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05/22/2012 04 Council General InformationBUSINESS OF THE CITY COUNCIL YAKIMA, WASHINGTON AGENDA STATEMENT Item No. For Meeting of: May 22, 2012 ITEM TITLE: SUBMITTED BY: CONTACT PERSON/TELEPHONE: SUMMARY EXPLANATION: Council General Information 1. City Meeting Schedule for week of May 21-28, 2012 2. Preliminary Future Activities Calendar as of May 20, 2012 3. 5/17/12 Weekly Issues Report 4. Preliminary Council Agenda 5. Newspaper/Magazine/Internet Articles: * "The Inspector's Tale," Governing, May 2012 * "Last Best Hope," Governing, May 2012 Resolution Contract: Contract Term: Insurance Required? No Funding Source: APPROVED FOR SUBMITTAL: Ordinance Mail to: Amount: Other (specify) Expiration Date: Phone: City Manager STAFF RECOMMENDATION: BOARD/COMMISSION RECOMMENDATION: ATTACHMENTS: Click to download ❑ info packet CITY MEETING SCHEDULE For May 21, 2012 — May 28, 2012 Please note: Meetings are subject to change Monday, May 21 8:30 a.m. Pension Board Meeting — Human Resources Conference Room 1:30 p.m. Yakima Valley Conference of Governments Meeting — Yakima Health District 5:30 p.m. Airport Study Session — Airport Conference Room Tuesday, May 22 10:00 a.m. City/County Study Session — Council Chambers 1:30 p.m. County Commissioners Agenda Meeting — Council Chambers Wednesday, May 23 3:00 p.m. Yakima Planning Commission — Council Chambers 4:30 p.m. Arts Commission Meeting — CED Conference Room 5:30 p.m. Historic Preservation Commission — Council Chambers 7:00 p.m. Regional Stormwater Policy Group Meeting — Harman Center Thursday, May 24 7:30 a.m. Airport Board Meeting — Airport Conference Room 11:15 a.m. Lincoln Avenue Underpass Dedication — Lincoln Avenue Bridge 11:45 a.m. YVVCB Annual Luncheon — Convention Center 1:30 p.m. EMS & Trauma Council Meeting — Yakima Regional 2:00 p.m. TRANS -Action Meeting — County's North 1st Conference Room 3:30 p.m. YAKCORPS Board Meeting — CED Conference Room Monday, May 28 HOLIDAY — CITY OFFICES CLOSED Office Of Mayor/City Council Preliminary Future Activities Calendar Please Note. Meetings are subject to change :M"eeting" ate/Ti me Organization Meeting Purpose Sun. May 20 5:00 p m. Mon. May 21 8:30 a m. 1.30 p.m 530• m. Tue. May 22 10:00 a.m. 3rd Annual EMS Awards Ceremon Pension Board Meetings YVCOG Board Meeting Air ort Stud Session _11.00m. Wed. May 23 4 30 p.m 5.30 p m 7.00 p.m. Thur. May 24 730 a m 15 a m 1145am. 1:30 p m 2:00 p m 3.30 p m Mon. May 28 HOLIDAY - CITY OFFICES CLOSED Tue. May 29 12:OOwp m Wed. May 30 1200 p m. City/County Joint Study Session Miscellaneous Issues Scheduled Event Board Meeting Board Meeting Scheduled Meetin Scheduled Meeting Scheduled Meetin Open Capitol Theatre Coffey HR Conference Room Ensey Yakima Health District Adkison Airport Conference Room Council Cawle , Adkison Arts Commission Historic Preservation Commission Regional Stormwater Policy Grou. Airport Board Meeting Lincoln Avenue Underpass Dedication Ceremony YVVCB Annual Meeting County EMS & Trauma Council TRANS -Action Committee Meeting YAKCORPS Executive Board Fri. June 1 8.00 a m Scheduled Meeting Scheduled Meeting Adkison Bristol Scheduled Meeting Board Meeting Scheduled Event Scheduled Event Scheduled Meeting Scheduled Meeting Board Meeting Lover Adkison Council Open Lover Cawley Miscellaneous Issues Scheduled Meetin Cawle Adkison YVVCB Board Meeting Board Meeting Adkison Sister Cit Meetin Scheduled Meetin Mon. June 4 10.00 a m. Tue. June 5 00 p m. .30 p.m. 6.00_p_m City Council Media Briefing Miscellaneous Issues (T) City Council Executive Session Cit Council Meetin Scheduled Meeting Coffey Scheduled Meeting Scheduled Meeting Scheduled Meetin Cawley, Adkison Council Council Council Chambers TBD CED Conference Room Council Chambers Harman Center Airport Conference Room Lincoln and 1st Street Yakima Convention Center Yakima Regional County's 1st Street Conference Room CED Conference Room TBD YVCC Winery Training Facilit - Grandview CED Conference Room Council Chambers TBD Council Chambers Council Chambers Thur. June 7 9.00 a m 4 30 p m. 6:00 p m. Sat. June 9 1100am 911 Joint Board Meeting GFI Steering Committee Meeting Regional Fire Authority Valle Ma or's Meetin William O'Douglas Trail Dedication Ceremon Board Meeting Scheduled Meeting Scheduled Meeting Scheduled Meetin Scheduled Event Coffey, Adkison, Ettl Cawley, Adkison, Coffey Cawle Toppenish CWCMH Station 86 o enish Davis High School MEMORANDUM May 17, 2012 TO: The Honorable Mayor and City Council Members FROM: Michael Morales, Interim City Manager SUBJECT: Weekly Issues Report • STUDY SESSION: The City and County will be having a joint study session on Tuesday, May 22 at 10:00 a.m. in the Council Chambers. The discussion will be about airport ownership issues (budget, property, lease agreement, etc). • DEDICATION CEREMONY: The grade separation dedication ceremony is scheduled for Thursday, May 24 at 11:15 a.m. Guest speakers include: Karen Schmidt, FMSIB Executive Director; Steve Gorcester, TIB