ALLEN PARK, Mich. – It saw stars and went full bore for the Michigan movie industry back when Gov. Jennifer Granholm was pushing the idea.
Allen Park ended up holding the short end of a disastrous financial stick. Hollywood producer Jimmy Lifton -- among others -- promised to bring film jobs and prestige to the town whose main claim to fame is hosting the Detroit Lions Practice Facility. The city bought a former Visteon warehouse next to city hall to house the new movie studio. The deal fell apart even before they could float the fraudulent bonds used to finance the $30 million dollar deal.
Yes, the then city administrator Eric Waidelaich admitted to the Federal Securities and Exchange Commission he wrote the bond deal and left out of the paperwork the fact the deal was falling apart at the seams before the first film job would ever arrive. The S.E.C. also charged former mayor Gary Burtka as a "control person" [an historic move by the way] as the one ordering Waidelaich to hide the failing deal. He's going to pay a $10,000 fine for his actions.
So instead of seeing famous stars walking around town with the NFL players, all the grandiose plans did was leave the city's residents seeing the kinds of stars that come with getting sacked by Ndamukong Suh. Allen Park wound up so broke and broken it asked Governor Rick Snyder to send in an Emergency Manager to fix the city's finances. He obliged.
Judge Avern Cohn took an inside look at Allen Park's troubles as part of the S.E.C. case against the men who authored the bond deal and called them "small fish." He wanted to know why the financial advisors and other lawyers involved in the deal did not end up charged with any violations. The answer was at the time advisors were not held to the fiduciary standard, putting the client's interests first.
The S.E.C. also told Cohn the lawyers were relying on Waidelaich and Burtka's bad information and were not responsible for the fraudulent bond deal. The Judge wondered whether there might be any criminal investigations into the case or the city's management. So far, the S.E.C. told him, it knows of none. The judge was also highly critical of the State for a lack of oversight on the municipal bond process.
The state of Michigan's answer was that Allen Park in 2008 -- when this process first started -- had "qualified status," meaning it did not warrant any state supervision. Wasn't that the judge's point? He would like to see that change. Currently there is no legislation anywhere in Michigan planned to deal with this expensive problem.
Meanwhile, the city went in and out of emergency management. But the EM left an interesting legal twist with her departure. Among EM Joyce Parker's last orders, she appointed Karen Folkes as City Administrator. She really ended up with CEO powers. At the same time, a new city council was elected. Its members say they are looking to right the city's ship and feel they get neither good management nor communication from Folkes. So much so, the council voted 7-0 to remove her from office on Tuesday night. But Folkes was at her desk today, nonplussed by the vote saying she takes her orders from Lansing.
The state of Michigan Treasury Department was so unhappy with the move it held a conference call with commission member and Mayor Bill Matakas today wanting to know what in the world is going on. No one involved is willing to give specifics about what was discussed on the call but it wasn't exactly a birthday celebration they were having! Most of the council and the mayor will make a trek up to the treasurer's office on Monday to further discuss this question of whether the EM can leave an EM behind. There is no love lost in this situation to say the least and whether the council survives, another emergency manager is appointed or everyone makes nice is anyone's guess.
If you were able to follow the bouncing ball in this piece, congratulations! It's complicated and needlessly so. It also is a window into the failed municipal government we have witnessed in Southeast Michigan over the past few years. Allen Park may as well be Wayne County or Detroit. There are so many burning questions looking at this small town intrigue. The S.E.C. called Gary Burtka a "control person," essentially pulling the marionette strings to get the bad bond deal through. Has anyone asked the question who was pulling Burtka's? How can a multi-million dollar debacle happen without any real charges for anyone? There were at least a few indictments in the Wayne County jail disaster. Why is the state only dealing with financial problems like this after the horse is already out of the barn? That's one question Judge Cohn asked.
This has been a costly disaster for Allen Park residents who didn't ask for lesser police and fire protection and reduced overall city services and higher taxes. They were forced on them through bad management and unknown others. This is bad government run amok. Where is the oversight? Where are the prosecutors? Residents have asked for an investigation by Michigan State Police under the EM law.
Clearly, Allen Park taxpayers deserve better.