Highland Park prepares battle over finances
By T. Kelly
The Michigan Citizen
HIGHLAND PARK — City officials convened a special meeting Oct. 2 to prepare a response to the State Treasurer’s preliminary review of the city’s finances—a move to return the city to complete emergency management.
Before a standing room only crowd and facing an Oct. 9 deadline to submit a response, Mayor DeAndre Windom and Finance Manager Ernestine Williams went point by point through Treasurer Andy Dillon’s 15 findings — the city is in “probable financial stress.”
“We need to be proactive,” urged Councilwoman Rodney Patrick. “We’ve watched the mistakes Detroit made. We need to develop our own plan and be proactive to make things as comfortable as possible for folks in the city.”
The letter came “as no surprise,” Windom said. State control of Highland Park is more than a decade old. The state took over Highland Park in 2001. The emergency manager at that time, Ramona Henderson-Pearson, closed the library and fired code enforcement officers, turning those duties over to the state. She trimmed staff while hiring consultants, paying airfare to bring at least one of them in weekly from Atlanta to run the water department.
The state has never fully relinquished the code enforcement office, collecting fees from permits while leaving the city without the ability to enforce codes.
“We’ve never come out from under the (emergency manager) act, at least in writing. We send monthly reports to the state; the state’s Mr. Klein is in here monthly. (State agent) Tony Saunders was here. How did we get to this point if the state has been here all the time?” Patrick asked.
Waving the letter of the state’s findings Williams responded, “The state already knew (about the financial issues), they just put the information in this format. There have been three emergency managers, and a monthly report required. This is no surprise.”
She said local media knew before city officials the Treasurer was invoking Public Act 436, the Emergency Manager Law passed by the lame duck Republican-controlled legislature one month after Michigan voters rejected emergency management at the polls.
On Sept. 9, Dillon began the process. His Sept. 30 letter, with 15 findings, is the first step in the takeover process. The city has five days to reply to his findings, then after review, Dillon will make a final report to the Emergency Financial Assistance Loan Board. That board will determine whether the governor shall appoint a review team to determine if there is an emergency.
Under the new EM law, the city has four possible responses if a financial emergency is found. Council can vote for bankruptcy, a consent agreement, an emergency manager or arbitration.
Williams and Windom said many of Dillon’s claims of overspending and illegal fund transfers were inaccurate, and much of the city’s woes come from the loss of state revenue sharing.
“This is a work in motion,” Williams said, noting she was gathering documentation from Plante Moran, the city’s auditors, among other staff and consultants and promised council she would present her response to them by Friday, Oct. 4, for their review.
The water department and pension payments are at the center of many of Dillon’s findings.
Water billings were also the subject of outrage expressed by many of the residents who commented during the council meeting. Dillon notes the city’s failure to send out water bills and the poor payment rate, ten percent, by Highland Parkers has contributed to the city’s $1.3 million deficit.
Adding to city debt is the unpaid $80,000 a month charge Detroit is seeking from Highland Park for use of its water. At the direction of Tony Sanders, a state agent, Highland Park shut its water plant in Dec. 2012 and switched to Detroit water. Dillon claims only 10 percent of those billed actually pay for water and sewage.
The failure of the city to bill is a problem. Williams said the water department has hired new staff and a private company to help get out the bills. Before December, she said, bills will be sent. Citizens told council that if water bills come out in the thousands of dollars billed per house in January, they will be unable to pay.
On the pension payments, Windom said the city is meeting the monthly pension payroll and health care bills, but future obligations are unfunded. He said the restructuring of pension boards is a step towards solving that problem since there can be no negotiation on the subject without a board in place.
The city of Highland Park currently has 10 employees and unfunded pension liabilities of $26.1 million.
In 2008, voters approved a pension bond and $9 million remains in that fund, which will last three years according to Dillon’s findings.
The city is also facing liabilities in excess of $3 million from lawsuits filed by former police officers for charges including wrongful dismissal. One pending suit will lead to spreading $290,000 on the tax rolls after a city payment of $30,000, unless an appeal of that judgment is successful.
A Highland Park resident said after the meeting, “these people who are morally bankrupt can come in and do what they want with our lives. It’s just not right.”
The reference was to recent news reports of Dillon’s own personal stresses: his leave to treat alcoholism and his former wife’s allegations of Dillon’s cocaine use and spousal abuse.