Executive Director; Terry Finn, BNSF Government Affairs Director; John LaRocque, Public Works Board Executive Director; Stan Finkelstein, Public Works Board Chair; and Thomas Tebb, Central Region DOE Director. Invitations were sent out to former Council members, state and local representatives and various other people that were involved with this project. • YVVCB ANNUAL LUNCHEON: The Visitors & Convention Bureau's annual luncheon will be held on Thursday, May 24 at 11:45 a.m. If you are interested in attending please let Cally know. The featured speaker this year is Steve Warner, Executive Director of Washington Wine Commission. • CITY MANAGER LEAVE: I will be out of the office on Friday, May 25. City Attorney, Jeff Cutter will be Acting City Manager in my absence. PRELIMINARY FUTURE COUNCIL AGENDA May 29 NO SCHEDULED BUSINESS MEETING — info packet on 5/24 June 5 (T) 4:30 p.m. Executive Session — Council Chambers 6:00 p.m. Business Meeting — Council Chambers • Proclamation — Arts logo contest • Proclamation — Parker Youth Sports Proclamation • Review and approve first quarter revenue and expenditure report • Kiwanis Park Interfund Loan • Report on prior meeting citizen service request • Ordinance amending Chapter 1.18 YMC pertaining to designation of administrative departments and functions of the City of Yakima • Review first quarter financial reports: o Accounts receivable o Court report o Treasury report • Review clean and safe proposals • Consideration of license agreement for Smoke and Choke event 7 00 p m. Public Hearing — Council Chambers 5/17/2012 10'37 AM • Public hearing to consider: A) Adoption of the Six -Year Transportation Improvement Program for the years 2013 to 2018, and to amend the Metropolitan Transportation Plan; and B) Amend the Yakima Urban Area Comprehensive Plan Capital Facilities Element • First public hearing on block grant amendments 1 • Problem Solver W IKIPEDIA.COM/HCGS555 SMART MANAGEMENT By Katherine Barrett and Richard Greene The Inspector's Tale Performance auditors are becoming endangered in more states and localities. There hasn't been a nefarious conspiracy to undermine per- formance auditing efforts in cities and states over the last several years, at least not that we know of. But auditing services, like other front- office operations, have been vulnerable to cuts. That's because they're perceived as not providing a direct service, even though "performance auditing is critical" to providing direct services, says Drum- mond Kahn, director of Audit Services in the Auditor's Office in Portland, Ore. So after a decade in which perfor- mance auditing was spreading like reality programming on TV, many governments have shifted into reverse. The Associa- tion of Local Government Auditors, which closely tracks news about cutbacks in audit offices or efforts to eliminate them, has an alarming list. Closed offices can be found all over the country, from Ft. Myers, Fla., and Macon, Ga., to Tacoma, Wash., and Jefferson County, Colo. Closings aren't the only issue. Local governments such as Lynchburg, Va., and Reno, Nev, have failed to replace retired auditors. Albuquerque, N.M.; Frederick County, Md.; and Knox County, Tenn., have been under threat either of closure or severe defunding. And cities like Dallas, Phoenix and San Jose, Calif., have lost positions. Similar circumstances prevail in states as well. Washington's well respected per - Denver, Colo. formance audit function, for example, was cut dramatically in last year's budget and was threatened with more cuts this year. There are some exceptions. Denver, for one, is becoming the poster child for expanding rather than contracting the performance audit function. Even though budgets have been very tight in the Denver Auditor's Office, it has continued increas- ing its performance auditing workload to the benefit of the city. Prior to 2008, the Auditor's Office functioned as the city's accountant as well as its auditor. But public leaders worried that this risked conflicts of interest and determined that it needed to separate the two functions. With the passage of a 2006 ballot measure, the Auditor's Office was refocused on performance auditing and in 2008 a new financial office was formed to take over the fiscal role. Since then, the office was budgeted to add a dozen employees. Audits released since 2008, as well as commentary from the elected Auditor Dennis Gallagher, have pulled few punches. Recent audits have focused on such topics as a broken contracting process for city and county Public Works, the safety impact of photo enforcement programs (like red light cameras) and the need for improve- ments in cost effectiveness for the Medi- cal Examiner's Office. Earlier audits have borne fruit as well, such as a report about emergency medical response times that continue to inspire efforts at reform. One of the keys to the success of Denver's performance audit office was recognition at the outset that it would need a lot of autonomy. "I don't