for what it’s worth, advice from hamtramck

I’ve been trading emails this evening with a few people about the Water Street situation. One of those people is my friend Hillary in Hamtramck. Following is an excerpt from one of her messages, reprinted with her permission. As Hamtramck has recently gone through the nightmare of receivership, I thought that perhaps their experience might be worth consideration.

…Mistakes were made, but the important thing is that they learn from this and change strategies. People need to understand the severity of the situation. As soon as the city council can’t agree on a budget, the state will take the city over, and they don’t care about your values the least bit. In addition to the tax judgment, our financial manager forced the demolition of many early commercial buildings in favor of strip malls, sold almost all city assets (including the street sign stamping equipment), fired over half the employees at city hall, and was paid handsomely for it. You can’t afford emergency financial management…

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11 Comments

  1. ol' e cross
    Posted December 12, 2006 at 10:07 am | Permalink

    It’s a little known fact, but the state constitution also gives the appointed emergency financial manager the power of droit de seigneur.

  2. Anonymous
    Posted December 12, 2006 at 10:15 am | Permalink

    Lets get some terms established. The State does not appoint a receiver, the State appoints an emergency financial manager.

    A receiver is appointed by the bankruptcy court.

    The EFM was created by the State after Ecorse went into bankruptcy and court ordered receivership.

    The State created the EFM to have an intermediate step before receivership and bankruptcy court.

    Three communites have had an EFM, Hamtramck, Flint and Highland Park.

    All four of the communities with receiver or EFM also had an income tax but we wont go there for now.

    The only way that Ypsilanti will go into EFM is for it to be a failure of leadership, a failure by our elected officials.

    There are three things that can ‘earn’ you an EFM like what Hamtramck had.

    1. The City cannot make employee payroll
    2. The City fails to file audited financials with the state
    3. The Council asks the governor to appoint an EFM.

    That’s it.

    So if Ypsilanti goes into an EFM, it is solely the fault of our elected officials. It means they were not responsible in creating a balanced budget and making sure they follow state law.

    Now don’t let the council scare you by threatening the EFM as justification for cutting police services or implementing an income tax.

    Look at the numbers, even with an income tax, we are in the same boat we are right now in less than 5 years.

    The same folks that were telling you everything was fine with Water Street are now telling you that you need a City Income tax to save the city.

    Schreiber said on the campaign trail, the income tax is a terrible idea yet it is a stop gap while Lansing fixes the problem. Yet Lansing didn’t fix Hamtramack, if you talk to Hillary and Steve, Lansing screwed it up.

    We need to fix our own problems and the first step is to quit spending money like it is growing on trees.

    Look at all the grants we got in the last year that all required match. Match money we did not have.

    This is like telling you, look, I know you just lost your job, but if you give me $10,000, I will give you $15,000 and you can go buy a new car.

    That sounds like a good deal, it is. But if you don’t have the match money and you rack up more debt on the credit card to get the $10,000, it is a very poor financial decision.

    That is what is going on at the city.

    They are claiming we are poor, but they are spending money like there is no problem.

    Look at all the extraordinary raises in salary just in the past three years for new employees. We pay the new incoming clerk the same amount we pay the outgoing clerk with 20 years of experience. It doesn’t make sense.

    The City Council made an offer to the new city clerk down in Ohio where she was paid $20,000 more than her current salary. That is crazy. This stuff is happening all over the place costing the City hundreds of thousands of dollars every year.

    The City CAN make cuts and still preserve jobs and maintain essential service like police, fire, roads and parks.

    If the only solution they can offer is an income tax that they admit is a stop gap solution that won’t fix the problem and that we will be back in the same boat in 5 years, then it is up to everyone reading this blog to demand change.

    The Status Quo is not working.

    Don’t let our leaders thow up their hands and claim we are doing the best we can, their best got us into the mess of Water Street and becasue Council can’t stop spending money, we are sliding off the cliff.

    Cheers!

    – Steve

  3. ol' e cross
    Posted December 12, 2006 at 12:17 pm | Permalink

    “This is like telling you, look, I know you just lost your job, but if you give me $10,000, I will give you $15,000 and you can go buy a new car … it is a very poor financial decision.”

