CHICAGO — Michael Stampfler, the emergency manager of Pontiac, Mich., resigned Friday after 14 months, calling the job a “sad and almost hopeless endeavor” and warning that bankruptcy or merger are the only real solutions for the troubled Detroit suburb.
Michigan Treasurer Andy Dillon tapped public finance veteran Louis “Bud” Schimmel to replace Stampfler, effective Monday.
Stampfler is the second emergency manager to leave since the state declared Pontiac to be in a state of fiscal emergency in March 2009.
Stampfler called the state’s approach to financially stressed local governments draconian and undemocratic in a Sept. 9 statement e-mailed to The Bond Buyer that was also critical of city officials.
The restrictions the state imposes on an emergency manager, combined with the public view that the state-appointed manager is a hostile occupying force, are “severe impediments to achieve long-term solutions,” Stampfler wrote.
“This is a sad and almost hopeless endeavor considering the absence of democratic process and lack of support or involvement by competent local elected leaders,” he wrote.
Stampfler said the state’s approach, to balance the books as quickly as possible, ignores the service needs of a community. The letter appears to imply that the state’s refusal to consider Chapter 9 bankruptcy as a solution is another impediment to improving the struggling community.
“I determined early on that bankruptcy or merger are the only viable courses of action that would truly allow Pontiac residents and businesses to be successful in the long term,” Stampfler wrote.
Without those options on the table, he added, “there is no real solution anywhere on the horizon.” He warned that Pontiac will suffer the same cyclical fate as other troubled Michigan municipalities like Ecorse or Hamtramck: entering emergency management status, leaving it, then entering it again.
Touting his achievements during his tenure, Stampfler added that the improvements are not likely to succeed because of the lack of real structural reform options in the state’s urban policy and political cronyism.
Stampfler has spent the last few months immersed in an escalating political dispute with Pontiac’s elected officials over how to eliminate the city’s $12.5 million deficit.
Schimmel, who is a native of Pontiac, leaves his current position as executive administrator for the city of Warren. He is a long-time public finance figure in the state, and was head of the Michigan Municipal Advisory Council for decades.
He left the organization in 2001 to take over as emergency manager of Hamtramck. He also was a court-appointed receiver for Ecorse.
In a former position as director of municipal finance for the Mackinac Center for Public Policy, Schimmel wrote several columns addressing Pontiac’s problems. A 2006 piece suggested that the city needs a “sweeping privatization program that would place a wide array of services currently provided by the city into the hands of vendors,” and proposed starting with the Department of Public Works.
Another column, from 2008, argued that the city’s most “devastating” mistake was the creation of five tax-increment finance authorities. The TIFs since then have struggled to generate sufficient revenue to pay off debt, and Stampfler warned that the city will need to dip into its general fund to cover future TIF bond payments.
“I am optimistic that with the tools available through [Michigan’s new emergency manager law] Public Act 4, we can work cooperatively to end the financial emergency,” Schimmel said in a statement.
Fitch Ratings dropped the city’s general obligation rating on to CCC in January, warning that default is a real possibility.
With a population of 66,000, Pontiac suffers from a 26% unemployment rate and 31% of its population lives below the poverty line.