think there's another model that has this level of independence," says Kip Memmott, director of audit services. Using the very successful Portland Auditor's Office as an example, leaders in Denver codified a number of elements to ensure its auditors knew what had to be known, and reported what should be reported. Among the elements that Memmott considered important are: • access to all records, including all internal memos; • confidentiality of an auditor's work, except for the final work product; • a requirement that people must respond to auditors' requests within 15 days. (When the performance audit program first got going, Memmott saw that the responses to an audit were often weak. Sometimes responses weren't even provided or they were provided by a midlevel manager, not by the department head.); and • the ability to establish its own audit plan. Audits are determined using good risk assessment processes. But the auditor's office also builds in time to be flexible so it can quickly respond to changing public policy and city needs. "We're reacting to what's happening in the city, real time," says Memmott. In addition, an audit committee was created, populated with members appointed by the City Council, the mayor and the auditor, and chaired by the audi- tor. Audits are released through televised meetings of the committee, but the audit committee cannot block- or suppress a report. A well established, consistent release point helps keep people from being caught off guard. When agency directors respond to an audit in front of cameras, they tend to take issues seriously. Communication has been key. Meet- ings with department heads and elected officials help managers and decisionmak- ers understand what auditors are doing, which establishes a team dynamic and avoids debilitating adversarial confron- tations. This is critical stuff. We've long been convinced that a successful audit shop needs to take every step it can to avoid publishing material that will need- lessly and publicly embarrass agencies. Perhaps most important, the office also sends a strong message that it will follow up on its audits. Memmott describes this as "the Achilles' heel" of the profession. "You get people agreeing just to make it go away," he says, "and then they don't do anything." The bottom line: Agencies have agreed to comply with 94 percent of audit recommendations. That's an aston- ishing number. Maybe we could learn a lesson from Denver. G Emciilgreenebarrett@gmail.com GOVERNING 34 GOVERNING 1 May 2012 May 2012 1 GOVERNING 35 LAST BEST HOPE n outsider's first visit to Pontiac, Mich., feels a bit like Alice's first glance at Wonderland. Everything seems upside down. City Council meetings last for hours, but there is nothing on the agenda. The city has a mayor, but he doesn't have any author- ity. There are workers inside City Hall, but they aren't employed by the city. And the man at the head of the table is an exceedingly charming 74 -year-old who might be destroying his hometown, or who might be the only person willing to save it. places like Harrisburg, Pa.; Central Falls, RI.; and Nassau County, N.Y., state -appointed officials are making decisions that were once decidedly local. But nowhere in America do local officials have less control— and state appointees more—than in the financially distressed communities of Michigan. Republican leaders here say that's no accident, and that they intentionally crafted a mechanism for out- siders to swoop into a troubled community, assess the financial damage and fix it—all without being beholden to local political interests. They argue that if a locality declares bankruptcy, taxpayers statewide could be left holding the bag. Preventing such a situation is a paramount concern. "You don't want to go through municipal bankruptcies and pay the debts of these communities," says state Rep. Al Pscholka, the sponsor of PA4, which vastly expanded the power of state -appointed fiscal overseers established in a previous law. 'We have to have protection for taxpayers." On the surface, it's a statement that's hard to argue with. But it also raises a more fun- damental question: Can democracy become too expensive? City Hall is eerily empty, the result of a major workforce reduction. Thanks to a law championed by Republican Gov. Rick Snyder and passed by the Michigan Legislature early last year, that man, Lou Schimmel, has almost unilateral authority to run the govern- ment in this city of 60,000 that state leaders have deemed to be in the midst of a fiscal emergency. That law, known as Public Act 4 (PA4), is the same one that state leaders held over Detroit offi- cials as they threatened a state takeover (the two sides eventually agreed to a more limited type of oversight). In Pontiac, Schimmel oversees the city's day-to-day opera- tions. He hires and fires employees. He forces major changes to labor contracts. He sets the budget. He creates ordinances. He sells city property His critics call the policy that put him