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How Michigan’s Emergency Manager Law Guarantees Corruption

One of the arguments raised by people like me against Michigan’s authoritarian and anti-democratic emergency manager law over the last few years is that allowing people, and even whole businesses, to have dictatorial control of a city will lead to inevitable conflicts of interest and using that power to enrich themselves. Here’s a perfect example:

Pontiac’s former state-appointed financial manager Fred Leeb is part of a coalition seeking a constitutional amendment to expand casino gambling in eight locations across Michigan, including the Silverdome in Pontiac, the public relations firm representing the coalition says.

Leeb was Pontiac’s state-appointed emergency manager from March 2009 until June 2010. The Silverdome was sold to Andreas Apostolopoulos in November 2009 for $583,000, a sum that drew wide criticism for being so low for the former home of the Detroit Lions…

But Emily Gerkin Palsrok of Lambert Edwards & Associates, the public relations company handling information about the ballot initiative and the coalition behind it, said Leeb, along with Apostolopolous, are part of the coalition seeking to put the initiative on the November ballot.

“He (Andreas Apostolopoulos), Steve Apostolopoulos and Fred Leeb are part of Jobs First,” Emily Gerkin Palsrok of Lambert Edwards & Associates said Monday. “As such, this is land that they’re targeting to use.”

So as Pontiac’s emergency manager he helped engineer the sale of the Silverdome at a fire sale price and now he’s working with the guy who bought it to make what will inevitably end up being a huge amount of money on the use of that property. Anyone wanna bet that Leeb will end up as a partner in the casino there if and when it’s approved? I’m all for this initiative, though I think it doesn’t go far enough. I think gambling should simply be legalized in all forms, everywhere. But this deal stinks to high heaven.

Comments

  1. says

    You shouldn’t be for this initiative Ed. Rather than not going far enough, it explicitly limits where gambling can take place.

  2. d cwilson says

    I’ll repeat my question from the last time Ed blogged about Michigan’s EM Law:

    How exactly will giving away public property at firesale prices help attract jobs and economic revitalization to these communities?

    Hopefully, this time I’ll get a better answer than, “Detroit is hopeless”.

  3. Jordan Genso says

    What I find most interesting about this is that the sale took place before the Republicans greatly expanded the powers of the emergency managers.

    And from another reporting of this issue, I believe all of the Pontiac elected officials were unanimously opposed to the sale, yet they were powerless to stop it even back then.

    As a member of the Democratic Party, I want to believe that the most egregious emergency manager abuses happened under Gov. Snyder (R), but this one occurred while Gov. Granholm (D) was still in office. So with the law clearly flawed before the Republicans took total control (and made it worse), why wasn’t the Democratic Party fighting it back then?

  4. twincats says

    Wow. I occasionally watch Granholm’s show on Currnet TV and often watch Rachel Maddow. I never made the connection before that Rachel reports on these stories often and Granholm never does seem to!

  5. kantalope says

    “How exactly will giving away public property at firesale prices help attract jobs and economic revitalization to these communities?”

    Fred Leeb seems to have gotten himself a nice cushy job as casino owner…I imagine that it pays pretty well too.

    Leeb can pay his housecleaner minimum wage for a couple days a week – so there’s 1.5 jobs right there.

    You just refuse to see the marvelous invisible hand of the market at work.

  6. sithrazer says

    The silverdome was (I haven’t seen it in the last year or so) in -terrible- condition. Water ran down the inside walls when it rained.

    The city counsel also managed to scare away a lot of potential buyers by putting it up for auction, requiring participants to put up a non-refundable (deposit?) before they could participate in the auction, and then cancel the auction. They did that two or three times.

    The silverdome was a clusterfuck long before any financial manager came along.

  7. Michael Heath says

    slc1 writes:

    Oh, but Heath says that the law is a necessary evil.

    Citation requested I made such an assertion.

    And what defect-free prescription do you propose to get these cities back to liquidity? Or at least a demonstrably effective policy with less defects than this approach.

    There are times when the only options are nothing but bad options. It’s easy for armchair quarterbacks to critique any of them, the hard part is making a positive compelling case for your least bad solution. I’ve yet to see one single individual in this forum, except DuWayne, even attempt to do so.

  8. baal says

    But you’re ok with self dealing Michael?

    Corruption will happen when there is that much power in single individuals who are not checked.

    At the very least, Michigan needs an enforceable ethics code for these managers. They must not, at a minimum, have a current or future financial interest in the properties they sell as a manager. Let’s even add a safe harbor for single family dwellings under 5 million dollars – the manager can have that.

    Securities dealers, certain corporate positions, doctors and lawyers have enforceable ethics codes so why not these unlimited unbalanced CMs?

  9. slc1 says

    Re Michael Heath @ #8

    The following statement sounds like the lesser of the evils to me.

    There are times when the only options are nothing but bad options. It’s easy for armchair quarterbacks to critique any of them, the hard part is making a positive compelling case for your least bad solution. I’ve yet to see one single individual in this forum, except DuWayne, even attempt to do so.

  10. Michael Heath says

    baal:

    But you’re ok with self dealing Michael?

    No, I referred specifically to this behavior as a defect.

  11. robertfaber says

    Apologies to those involved in the conversation, but the Silverdome was simply worth more than $580k, even in 2010. That’s $4k an acre just for the land, not counting the millions worth of scrap from simply demolishing the place. $4k an acre would be around double the price for rural vacant land in Michigan of similar acreage, but for zoned commercial in any Michigan city, it’s a bargain at 10 times the price. A bid of $18 million was placed just one years before it was sold by the city manager who now works for the guy who bought it.

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