A review of Allen Park, Mich.'s finances shows the city is in a state of fiscal emergency, according to a preliminary state-appointed review team.
The team recommended that Michigan Gov. Rick Snyder appoint an emergency manager for the Detroit suburb.
Allen Park faces an ongoing general fund deficit, severe cash-flow problems, high debt and falling property taxes, the review team found. A 2011 audit revealed factors that "raised substantial doubt that the city could continue as a 'going concern,'" the report said.
The review also called the City Council "manifestly dysfunctional." The city in March issued tax anticipation notes for cash flow that were expected to be repaid with an emergency loan from the state. The council later declined to apply for that loan, and the "source of repayment presently is unclear," the report said. The notes are due in October.
Chief among the junk-rated city's problems is a $31 million general obligation bond deal floated in 2009 to finance a now-failed film studio complex adjacent to the city hall. Residents have twice rejected tax increases to pay the annual $2.6 million debt service tab.
Snyder has 30 days to determine whether he agrees that a financial emergency exists in the city. The city then has the chance for a hearing.
Standard & Poor's rates the city B with a negative outlook.