in power the "dictator law." Pontiac isn't alone. Five other local governments in Michigan have emergency managers who make decisions that, until now, have been under the purview of democratically elected local offi- cials..In those communities, locally elected officials have virtually • 'cion -making power. It's a trend that's not limited to Michi- ire than half the states in the country have provisions that allow them to exercise some degree of financial supervision over distressed localities, and it's clear they're willing to exercise it. In 36 GOVERNING I May 2012 n 1986, a circuit court named Schimmel the receiver for Ecorse, a small city just outside of Detroit, and told him to put the city's fiscal house back in order. With that assignment, Schimmel believes he became the first person in the country to hold what's becoming an increasingly frequent position in local government: emergency financial man- ager. In 2000, the state again tapped him to take over Hamtramck, a financially distressed city surrounded by Detroit. Now, he's on his third dance—and he insists it will be his last. But he's not the typical outsider this time. Pontiac is his hometown, the place he was born and raised. It's a job that few would be interested in tak- ing, given the track record of Pontiac's previous two emergency managers. Both encountered harsh resistance from local officials, both resigned after little more than a Year and neither is spoken of favorably here. For Schimmel, it's clear that part of the job's draw is the immense challenge it offers, as well as the rare opportunity to see what could be realized if a manager were given total control without political interference. "It's a sense of accomplishment when you take something that's broke and fix it," says Schimmel, who, despite the seriousness of his job, almost always wears a smile and constantly cracks jokes. Critics of the law that put him in power are doing everything they can to get it taken off the books. A campaign to repeal the law, supported by the National Association for the Advancement of Colored People and the labor community, among others, has likely gained enough signatures to force a statewide vote later this year. In the interim, PA4 will be suspended, but it's unclear what that means for the five emergency managers. In addition, the law is the target of several lawsuits, one of which—at least briefly— LAST BEST HOPE got the emergency manager in Flint removed from office. (After a successful appeal, he's back on the job for now.) What's unclear is whether the legal and political challenges will mean the end of emergency managers in Michigan, or simply a return to the earlier version of the law, which still gave the state significant oversight over troubled localities. Regardless of the outcome, some believe the debate is moot: Pontiac residents elected a mayor and council to run the city. The state gave them Schimmel instead. Schimmel isn't accountable to anybody in Pontiac. He answers to the governor and an appointed state treasurer. Yet Schimmel disputes the premise that democ- racy has been subverted in Pontiac. "The law I'm operating under was passed under a democracy," Schimmel says. "It wasn't a law handed down by a king. It was passed by a legislature." For some, that point offers little consolation. The debate about PA4 in Pontiac is bitter and discussed in overtly racial terms. The majority of Pontiac's population is black. All three emergency managers—not to mention the governor, treasurer and legislator who sponsored PA4—are white. Democratic blogger Chris Savage generated national attention when he noted in December that, if you included Inkster and Detroit, two cities that were on the verge of emergency management, more than half of the state's black population could soon lack full-fledged local democracy. Fred Leeb, Pontiac's first emergency manager, says that some people in Pontiac tried to promote the sentiment that he was "the master sent from Lansing to control the plantation." Indeed, at a recent City Council meeting, one black resident thanked an elected official for tying to protect "field negroes" like him from "carpetbaggers" like Schimmel. ontiac got into fiscal trouble when the automobile) industry, which once had manufacturing pl- throughout the city, began its decline. A boors in the first half of the 20th century, Pontiac's pop tion peaked around 1970 at 85,000 and then declined dramatically in subsequent decades. Today, it has 30 percent fewer residents than it did at its height. More than a third of those residents live in poverty, including nearly half the city's children. For decades, its unemployment rate has exceeded the national average. Right now, it's at 22.5 percent—second worst in the state. "When we were affluent, we didn't diversify," says City Councilman Kermit Wil- liams. "We married GM instead of dating around, and when the divorce happened, it was brutal." General Motors plants, which were once the economic driver of