Case Study

City of Pontiac Turnaround

Fred Leeb was appointed to be the Emergency Financial Manager for the City of Pontiac by the Governor of Michigan in March of 2009 and served through June 30, 2010.  Geni Giannotti also served in Pontiac as the special assistant to the EFM.  At that time, the City of Pontiac had a budget of about $100 million and 450 employees.  During his tenure in this position Fred was able to lead the staff to:

  • Generate over $115 million in multiyear benefits.
  • Quickly achieve two years of surplus after many years of deficits ($1.4 million in Fiscal Year 2009 and $3 million for the nine months ended March 31, 2010), even though the City’s tax revenue declined by about $5 million during FY10.
  • Upgrade the City’s bond rating from Fitch to a “B” from “CCC” and improve the Fitch outlook from “Negative Watch” to “Stable” at a time when many financially stronger cities were being downgraded.  Fitch stated on April 16, 2010, “The upgrade and Stable Outlook reflect the oversight of the state-appointed emergency financial manager (EFM) and the resulting improvement in financial management in addition to the successful implementation of personnel cost savings. The quality of disclosure and the responsiveness of the management team have improved markedly with the EFM and gains have been made in adjusting spending to operating revenues.”
  • Issue about $19 million in 2.5% low interest water and sewer bonds to enable critical improvements and then obtained $7.7 million in forgiveness of that debt from the federal government.
  • Negotiate successfully with six unions to have them voluntarily take on the equivalent of approximately 20% of the cost of their health benefits.
  • Reduce personnel costs by $2.5 million annually without the necessity of mass layoffs or significant reductions in services.
  • Save $3 million annually through voluntarily re-negotiated, reduced minimum manning requirements and other concessions from the Fire union.
  • Sign a new long-term agreement with Detroit to reduce the cost of drinking water for Pontiac by $1.4 million/year for 30 years.
  • Outsource management of the water treatment plants and the golf course to increase management efficiencies and reduce/eliminate operating losses.
  • Eliminate subsidies of the Silverdome and the golf course of about $2.7 million per year.
  • Obtain numerous opinions from the Circuit Court that were completely in agreement with our management decisions regarding our business analyses and the auction of the Silverdome.
  • Sell real estate, find and sell forgotten insurance company stock and settle a long-standing lawsuit, all totaling about $4.1 million.
  • Receive multiple letters from the State Treasurer complimenting our work

During Fred Leeb’s term as the Emergency Financial Manager, a long list of achievements and projects underway was published in The Oakland Press