Better Fred than Dead

But if your name is Fred Leeb and you live in Pontiac, Michigan, there are lots of locals who would prefer the latter. The name of the town says it all – maybe once a notable Native America name but more recently associated with a General Motors product line which, like the town, is pretty much over. Unemployment and the demise of GM have saddled this Detroit suburb with about $100 million in debt, a completely eroded tax base, and an impossible task of surviving. You see, Mr. Leeb was appointed by the State of Michigan to supervise all things financial in this economically devastated town. It seems the fiscal crisis pushed Michigan to designate a state of financial emergency on Pontiac and impose a financial caretaker on the small city.

The March 17^th Los Angeles Times caught up with Mr. Leeb shortly after a Pontiac City Council meeting where the following epithets were hurled at Freddy the Financier: “‘Municipal monster,’ shot one man. ‘Arrogant racist,’ declared another. ‘Theft on the highest level,’ called a third. ‘Somebody needs to go to jail.’” Fred is busy selling off assets, cutting salaries and pushing government workers and vendors out the door. The City Council doesn’t have much of a voice in these matters, now that the state has taken over.

What assets, you ask and for how much? Will how about this little gem: the Silverdome. Yeah, where the Detroit Lions (kittens?) NFL Franchise once played. 180 seat covered arena on 145 acres. Even the Pope held mass there. Must’ve sold for millions, you exclaim. Not exactly. Would you believe $550,000, about the price of a moderately expensive single family home in most of the United States… although you can buy a fair-sized home in Detroit for under $15,000 these days. The city could no longer afford the $6,000 per week in security or the $1.5 million a year in maintenance costs. Leeb, a 58-year-old bureaucrat, responded to queries as to the efficacies of the sale of this landmark. “No regrets,” he replied.

Leeb’s job description might become an entirely new, mainstream government job since Pontiac’s problems are clearly spread to almost every nook and cranny of these United States: “Now Leeb signs off on every dollar spent by the city, making the Wisconsin native something of an unelected king. Though the sale of the Silverdome at a price lower than many Los Angeles homes prompted national headlines -- and a brutal lampooning on ‘The Daily Show’ -- Leeb has no plans to shy away from selling other city properties. And he's not alone... In Arizona, officials in Tucson floated the idea of mortgaging City Hall. California Gov. Arnold Schwarzenegger proposed selling properties as notable as San Quentin State Prison…. Still, few wholesaling government officials have drawn the ire Leeb has in Pontiac. He recalls one resident of the predominantly African American city calling him ‘the white boy master sent from Lansing,’ the state capital.”

Leeb slashed city council salaries by two-thirds, and he wanders the town looking for assets to sell: “Cruising around town, Leeb called out properties he says need to go, or at the least have their operations outsourced. The Oak Hill Cemetery, where massive tombstones poke out from a blanket of snow, costs the city more than $500,000 a year. The Phoenix Center, an outdoor pavilion, has never met its potential, and would be better served run by an outside entertainment company, he says.”

How many other cities and towns face the same debacle? Cities in Riverside and San Bernardino Counties in California have direct unemployment rates well north of 20%. Los Angeles faces a nine figure shortfall, pension obligations that literally cannot be funded, an underperforming investment portfolio and sports an ex-mayor – Richard Riordan – who believes that city leaders (in LA and other California cities) may have to consider bankruptcy as the realistic solution. But if that happens, there goes another appointed financial administrator for the relevant city. Who will their assets off? Who will decide which municipal services to eliminate and which salaries to cut? With 39 states in deficit, who will bail them out? Where exactly will these governmental services come from when the cities go under?

I’m Peter Dekom, and yes, I actually do lose sleep over this.