Emergency Managers, Pontiac — January 12, 2012 at 1:24 pm

More on Emergency Manager Louis Schimmel’s decision to forfeit millions in HUD funds for Pontiac


Yesterday, I wrote about how Pontiac Emergency Manager Louis Schimmel signed an agreement with Oakland County to manage monies from a substantial HUD grant. This boneheaded decision, it turns out, would have resulted in a loss of upwards of $800,000 per year for Pontiac. Thankfully, Congressman Gary Peters stepped in to prevent this from occurring.

Federal and local politicians lined up Wednesday to announce they undid a move taken by Pontiac’s state-appointed emergency manager that would have cost Pontiac thousands in federal funds. While they were at it, they took time to slam Emergency Manager Lou Schimmel’s method of management. U.S. Rep. Gary Peters, D-Bloomfield Township — flanked by Oakland County Commissioner Tim Greimel, D-Auburn Hills, Pontiac City Council President Lee Jones and other city officers — said he prevented Pontiac from missing out on millions of dollars in Housing and Urban Development (HUD) Community Development Block Grant money at risk because of a mismanaged contract signed by Schimmel. “We had a situation in Pontiac where (Schimmel) was going to shift block grant money away from city to the county,” said Peters. Had the shift occurred, Peters said, it would have meant a “significant loss” of funds — up to $800,000 — to the city.

Peters suggests that Schimmel did this simply to make his own life easier and so that he wouldn’t have to deal with management of the grant money. This, he says, is exactly when Emergency Managers are the wrong approach for Michigan.

“Emergency managers come in and are focused on balancing budgets in the short term, and because of that they make decisions that aren’t necessarily in the best interest of the city,” he said. “They’re interested in taking things off books to make their job a little easier. That may be be good for them but it’s not good for the city. “It highlights why we have to have elected officials, accountable to the people.”

Meanwhile, Lou Schimmel is defending his decision, even while he admits it would hurt Pontiac financially.

Yet Schimmel said his decision was his only option at the time, and necessary to preserve any part of a program that has been cited repeatedly for actions such as paying service providers for work that could not be verified and shoddy record-keeping. He said HUD deadlines forced his hand — he did not want to have the city administration involved in mismanaging funds continue to be responsible for them. “HUD made the recommendation,” Schimmel said. “It did mean we’d lose some funds to have good management. Oakland County runs a stellar program.”

What’s odd about this statement is that Schimmel is actually the person in charge of managing the funds now. He is in complete control over the government of Pontiac. The Huffington Post has more from Congressman Peters:

Peters, who has publicly opposed Michigan’s emergency manager law, sees Schimmel’s handling of federal funds administration as part of a larger problem with emergency managers. “Replacing democratically elected officials with an emergency manager creates an environment where decisions are made with no accountability and no commitment to the long term benefit of the city,” Peters said. “The governor can appoint an emergency manager, but he can’t guarantee that his decisions are in the best interests of Pontiac residents.” Schimmel, who has managed Pontiac since September, is not the first emergency manager to have his cost-cutting strategies questioned. Last week, Michigan Radio reported that an independent audit of Benton Harbor, controlled by Emergency Manager Joe Harris, showed a large deficit there: The city spent about $653,000 more than its operating budget in fiscal year 2011.

HuffPo also discovered that Schimmel could actually still reject this plan.

According to Laura Feldman, public affairs specialist for HUD’s Midwest region, Schimmel has until Friday to decide whether to go forward with a cooperative or joint agreement that will determine how the Pontiac’s HUD funds for 2012-2014 will be allocated. “HUD, Pontiac and Oakland County are only exploring the options at this point,” Feldman wrote in an email to HuffPost. “HUD is making sure that the Emergency Manager has a clear understanding of all the options available.”

Pontiac already lost nearly a half million dollars in its grant allocation last year due to cuts in the block grant program. Louis Schimmel could potentially make that well over a million dollars per year. It’s not in his job description to ensure the future economic revival of Pontiac or to work to build up the neighborhoods and housing stock. His job is to balance the books and leave. This is exactly the point I have made repeatedly: Emergency Managers do not solve the problems that created the financial emergency in the first place. They simply put a band-aid on a gaping wound and leave. It’s also exactly the reason why all three Michigan cities that have seen Emergency Managers come and go are back in dire financial straits again. I am often told that I should shut up about this if I don’t have the solution to offer myself. My response is this: I don’t have to have the solution to know that this solution is wrong just like if I eat food that tastes bad, I don’t have to know how to make the food taste good myself to know that it’s bad. With Emergency Managers, all I have to do is look at the results: stripping away local democratically-elected representation, a disparate impact on minorities, and clear, obvious evidence that Emergency Managers not only don’t work but that they often make decisions that aren’t in the best interests of the municipality in their rush toward “efficiency”. Looking at this empirical evidence tells me that this solution is disqualified — it, in fact, simply is NOT a solution at all.