Friday, June 25, 2010

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Leeb suggests ideas for new Pontiac manager

Friday, June 25, 2010
Of The Oakland Press

“Success is highly unlikely if there continues to be personality cults in Pontiac.”

That’s how Fred Leeb ended a letter written to the man set to take his place as Pontiac’s emergency financial manager next month. Leeb read the letter — listing 50 accomplishments under his 15-month term as EFM — during Thursday night’s Pontiac City Council meeting.

Leeb said the city generated a $1.4 million surplus last year with a “very favorable audit” and also has developed a $3 million surplus during the first nine months of this fiscal year, “despite a revenue decline of almost $5 million this year as compared to last year.”

He also touched on the controversial sale of the Pontiac Silverdome for $583,000.

The city obtained numerous court opinions “that were completely in the city’s favor regarding the Silverdome sale and management’s conduct,” he said.

Leeb said negotiations with unions have reduced health care costs by 20 percent, and furlough days have been eliminated for most employees.

Listed as another accomplishment was a pending security increase at City Hall.

“We’re finalizing new proposals to provide basic security, meaning cameras, mirrors and panic buttons at City Hall, which I think is absolutely necessary,” he said.

The city’s financial future will be difficult, Leeb said.

“Pontiac must deal with a number of years of upcoming declines in revenue,” he said. “The city will run out of cash if nothing is done.”

There is a $4 million gap in the city’s general fund beginning in fiscal year 2011, which starts July 1, Leeb said. If nothing else is done, anywhere from 35 to 60 city employees must be laid off, he said.

“This would represent a huge cut — 17 to 30 percent of the general fund’s head count,” Leeb said. “That would lead to an extremely difficult situation, and it’s the last thing I would want to do.”

Leeb offered six suggestions to cover the difference and avoid layoffs, including putting a measure on the fall ballot for a millage increase for the Pontiac Police Department, settling an ongoing lawsuit, growing downtown as an educational campus for nurses and research and development, and regionalizing the city’s wastewater treatment facilities.

The other two options are where “the City Council, mayor and the new emergency financial manager need to focus right now,” Leeb said. Both involve paying retiree medical benefits to about 1,000 retired city employees — more than double the number of active city employees.

One of those options is to withdraw $1.5 million from the general voluntary employee beneficiary association (VEBA) fund, and possibly a larger amount next year.

“In my opinion, the principal should be withdrawn and used during these difficult years for paying retiree medical benefits,” Leeb said.

The other suggestion is to withdraw money from the general employee retiring fund — which Leeb guessed has excess funding of $50 million to $100 million. That money should also be used to pay retiree medical benefits, Leeb said.

An attorney has stated that the withdrawal would be illegal, but Leeb said he has been advised that it is legal “under certain circumstances.”

“This is only likely to be accomplished if people put aside their infighting and work together as a team,” Leeb said. “If one side digs in its heels, it is likely to result in a massive, unnecessary layoff of city employees. The city should take advantage of a fresh start with a new emergency financial manager to enable this necessary withdrawal to be successful.”

The City Council did not pass a budget for the next fiscal year Thursday, preferring to wait for Michael Stampfler to take over as emergency financial manager next month.

“We have to at least let the new person coming in know what’s going on,” Council President Lee Jones said. “To ensure the safety of our city, this is what we have to do.

“We need to have another meeting in the next week or so to make the best decision for the city and its employees,” Jones said. “We’re transitioning from one emergency financial manager to another emergency financial manager, and we don’t know how that transition is gonna be.”

In other business, the council approved a three-year lease of the Howard Dell Center to Playmakers University, approved maintaining the city’s current 17 mill tax rate for the next fiscal year, and approved the lease of the Kennett Road Landfill property to Carlton Taylor, who plans to operate a concrete crushing and wood chipping business there.

Contact staff writer Dave Phillips at 248-745-4631 or Follow him on Twitter @dave_phillips1.

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