Once Thriving Michigan Town Tanked By Recession

Pontiac, Michigan was once a bustling city with a flourishing auto industry and its very own car brand as a namesake. At the heart of the town was its $55.7 million Silverdome stadium, which received famous visitors from Elvis to Pope John Paul II. But the state recently declared a financial emergency in the city and sent in a turnaround expert, Fred Leeb, to oversee its finances. Leeb joins host Michel Martin to discuss his plan to get Pontiac back up and running.

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MICHEL MARTIN, host:

Now, we turn to another very different story about the way we live now in Pontiac, Michigan. It was once a bustling city with a flourishing auto industry and its own namesake car. For a quarter century it was home to the Detroit Lions at the Silverdome Stadium, which also hosted famous visitors ranging from Elvis to Pope John Paul II.

Today the Pontiac brand is on its way out, the city is broke and the Silverdome has been sold for less than the cost of a luxury apartment in Manhattan. The state has declared that the city is in a state of financial emergency and has sent in a turnaround expert to oversee municipal finances. The expert's name is Fred Leeb. And he is with us now from NPR member station WDET in Detroit. Welcome, thank you for joining us.

Mr. FRED LEEB (Emergency Financial Manager, Pontiac, Michigan): Hello, it's good to be here.

MARTIN: So, give it to me straight, how bad is it?

Mr. LEEB: Well, actually the problem in Pontiac is probably just a microcosm of what exists in many other cities in the country in the sense that revenue is declining rapidly. By revenue, in terms of a city, I'm talking about taxes. But in Pontiac we have an even more accentuated situation because we have probably about 35 percent unemployment. So even though we have a very diverse economy in terms of population and we have had a large employer, meaning General Motors, because General Motors has gone or had gone into bankruptcy that has affected Pontiac more than other cities.

MARTIN: So, I understand that when you were appointed the city was roughly $100 million in debt, is that right?

Mr. LEEB: The city has approximately $100 million in debt and a cumulative deficit of about $6-$7 million.

MARTIN: Sure. And the $6-$7 million deficit out of a budget of how large?

Mr. LEEB: The total spending by the government is in the neighborhood of about 90 million.

MARTIN: So, I understand that when you took this job that you did a lot of the things people tend have to do when they have to bring a budget deficit under control. You have to, you know, cut the payroll, lay people off. You have to try to cut expenses wherever you can. But the thing that seems to have attracted a lot of attention is selling the Silverdome. How did you come to that decision?

Mr. LEEB: Well, there are really three basic things you can do in any you turnaround. One is to increase revenue, another is to decrease expense. But the third is to take assets that are being unproductive and convert them into something that can be valuable again. So, in the case of the Silverdome, there's a stadium that had been built in 1975, so that's 35 years ago. It's also been empty for eight years and has been costing a million and a half a year just to maintain an empty building. It was obvious to me that that just could not go on. So, my thinking was the way to do it was to set a final endpoint, which was an auction, and give it to a person who can operate it in a professional manner. And that's actually what's happening. A person from Toronto bought it. And he is intending to use it again.

MARTIN: Is this the thing, though, that just is seems kind of stick in people's craw? It just feels, what, like humiliating for some reason or...

Mr. LEEB: There are some people who thinks it's humiliating but those people would also feel like it's better to spend the city's hard earned tax dollars on an empty building than to have critically-needed city employees, like police. The reason I bring up police is that three, four years ago the city's police department had about 170 officers, now it has about 70. So, which would you rather have, you know, a few policemen coming back or an empty building doing nothing?

MARTIN: What's been the hardest decision that you have had to make since you have been doing this job? Is there anything that's kind of made your stomach hurt even a little?

Mr. LEEB: What makes my stomach hurt is wasting money when I see people in need. There are people that don't have enough money to repair their windows in the wintertime or don't have enough money to live in an apartment. I mentioned before you started talking here on the radio that a person died today in an abandoned building. Those are the kind of people I feel sorry about because the city doesn't have enough money to provide for those people.

MARTIN: We were also talking before we went on the air about your title is technically emergency financial manager. And I'm sure other people, you know, have other names for you behind your back. But do you ever - I am wondering why you took on this job. It's not as though you had not had another successful career doing other things and this cannot be easy. So...

Mr. LEEB: Not, it's actually - that's the only thing that everybody has agreed on about this job is that it's tough.

(Soundbite of laughter)

MARTIN: So, why did you do it? Why did you decide to take it on?

Mr. LEEB: I'm unique in a number of aspects. I have had a lot of experience. I have a Wharton MBA but I also have a lot of experience in working for very large for-profit businesses. And then I've been a turnaround consultant for about 20 years. But even another different aspect of that is I'm also a turnaround consultant for nonprofits. And when this project came along I thought this would be a great opportunity for me to use all my experiences to do something that would actually be very good for a larger community. So, I'm trying my best to make that happen.

MARTIN: Fred Leeb is Pontiac's emergency financial manager and he was kind enough to join us today from WDET - our member station, WDET in Detroit. I thank you so much for speaking with us.

Mr. LEEB: Well, thank you very much.

MARTIN: Our Black History Month conversation is next on TELL ME MORE from NPR News. I'm Michel Martin.

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