the city, are being demolished, and their rubble is carried away by freight trains. The process gives residents the unusual opportunity to watch their city disap- pear before their eyes. As Pontiac's population and economy declined, so too did property values and tax revenue, along with its share of state revenue. That caused deficits to mount in the short: term; in the longer term, debt from projects that might have been profitable, in better times is climbing. Meanwhile, the city faces an unfunded liability for retiree health and life insurance of nearly $270 mil- lion. For officials in the state capital of Lansing, it became clear in 2009 that Pontiac needed professional help, so then -Gov Jennifer Granholm picked Leeb as her man for the job. Two managers later, Schimmel is in charge. He's not only Pontiac's first emergency manager appointed under Sn• Republican, he's also Pontiac's first emergency manager apt. under PA4. Schimmel says critics shouldn't blame him for his work. "I'm not the one who made the appointment," he says. "The law is what it is." But Schimmel himself is being mod est, as his work may have helped inspire key aspects of the law. In 2005, Schimmel wrote a piece for the Mackinac Center for Public Policy, an influential conservative think tanit in Michigan, that detailed reform he thought the state should make to its existing emergency management law, which he believed lacked the tools needed to enact a serious municipal turnaround. He recommended that emergency managers be given immunity from lawsuits, the authority to assume powers held by the mayor and city commission, and the ability to cancel labor contracts. All those provisions made it into PA4, and today Schimmel is able. to take full advantage of them. chimmel's focus in Pontiac has been on cutting costs. He ripped out the city's parking meters when he reap ized it cost more money to collect parking fees than the city was taking in He consolidated 87 separate city employe( plans into one to save $5 million annua. Pontiac City Councilman Kermit Williams is unpaid and has no authority. May 2012 1 GOVERNING 37 LAST BEST HOPE inched a major effort to sell city property. But what's gener- ne most controversy is an aggressive campaign to outsource as many city services as possible. He can rattle off a list of city services that are no longer performed in-house: building permits, water and sewer operations, income tax collection, payroll, trash pickup, IT and cemetery operations, among others. Indeed, walk- ing through City Hall (which Schimmel might sell, by the way) is an unusual experience. The city's payroll has been reduced from about 600 to 60 employees. The building is largely empty, and those who remain perform city work but get their paychecks from the private -sector companies that employ them. Schimmel's predecessor closed the local police department and outsourced law enforcement to the Oakland County Sheriff's Office in a move expected to save $2.2 million annually. Schim- mel took a similar step and used his authority to outsource the fire department service to neighboring Waterford Township. The Pontiac firefighters' contract wasn't set to expire until June 2013, but Schimmel was set on the move. So when Pontiac firefight- ers resisted, he essentially gave them an ultimatum: agree to a deal—and get some modicum of job security—or risk getting laid off completely. "Without Public Act 4," Schimmel says, "I couldn't do that." In the end, firefighters reluctantly agreed to a provision in which all but a handful received early retirement or new jobs with Waterford, albeit on a lower pay scale. The changes, Schim- mel says, will save Pontiac $3 million annually. ;le he says these decisions are critical to an effective and irnaround of a city, his critics are skeptical. They view his 2003 article and subsequent job at Mackinac as evidence that ideologically driven Republicans are using Pontiac as a testing ground to see if a model based on outsourcing can be reproduced in other cities. "It's just an experiment to see if privatization works," says Williams, the city councilman. oyes like the firefighter deal aren't popular in a city that's down on its luck and views the fire department as one of the few remaining sources of local civic pride. That's part of the problem, says Mayor Leon Jukowski, who has no authority as mayor but is a paid member of Schimmel's staff. "That sort of emotional attachment to an institu- tion is part of what's dragging the city under at this point," he says. "I'm a Democrat," Jukowski continues. "People in my party say it's union busting. To a certain extent, it is. The dilemma is, how do you send someone in and say, `I want you to fix this prob- lem, but you can't touch 80 percent of what's under the hood?"' Douglas Carr, a professor at nearby Oaldand University, says the firefighter situation illustrates the dichotomy facing the city: Nearly everybody recognizes its financial challenges, but few people like the way that