Wednesday, April 28, 2010

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April 28, 2010 12:46 PM

Pontiac gains $1.5 million from insurance stock, new management for golf course

The City of Pontiac could see a budget windfall of more than $1.5 million this fiscal year from the sale of recently found stock shares and a new management contract for the Pontiac Municipal Golf Course.
Pontiac Emergency Financial Manager Fred Leeb reported this week the city has selected Torre Golf Management, an affiliate of Pontiac-based landscaping firm Torre & Bruglio Inc., to manage day-to-day operations, concessions and grounds maintenance at the course.

A recent review of the city's insurance files uncovered that Pontiac owned 43,000 shares of Des Moines, Ia.-based Principal Financial Group Inc. (NYSE: PFG). City officials were previously unaware of the asset and it wasn't mentioned in other recent financial statements, Leeb said in a statement.

The city had selected Troy-based McGraw Wentworth as its insurance agent of record in 2009.

Leeb, president of Orchard Lake-based turnaround firm Fred Leeb & Associates L.L.C., was appointed emergency financial manager for the city in March 2009 when Pontiac was struggling with a $7 million budget deficit.

Leeb had the PFG stock sold at a price of $29.17 per share, for a return of $1.26 million received this week by the city.

“This is a terrific example of the work that is being done by members of our staff to address the financial emergency plaguing Pontiac,” Leeb said in a statement.

The contract with Torre Golf Management also relieves the city from subsidizing a loss margin in the municipal golf course out of its general fund budget. The course operated at a $330,000 loss last year and has averaged a loss of $250,000 over the past 10 years.

Torre, which has had contracts to manage Inkster Valley Golf Club and Dearborn Heights-based Warren Valley Golf Club since 2005, will manage the city-owned course for Pontiac and make a guaranteed payment to the city out of its gross operating revenue.

“We are pleased that the City of Pontiac has given us an opportunity to manage this fine course,” Torre President and CEO Frank Torre said in a joint statement with Leeb.

“Our mission here, as always, is to provide the highest quality playing condition, exceed our customer's expectations while, at the same time, maximizing revenue for our client.”

Thursday, April 1, 2010

valuingsilverdome.pdf (application/pdf Object)

valuingsilverdome.pdf (application/pdf Object)

“The Silverdome is worth millions, and this is a disgrace,” was the
resounding response, but the dissident voices hadn’t shown up at the auction
cash in hand, to pay even slightly more in order to prove their point.
Fred Leeb, Michigan’s state-appointed emergency financial manager,
faced hard facts when he hired Williams & Williams. The dome hadn’t
been occupied since 2002, and although traditional brokers had worked
diligently for the past three years trying to sell it, in the meantime the city
had paid roughly $12 million in holding costs and was facing another $1.5
million annually just to keep the 10-acre, 200-ton roof inflated.

Leeb and the state of Michigan saw a problem and said we have to fix this. It can’t get better unless we take action. No one will save us but ourselves. Leeb’s concerns, as well as the citizens’ of Michigan, were those of everyone who owns real estate and doesn’t want to: What’s the property worth?

Wednesday, March 31, 2010

Financial manager doing good job for city - theoaklandpress.com

Financial manager doing good job for city

Published: Wednesday, March 31, 2010

By Robert L. Kleine

It has been just over one year since Fred Leeb was appointed Emergency Financial Manager (EFM) for Pontiac. As chair of the Local Emergency Financial Assistance Loan Board, which appoints and oversees EFMs in communities under financial emergency, I want to provide the citizens of Pontiac with an update on what has been done to move their city forward and offer some perspective on what lies ahead.

Leeb has accomplished much in his first year as EFM. He has made many difficult decisions and Pontiac is in better financial shape today than it was one year ago.

Although the financial emergency that has plagued the city for years has not been eliminated,

Leeb has Pontiac on the right path to return the city to financial health. In fact, current estimates indicate the city will show a modest budget surplus when this budget year ends June 30. The surplus will help further trim the city’s structural deficit, which has been reduced from more than $7 million to approximately $5.6 million.

Among Leeb’s accomplishments are:

Successful negotiations with the Pontiac firefighters union, saving $3 million annually;
Settlement with the North Oakland Medical Centers. Received payment of $2.25 million;
Elimination of nonessential administrative personnel, saving $2.2 million in fiscal year 2010;
Furlough days implemented in October 2009, saving approximately $645,000 in fiscal year 2010;
Received approval for and issued bonds to improve wastewater and drinking water facilities. Saved $7.7 million; Obtained approval for approximately $15.4 million in Neighborhood Stabilization Program II funding.
Plante & Moran now operating as full-time CFO/Controller; Finance Director position eliminated without increase in cost, saving $100,000-plus a year; and
Sale of the Silverdome, saving more than $1.5 million spent annually on maintenance.