    Or, it’s a very good financial decision if the car will allow you to drive to interviews and get a get a new job.

  4. Ted Glass
    Posted December 12, 2006 at 12:49 pm | Permalink

    I notice that our Mayor just commented on another thread. Perhaps he’ll stop by this one too.

  5. Anonymous
    Posted December 12, 2006 at 1:12 pm | Permalink

    OL E Cross,

    You could be on City Council, because that is exactly the thinking they used to justify all these grants and loans and $17 million dollars of debt for Water Street.

    Here is where it is flawed, you are in effect paying $10,000 in the hopes of getting a job. But what if you don’t get a job, you now owe $10,000 more than you did last week and so you are worse off.

    Instead, pay 20 bucks and take a taxi or 2 bucks and the bus. Or hitch a ride. Call me, I will give youa ride, do whatever it takes to get the job but don’t go into more and more debt trying to get a job.

    Then when you get the job and actually get a paycheck, then take the grant to buy a new car.

    But if you don’t have the money for the car and you don’t have a job, how are you going to pay insurance, how are you going to pay for the license plate, the gas, the maintenance, and everything else.

    Those are the hidden costs of these grants, it may seem like free money but if you don’t have any money, it isn’t free.

    No one ever solved a fiscal crisis by spending more money in they same way that got them into the crisis in the first place.

    Cheers!

    – Steve

  6. ol' e cross
    Posted December 12, 2006 at 1:42 pm | Permalink

    But what if I take the job and then buy the car, but then after a week or two my new company goes out of business or I get fired, then I won’t be able to pay for the car either, and then you will yell at me again and tell everyone I was stupid for buying the car when all I really wanted was a sweet ride so I could cruise around with my friends sometimes and pick up chicks.

  7. Hillary
    Posted December 12, 2006 at 3:17 pm | Permalink

    I agree with Steve P. on this. You have still have time to avoid going bankrupt. Our city manager mentioned at a council meeting a few months ago that he was invited to speak to your city manager and council. He told them that they should absolutely avoid the appointment of an EFM.

    Our EFM did some good things. Hamtramck would have spent itself into bankrupt if the state had not stepped in. (I believe all three of those conditions were true at the time.) We wouldn’t have a City Manager without the new charter. It probably would not have passed without Schimmel’s appointment. The renovation of an old hospital into City Hall, the Police Station, and 31st District Court was good. Everyone here has their own list of things they liked about Schimmel, and a list of things they hated him for. Having an EFM did not solve our long term problems of spending and revenue.

    The key thing an EFM would do for Ypsilanti is sell the Water Street parcels to whoever is going to pay the most taxes. The city should immediately issue a request for proposals (for the whole and parts) and pay special attention to local business owners. The proposals should be presented to the public with honest financial information. The city may find out through this process that housing is not an option, and they have to be willing to consider others.

  8. mark
    Posted December 12, 2006 at 8:21 pm | Permalink

    I guess I

  9. mark
    Posted December 12, 2006 at 8:24 pm | Permalink

    I guess our former Mayor, Pete Murdoch, must read this site. He’s copied me a note to our current Mayor. Here’s the note:

    Someone kindly forwarded your e-mail about the Water Street situation to me. Whatever positive potential the Water Street project has, it now has the more immediate potential of pulling the entire City down. Some decisions on this project are necessary NOW to prevent a total financial disaster. They can

  10. mark
    Posted December 12, 2006 at 8:52 pm | Permalink

    And here’s a clip from a letter sent out today by our new Mayor:

    I was very disappointed when Ypsilanti’s preferred developer for Water Street, Joseph Freed and Associates, ceased negotiations on a development agreement with the city. This decision is based upon the Michigan economy, not the viability of the Water Street site. Freed is also halting development sales of luxury condos in Troy. In spite of the economy, we must examine all of our options to keep Water Street moving forward.