Schimmel's changes are affecting them personally. Those who support the actions of Schimmel and other emergency managers argue that labor contracts have long offered generous terms to public employees and were a ticking time bomb ready to wreak financial havoc on localities at the first sign of a downturn in revenue. Labor supporters say that in the wake of the recession, municipal workers have been unfairly scapegoated when larger economic forces are to blame. What's clear is that, whoever is right, techniques like the one Schimmel used are being reproduced elsewhere. In nearby Ecorse, emergency manager Joyce Parker recently cross -trained police officers and firefighters, reduced their numbers and com- bined what was left into a single public safety unit. In Central Falls, R.I., state -appointed receiver Bob Flanders slashed the pen- sions of emergency responders in a move critics call draconian. Flanders isn't apologetic. "Of course your contracts are being destroyed. That's what it's all about," says Flanders, a former state supreme court justice. "It's tough luck, but that's the way it is." "If you're a taxpayer, you probably want to nominate me for sainthood," Flanders continues. "If you're a municipal worker, you probably think I'm the devil incarnate." Meanwhile, the Michigan model is draw- ing praise from many conservatives, who maintain that labor unions are threatening the finances of cities across the country and believe laws that give officials the authority to blow up those contracts may be the only way to solve the problem. "Over time, what you build up ... is a set of contracts and work rules that are restrictive like a boa constric- tor," says Eric Kriss, who served in former Massachusetts Gov. Mitt Romney's cabinet and was involved in state takeovers of the cities of Chelsea and Springfield. Without a change in the law—like Public Act 4—"no administrative effort can break through it." But others question whether Schimmel's methods will be enough to save Pontiac. As Schimmel focuses on cost cutting, the other side of the ledger is in jeopardy as tax rev- enue continues to fall. Schimmel discusses bulk trash pickup, one of many outsourced city services, with City Engineer John Balint during a recent staff meeting. 38 GOVERNING 1 May 2012 A shuttered GM facility is one of many that dot the landscape of Pontiac and serve as reminders of its better days. "There's no question and no debate that a lot of cities are under serious financial stress," says state Rep. Tim Greimel, who repre- sents Pontiac. "The question is: Is an emergency manager likely to improve things and make it better? Just because one way is bad doesn't mean another is better. It may be worse." o other state centralizes its oversight of distressed localities as tightly as Michigan. Even the deci- sion of when it's time for Pontiac to emerge from its status lies largely with Schimmel himself. In Pennsylvania, a state that has experienced a similar decline in manufacturing, financial oversight plans are developed in con- cert with localities. Harrisburg—while generating headlines for its problems—is the lone case in which the state has taken the onerous step of appointing a one-man receiver. In neighbor- ing Ohio, when a city falls under emergency status, the state includes local officials on the oversight commission. "It's not one person coming in with a 'hail Caesar' approach," says Dave Yost, Ohio's state auditor. That's the central question for many here in Pontiac: Does it make political sense to have one person in charge? Many civic leaders in Pontiac say they believe in Schimmel and are even fond of him. Still, they think he has too much authority. "I have a lot of respect for Lou," says Douglas Jones, a pastor in Pontiac who has helped convene an association of business and civic leaders to address the city's challenges. "I think he wants the best for the city of Pontiac, and his heart's in the right place." But too much power in one person—even Schimmel—is problematic. "I've still got to report to God," says Jones. Others say there are more practical considerations. "If you put;; in an emergency manager that only acts unilaterally, at some point! in time, that person leaves and then what happens?" says John! Filan, vice president of DSI Civic, which specializes in govern- ment restructuring. Schimmel recognizes that the City Council can undo much of what he's done, and it's not lost on him that' Ecorse—the place where he got his start in municipal restructur- ing—is once again under an emergency manager. Williams, the city councilman, says that upon Schimmel's departure, he expects focal officials to start in -sourcing some of the city services that', have been privatized. Nevertheless, critics' skepticism may be warranted, given the: city's track record. At the end of last fiscal year, more than two; years after Pontiac received its first emergency manager, the city; had a positive fund balance of $L7 million, according to financial! statements