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MARY KRAMER: Pontiac EM's impact noteworthy

Article Reprint from Crain's Business Detroit
Originally Published: February 03, 2013 8:00 PM 
Modified: February 04, 2013 2:00 AM


Last week, General Motors announced it was investing $200 million in Pontiac, adding jobs to and expanding its global powertrain engineering headquarters. 

That was big news. But the bigger story just might be how Pontiac has fared in the 14 months since Louis Schimmel was appointed its emergency manager. 

The state appointed Louis Schimmel as Pontiac's emergency manager in November 2011. He used Public Act 4 quickly -- before it was suspended in August pending the November election, when voters ultimately nixed it -- to contract out for many city services or launch deals for combined services. 

"I ran hard with it," he says. "In cities like Pontiac that are in trouble, you have 80 percent of your budget spent on police and fire." 

Today, Oakland County Sheriff's deputies patrol Pontiac streets (many new deputies are former Pontiac police officers). Waterford Township and Pontiac combined fire services. Trash is picked up by a private contractor. Oakland County plows and maintains roads. Schimmel is also talking to the county about collecting taxes. 

Perhaps Schimmel's sweetest deal was selling excess capacity in its sewage treatment plant to Oakland County for $55 million. Schimmel is using the money to pay off the city's debt and eliminate its deficit. Wastewater from 13 suburbs that would have been going to Detroit's system will now go to Pontiac. The city may save $5 million a year that can now go for retiree health care and pensions. 

Remind me again why Public Act 4 was so bad? 

"There are those who are just livid about what I've done," Schimmel says. "(But) I cleaned up this mismanagement and created better services." 

He also sold property and buildings in the city that were abandoned or blighted. West Construction Services bought the Strand Theatre and plans to reopen it in 2014 as an entertainment destination. Kyle Westberg, CEO of West Construction, also put 46 lofts into a former Sears store built in 1929. The project opened late last year with a retail market and fitness center. 

That investment, as Ryan Felton reported on crainsdetroit.com last November, attracted brothers Rick and David Derbyshire to buy and develop a 20,000-square-foot building across the street for their engineering design software company, DASI Solutions. 

Schimmel says investment is coming because people have confidence in the city. 

"Some think, 'This might be the new Royal Oak,' " he says. "This may sound corny, but people don't want to come to a town that's a financial disaster. A city is not in a good position when it goes out and begs for money to continue to pay for a broken process that causes the financial problem in the first place." 

Perhaps Detroit's elected officials might take note.