    To this end, City Manager Ed Koryzno will be forming an advisory committee of experienced local developers to examine all of the options available to the city. Also, I will be forming the Mayor’s Ypsilanti 2020 Task Force at the beginning of the new year. The task force will be charged with proposing at least five long-term strategies and ideas to make Ypsilanti a thriving city in the year 2020. The task force is a natural setting for public input and ideas on Water Street.

    I look forward to working with city staff, city council, and concerned residents to examine all of the options available to make Water Street a development that will energize downtown Ypsilanti.

  11. egpenet
    Posted December 12, 2006 at 10:16 pm | Permalink

    Did I see shark fins cruising the river under the Michigan Avenue bridge, while I was walking my dog? Nah! (Did I?) Just how big ARE those gar?

    Somebody’s gonna get a really sweet deal as the city dumps that property. Campbell Souptime …. MMMMMM Good!

    I’m too old to wait for 20/20 … besides I haven’t been 20/20 for years. My eyesight matches something more like 20/10 … which is closer to our city’s end time.

    I like the initial input, which echoes thoughts we have threaded around town since before the primary …

    1 – Stop digging
    2 – Stop borrowing
    3 – Cancel all pending deals with attorneys, consultants
    4 – Let the DDA know they will be the FIRST to sacrifice
    5 – Cut back at City Hall AGAIN … by rewinding the “Let’s Make A Deal” deals made out of earshot
    6 – Think business … think jobs … think tax-production

    I asked on a 3/5 card at one of the town hall meetings how the city could make money. Dumb question, right? It was not asked, because the moderator was thinking “This kid doesn’t understand civics.”

    1 – First, we have to save Water Street and a good chunk of riverbank and adjacent land to connect Riverside Park along Water Street down to Water Works Park. Future “green” and recreation … Heritage Festival Expansion, etc.
    2 – Moving Walgreen’s to Water Street is a GREAT idea! Closer to senior center, better traffic pattern, jobs, taxes … money for the city. Good competition for Frank’s Drugs.
    3 – Breaking up the parcels for development affords more reasonable planning, easier monitoring, smaller developer investment, faster turn-around, quicker payback … makes the city money.
    4 – We need 50 ideas … 50 smaller scale, reasonable, affordable, sensible, doable ideas) for making money in Ypsilanti, not just five. These ideas can be new and creative … ie., a recreation venue. They can be run-of-the-mill, regular old business ideas … ie., creating licensing of landmarks for commercial advertising and promotional uses.
    5 – The city needs to make money with what its already got to work with … the Historic District. I really hate to turn this idea over to the DDA or Convention Bureau … but why aren’t there buses bringing folks into town for walking tours of our Historic District? We have the expertise for organizing, we have the hotel space, we have EMU staff and grads to conduct the tours, we have local print shops who can publish guidebooks, companies exist that could create iPod/Walkman self-guided materials … cripes! And the city could make some money, because: Tourism creates more tourism … and local entrpreneurs I am sure could figure out other crud to sell to these visitors … and the hungry will need to be fed.
    6 – President Fallon agreed to help … so what can EMU do to help the city? And WCC, as well. Tourism will create jobs and people will need skills to perform those jobs. EMU Preservation can do a LOT to make the program top notch.
    7- Connecting Frog Island, Riverside Park, Water Street, and Water Works Park, will more than double the potential for the Heritage Festival … more activities … more entertainment … more crowds … more food and refreshment … more money for the city.
    8 – Someone needs to start now to document what is happening to turn this town around … the good, the bad and the ugly. We will need some first class promotional materials almost immediately … this is a discussion idea that I remember having with Pete over 20-25 years ago. The city has no money for this, but whoever can make it happen will make money and help the city … to make money.
    9 – Last, for now, we neeeeed to get nasty with local building owners. It’s fix up, clean up or get boarded up time. We gotta get downtown ready for the buses. “Works in Progress” are A-OK. But cheese grating, busted bricks, crumbling walls and broken windows, among others … it’s ticket issuance time. And, perhaps, council should consider raising the fines to help defer the increased inspection, paperwork and enforcement costs. As one councilperson found out recently, you get towed once in this town, you never get towed again!
    … rant … rant …. rant … more later

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