that Schimmel filed with the state shortly after taking over. But it achieved that largely by failing to make payments into; employee pension and benefit funds, and opting against putting aside money for a property tax refund it owes GM. Those liabili= ties still exist, and if the city had paid them, it would have had a $12.5 million deficit instead. Some even blame Michigan for inflicting some of the pain Pontiac and other distressed cities are now experiencing. h 2011, while promoting PA4, Snyder simultaneously advt budget eliminating one-third of the state revenue sharinb pct May 2012 1 GOVERNINd 39 LAST BEST HOPE for localities—about $307 million. That was on top of the pillion in state revenue that localities had lost over the last decade. While Pontiac struggles, the state ended last fiscal year with a reported $457 million surplus. That disparity has prompted some residents and elected officials to openly question whether Snyder's budget, in concert with PA4, is an attempt by state lead- ers to systematically dismantle urban communities and promote a regionalized approach that favors counties. Schimmel's imme- diate predecessor, Michael Stampfler, had suggested that the city consider filing for bankruptcy or being absorbed by Oakland County. The idea infuriated many residents, who viewed it as the state giving up on Pontiac. Ultimately, however, critics don't buy the oft -repeated argu- ment made by Schimmel and others that local officials aren't willing to address the problem. In 2009, Pontiac residents became obvious there was nothing to be gained by either side" by trying to work together. Still, Schimmel says he's making the most effective reforms he can. As fiscal 2013 approaches, he expects the city will have no shortfall as a result of a multimillion dollar deal in which the city will sell excess sewer system capacity to a county comission. (He wryly jokes it's a move that even his critics should like. By help- ing to shore up the city's finances, the deal will help expedite his departure from Pontiac.) Schimmel also says local officials aren't giving him credible alternatives. He may have a point. Williams says instead of outsourcing the fire d: partment, Schimmel could have simply laid off enough of the existing personnel to keep fire protection in-house. But that plan would have caused an even larger furor over lost jobs. Or, Williams suggests, Pontiac could have generated revenue by absorbing Waterford's department. But that plan would have increased long-term labor expenses. Williams does make a salient,. larger point. "The bottom line is if your city gets poor enough, they can strip your democracy." Promotional materials have been removed from the offices of the city's economic development council, which Schimmel disbanded. elected a new mayor and replaced all but one member of the City Council. "I'm 29 years old," Williams says. "Some of the problems we have in Pontiac were created before I was alive." In addition to the City Council losing its power, it's also suf- fered symbolic affronts. Council members don't get paid, they don't have the keys to City Hall and because they don't have power, the City Council meetings are essentially meaningless. mbers of the City Council say Schimmel tries to keep them lark, and even Schimmel admits that while he has an open dour policy with locally elected leaders, the relationship isn't great. "My agenda is so different from theirs," he says, "that it 40 GOVERNING 1 May 2012 he greatest criticism of Michigan's law is that it does little to ensure a long- term turnaround of the state's most troubled cities. The problem, say local officials in Pontiac and elsewhere, is that the state has failed to build up business and encour- age urban renewal. Schimmel is candid that his primary concern is not economic development. That duty, he says, is "beyond my purview." In Schimmel's defense, economic develop- ment is a process that takes years, and neither he nor local leaders want him to stay in Pontiac for that long. But it's hard to imagine a strategy based primarily on cuts will do much to change the underlying factors that have caused 20 per- cent of homes to remain vacant and thousands of residents to remain out of work. As many observers note, people who can afford to pay taxes have a choice of where they can live, and right now, it doesn't seem they have much incen- tive to move to Pontiac. But Schimmel also believes people won't move to a town that's in a fiscal crisis either. He's trying to fix the backbone of the city and put it on a successful path. "I've done it before," Schimmel says. "We'll get there. I hope to work myself out of a job by the end of this calendar year." Others are more skeptical. "The one thing people seem to agree on in Pontiac is that it's a disaster," Leeb says, "and that is unfortunate." G Email rholeywell@governing.com s To view a slideshow of Pontiac and a map of other distressed municipalities, visit: governing.com/pontiac GOVERNING