Michigan Today Takes Over Pontiac Finances, Taps Emergency Overseer

CHICAGO - Michigan officials will take over the finances of Pontiac starting today following a state review board's determination that the troubled city was not taking adequate steps to address its "serious financial problems."

Last Thursday the state appointed Fred Leeb, an Orchard Lake, Mich.-based business consultant, to act as emergency financial manager for the city. Leeb owns the Nonprofit Management Group LLC and Fred Leeb & Associates LLC, consulting firms that specialize in helping nonprofit organizations and businesses stabilize and strengthen their finances.

The financial takeover is the culmination of nearly two years of state review of the city's finances. In April 2008 Pontiac signed a consent agreement with Michigan's Financial Review Team that was aimed at addressing its fiscal problems.

"Last month the Financial Review Team advised the governor that city of Pontiac officials had failed to abide by terms of a consent agreement and had not taken adequate steps to address the city's serious financial problems," state treasury officials said in announcing the takeover last week.

Located between Flint and Detroit, Pontiac has struggled for years with growing deficits. The state says the city currently faces a $12 million deficit - its recent budget totaled roughly $54 million - while the city says the deficit is between $5 million and $7 million.

Part of the problem is that Pontiac has been unable to sell off some of its unused assets, such as the Pontiac Silverdome, the former home of the Detroit Lions. Like other cities in southeastern Michigan, Pontiac has also been particularly hard hit by the loss of jobs in the manufacturing sector, reflected in its 20% unemployment rate.

The state's decision to take over the city comes three weeks after Gov. Jennifer Granholm pushed for a takeover.

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