Council could lose control of city in 60 days

Sunday Times Newspapers

ALLEN PARK – In less than two months, the City Council and mayor will likely lose control of the city.

That was the message Plante and Moran’s Carl Johnson gave Tuesday when discussing a visit to the city by a review team from the state Treasury, set for tomorrow and Tuesday.

A 60-day period for the review team to verify the preliminary review team’s assertion that the city is under a financial emergency began July 10, when the Treasury named a six-member review team.

After it visits the city, the team will decide among three options, either that no financial emergency exists – a conclusion Johnson and Acting City Administrator Dave Boomer both deemed unlikely – that the city has a plan to address it and is competent to enforce that plan, or that the city either has no plan or the team does not believe they can enforce a plan to combat its $4 million operating deficit and $2 million cumulative deficit.

If the team believes the council can enforce a plan, the team will recommend to Gov. Rick Snyder that the city enter into a consent decree and Snyder will appoint a city employee — not a councilor or the mayor — to control the city. That person will have many of the same powers as an emergency financial manager, such as breaking contracts and laying off employees, but must receive permission from the state Treasury before acting.

If no plan is in place, the team will recommend an emergency financial manager, who can perform all the same tasks without permission from the Treasury.

“The bottom line is, at the end of the 60 days, unless they find there is no financial emergency, the mayor and council will lose control of the city,” Johnson said.

Though the city has no control over the team’s recommendation, councilors, the mayor and department heads can explain what they would do were they granted a consent decree if they hope to sway the team’s decision, Johnson said.

And that plan can contain things the city could not do before, like break Police and Fire contracts by laying off or cutting wages of employees in those departments without being bound by their contracts, effective through June 2013. Johnson said a reduction of staffing in those departments to state-defined minimum levels – from 40 police officers to 20 and from 28 firefighters to 18 – would net about $3 million.

“They want to hear from you what you would do, what would your plan look like,” Johnson said. “The first step for either a consent agreement or an EM is to stop the bleeding. The bleeding is $4 million.”

Johnson, who is assigned to cities facing emergency managers, said the team also will want answers about the city’s failed movie studio property.

“Are you in favor of selling it for whatever you can get?” Johnson asked. “Sell it for $15 million, you have $30 million worth of debt service, it cuts your debt service in half. That $2 million (annual) payment is now $1 million.”

Councilman Harry Sisko expressed a desire to attempt to sway the team toward a consent decree, despite that the employee appointed to run the city under it would act under the direction of the Treasury, not the city.

“At least it would be a person that understands all the things that have gone on in Allen Park and all the dynamics that are here versus an outside person, who has no clue,” he said.

Councilman Dennis Hayes expressed a desire to present a plan to the team that focused on a combination of few layoffs and reduced wages for Police and Fire, as Johnson said deep layoffs would come with unemployment and other expenses and could raise the cumulative deficit by nearly $1.5 million.

“Policemen and firemen could be equally as effective at a lesser rate of pay,” Hayes said. “They don’t like it, I don’t like it particularly … but the fact of the matter is … we cannot do things the same way we did before.”