Posts Tagged ‘Michigan’

Michigan Opts for Emergency Managers for Financially Distressed Towns

Monday, March 28th, 2011

While the nation’s attention was riveted on Wisconsin legislators on the lam and massive protests in the state capital, Michigan legislators enacted a law that – in effect – gives the state the unprecedented authority to control cities and school districts in financial distress. The new law, which had the support of Governor Rick Snyder, includes the ability to tend employee union contracts, fire local officials and even disband local governments and combine them with others.

One of the bill’s most controversial measures is to fully tax pensions that previously were exempt from Michigan’s 4.35 percent personal income tax. This prospect of the new law drew approximately 1,000 senior citizens to protest at the Michigan State Capitol in Lansing.  “I’ve never been political, but this is a power grab,” said Jennifer Cherrette, 55, a retired state employee.

Officially known as the Local Government and School District Fiscal Accountability Act, the bill’s supporters say the legislation gives the state a way to step into distressed municipalities and schools before they collapse. It also gives emergency financial managers broad authority to end employee union contracts, and to invalidate elected boards and councils.  The bill’s sponsor, Representative Al Pscholka, said that it would give the state the power it needs to turn around municipalities and school districts in financial distress.  “For years we have allowed cities and schools to be on the verge of bankruptcy without any intervention,” Pscholka said.  “When the state finally does arrive, in many cases we find the financial records in disarray and leave emergency managers with very few good options to balance the books.”  Senator Jack Brandenburg said emergency managers would be used only in communities that need “financial martial law.”

“The Governor will sign,” said Sara Wurfel, a spokesman.  “He believes this was an important step forward and will be a key tool to help indicate and address fiscal problems earlier and more clearly in Michigan’s cities and schools with the hopes of avoiding the appointment of an emergency manager to begin with.”  Critics contend that the Emergency Manager legislation is part of a national effort to consolidate political power by undermining public-sector unions.  Although much of the concern about the Emergency Manager bill focuses on the loss of benefits and jobs that will come when labor contracts can be scrapped, another expected impact is the increasing privatization of city assets.  Additionally, they believe that the law could establish virtual dictatorships and take power away from local elected officials when an emergency manager is put in place.  Michigan’s current emergency financial manager law is being used only in hard-hit Pontiac, Benton Harbor, Ecorse and the Detroit public schools.

An editorial in the Detroit Free Press views the objections to the new law as much ado about nothing – and cautions that the powers be used only rarely.  According to the editorial, “We suspect that the fears the legislation will provide the pretext for emergency managers to run rough-shod over the democratic process in general and public employee unions in particular will prove greatly exaggerated.  Still, the new powers being granted to the governor and the treasurer to intervene in financially failing local jurisdictions are best used sparingly.  Michigan shouldn’t see a rash of state takeovers behind the new law.  In jurisdictions where the state does deem it necessary to assign financial managers, appointees should set aside collective bargaining agreements only when doing so is the only alternative to insolvency.  The new law’s chief attributes are prophylactic more than anything else, designed to help state officials head off local financial crises in the first place.  Rather than wait around as school boards or city councils ignore warning signs, avoid corrective action or indulge outright financial incompetence, the state can now swoop in early and demand substantive change.”

Want Affordable Housing? Here’s Where to Find It

Tuesday, July 8th, 2008

Despite all the doom-and-gloom reports on the residential real estate market, there are some bright spots.  In several markets, housing has become surprisingly affordable to families earning a median household income of $61,500.  And there’s more good news.  Mortgage rates are again nearing the record lows of a few years ago; and family incomes jumped an average of a $2,500 between 2007 and 2008.

What are some of the markets most strongly impacted by this trend?

Indianapolis, IN – The largest affordable cities – Indianapolis, for example — tend to be in the Midwest.  More than 90 percent of all Indianapolis households have sufficient incomes to buy a median-priced $125,000 home.  During the first quarter of 2008, Indy ranked as the most affordable major U.S. housing market for the 11th consecutive quarter.

Stockton, CA: — The average single-family home price fell 35 percent to $230,800 in the first quarter of 2008, compared with $357,800 just two years previously.

Kokomo, IN: — Among smaller metro markets, Kokomo ranked well in terms of housing affordability during 2008’s first quarter.  A median-priced home in Kokomo is about $147,000.

Grand Rapids, MI: — Approximately 88.7 percent of homes sold were affordable, a 4.2 percent change from 2007.  A median-priced house in Grand Rapids is currently $132,100.

Youngstown, OH: — In this small city with a population of 82,000, the median sales price dropped 13.5 percent to $67,700 in just one year.

Study Break

Wednesday, April 23rd, 2008

On NAIOP member Jack Schultz’s list of Top 10 Development Trends for 2008, one really stands out. Following Kalamazoo, MI; Newton, IA; and El Dorado, AZ, have promised to pay for the college education of anyone who completes grade and high schools.  In light of of the economic flux that we are currently in, this seems like a bold incentive package that inverts the traditional concentric circles of economic development.  Instead of corporate tax incentives to bring jobs and improvements to the community, these communities are funding higher education to attract (and educate) people, then entice employers needing educated labor, with the net effect of driving retail, and higher-end residential development as a way to lift the general economy.