New deal lets Pontiac keep federal money

Jan 11, 2012

Pontiac’s emergency manager says the federal government has agreed to a proposal that lets the city keep some grant money it was expected to lose.

Pontiac has a history mismanaging federal grant money.  So when federal officials from the Department of Housing and Urban Development asked the city to hand administration of Community Development Block Grants over to Oakland County, its emergency manager, Lou Schimmel, agreed.

But that meant Pontiac would have lost out on some of that money—an estimated $2 million or more over 3 years. Now, HUD officials have offered a deal that lets county manage the funds, which will still go to community programs in the city.

Congressman Gary Peters helped broker the deal. He says the whole episode highlights a weakness in the emergency manager concept: an almost exclusive focus on minimizing short-term costs.

“And because of that, I believe they make decisions that aren’t necessarily to the benefit of the city in 5-10 years,” says Peters, suggesting that amounts to “mismanagement.”

Peters, a Democrat, is running for re-election in a newly re-drawn Congressional district. It includes much of Detroit, along with most of Oakland County.

Emergency Manager Lou Schimmel says he was just complying with the federal request. But he praised the deal, saying it helps Pontiac “maximize its federal funding opportunities” (allowing it to reclaim some unspent funds from previous years).

According to a city press release:

“HUD presented the City of Pontiac a mechanism so the City would not jeopardize the loss of prior year [grant] funding that had been uncommitted and unspent. Also…HUD presented an option that would allow the City to keep CDBG funding under the current year formula for the next three years while addressing HUD’s concerns about mismanagement of the funds.”

Schimmel has made some controversial moves as Pontiac’s EM, including eliminating the city’s fire department and putting most of the city’s assets up for sale.