HomeMy WebLinkAbout05/22/2012 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