Administrator John Zech to draft a letter to the state Treasury asking for a preliminary financial review and citing a financial emergency, one of 14 automatic triggers for a review team that could result in an emergency financial manager under Michigan Public Act 4.

Councilman Harry Sisko introduced the resolution, citing many factors, including recent failed negotiations with police and fire unions, both of whom refused wage cuts while the fire union agreed to concessions including paying part of their health care costs.

Sisko also cited the city’s bond rating, recently lowered by Standard and Poors to a B from a BB+ and his belief that a two-year, 4 mill levy to support the city’s failed movie studio property may fail due to community “acrimony.”

“There’s a lot of ‘ifs’ here, and a lot of things have to be perfect,” Sisko said. “And for me, I think we need to be up front with our citizens. Rather than being reactive, let us be proactive.”

The letter is to be returned for council review at Tuesday’s special meeting scheduled for 7 p.m., before being sent to the treasurer at which point “the ball starts rolling and there’s no stopping it,” Financial Advisor Carl Johnson of Plante & Moran said.

Johnson said representatives from the treasury conclude whether a financial emergency exists and whether there is a plan in place to fix it.

“Literally, they could be out in a week after receiving that to do a preliminary investigation,” Johnson said. “And you would not be able to hand them a plan, so it’s a quick conclusion.”

From there, a financial review team would recommend to the governor whether the city should get a financial manager or enter into a consent agreement with the review team to make changes toward financial recovery.

But the letter is not a sign of surrender, City Administrator John Zech said. The city plans to continue to make steps toward “the right financial footing,” he said, and Councilman Larry Templin at the meeting requested a freeze on all non-essential spending and a review of vendors and contractors with which the city does business so that potential cost savings can be found.

Mayor William Matakas expressed concern that the move may hinder some of the city’s efforts toward financial stability, such as the successful passing of the May millage.

“A lot of people think when the emergency financial managers come in ‘there’s no point, they are going to impose their will, why should we negotiate with this council?’” Matakas said. “Why should the citizens bother to come out and vote for a millage? I think we ought to think this over.”

But for many in the audience, the move was long overdue.

“It’s time to ask the state for assistance,” resident Bryan Diebolt said. “We have to move forward. It’s time that we pick Allen Park up and restore it to the city it once was, something we can be proud of. It’s time.”