The Silverdome will soon return to life as a viable entertainment venue, and will again contribute to the city’s tax base rather than be a drain on resources.

These are just a few examples. A more extensive list of accomplishments is posted on the City of Pontiac website at www.pontiac.mi.us. I encourage anyone who is interested to visit the site.

Leeb, working with the mayor and city council, is also in the process of updating the city’s written Financial Plan and developing a budget for fiscal year 2011, which begins July 1. These two documents will provide an important and necessary roadmap for the city’s financial future.

To provide residents and others with an easy way to offer their respective thoughts and suggestions on the budget and financial plan, Leeb has placed a suggestion box on the city’s web page (http://www.pontiac.mi.us/info/suggestionbox.html). Those who do not have Internet and/or e-mail access can send their suggestions to Fred Leeb, at Pontiac City Hall.

As you can well imagine, Leeb will continue to be very busy over the next several weeks. I encourage citizens and elected officials alike to remain involved and to exhibit patience with the process. Pontiac’s financial emergency did not develop overnight. Likewise, serious and lasting remedies will also take time. Everyone shares the common goal of returning Pontiac to solid financial footing as quickly as possible. With the continued support of local leaders and Pontiac residents, that goal can and will be achieved.

Robert J. Kleine is Michigan State Treasurer.

Friday, March 12, 2010

New life for Pontiac Silverdome: First up, monster trucks - CSMonitor.com

New life for Pontiac Silverdome: First up, monster trucks - CSMonitor.com

For a decade, the Silverdome has been a symbol of economic distress in southeastern Michigan, an area hit hard by mass layoffs, a shrinking population, the foreclosure crisis, and automotive plant closures. The hulking arena was sold via an auction sponsored by the city of Pontiac for about 1 percent of its $55.7 million construction cost in 1975.

City officials at Thursday’s press conference agreed. “This is a good day for the city ... to have the Silverdome on the cusp of becoming a major regional entertainment center again,” said Fred Leeb, Pontiac's emergency financial manager. “The facility is poised to again generate revenue for the city and is expected to be a key piece in Pontiac's economic rebound.”

But after the Detroit Lions' 2001 departure for Ford Field in downtown Detroit, the venue was used only sporadically, contributing to its disrepair. Upset over the Silverdome's $1.5 million annual upkeep costs, the city had considered demolition before the 2009 auction.

Wednesday, February 3, 2010

Once Thriving Michigan Town Tanked By Recession : NPR

Once Thriving Michigan Town Tanked By Recession : NPR

Mr. LEEB: Well, there are really three basic things you can do in any you turnaround. One is to increase revenue, another is to decrease expense. But the third is to take assets that are being unproductive and convert them into something that can be valuable again. So, in the case of the Silverdome, there's a stadium that had been built in 1975, so that's 35 years ago. It's also been empty for eight years and has been costing a million and a half a year just to maintain an empty building. It was obvious to me that that just could not go on. So, my thinking was the way to do it was to set a final endpoint, which was an auction, and give it to a person who can operate it in a professional manner. And that's actually what's happening. A person from Toronto bought it. And he is intending to use it again.
MARTIN: Is this the thing, though, that just is seems kind of stick in people's craw? It just feels, what, like humiliating for some reason or...
Mr. LEEB: There are some people who thinks it's humiliating but those people would also feel like it's better to spend the city's hard earned tax dollars on an empty building than to have critically-needed city employees, like police. The reason I bring up police is that three, four years ago the city's police department had about 170 officers, now it has about 70. So, which would you rather have, you know, a few policemen coming back or an empty building doing nothing?
MARTIN: What's been the hardest decision that you have had to make since you have been doing this job? Is there anything that's kind of made your stomach hurt even a little?
Mr. LEEB: What makes my stomach hurt is wasting money when I see people in need. There are people that don't have enough money to repair their windows in the wintertime or don't have enough money to live in an apartment. I mentioned before you started talking here on the radio that a person died today in an abandoned building. Those are the kind of people I feel sorry about because the city doesn't have enough money to provide for those people.

Emergency Financial Planning