Michigan Privatization Digest - October 31, 2008

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Contents of this issue:

  • Pontiac seeks asset options

  • Iosco County explores inspection contracting

  • Union files lawsuit to prevent Detroit incinerator deal

  • Macomb County rejects nursing home privatization

  • Ypsilanti school sale stopped

  • Alma receives union concessions after investigating privatization

  • Leland schools join consortium

Pontiac seeks asset options

PONTIAC - Pontiac is trying to sell a number of assets, including two cemeteries and a hospital, in order to help balance its budget.

The city owns two cemeteries, Oak Hill and Ottawa Park. The cemeteries are operating at a deficit - revenues covered only 54 percent of expenses, according to its most recent financial report - and needed $486,732 from the city's general fund to stay afloat. The Mackinac Center recommended selling the cemeteries in its Winter 2007 Michigan Privatization Report.

The city tried selling its North Oakland Medical Centers to the Oakland Physicians Medical Center. NOMC filed for bankruptcy protections from its $38 million debt in August. OPMC offered the city $2 million for the facility, but was unable to get financing, according to The Detroit News.

Pontiac is also selling the Silverdome. A buyer has been selected and the deadline to turn over the $20 million sale price is Nov. 1, 2008, according to The Oakland Press. Proceeds from the sale are expected to be used to pay down city debt.

The State of Michigan has assembled a team to review the city's finances. The team has located a number of issues that need to be addressed, including receiving reimbursement for police services offered to Pontiac schools, and delays in receiving revenue from taxes, public works services and fire transport services, according to The Oakland Press.

"Financial review team report: No glaring flaws," The Oakland Press, Oct. 21, 2008
"City on right track with sale of cemeteries, NOMC," The Oakland Press, Sept. 4, 2008
"North Oakland Medical to close today due to money problems," The Detroit News, Oct. 28, 2008

Iosco County explores inspection contracting

TAWAS CITY - Iosco County officials are exploring possibilities in reforming how its building inspections are handled, according to the Iosco County News.

Revenues for its building inspection team - the main source of which are inspection fees - have not been keeping up with the department's expenses, according to the News. The 2007 revenues were $269,735 and expenses were $293,461, according to its most recent financial report.

The county has raised its fees to help meet program expenses. Overall in Michigan, the number of new home permits issued has decreased 42 percent from 2007, according to Census Bureau figures.

Privatizing inspections was suggested by a county commissioner who was a builder himself, according to the County News.

"Contractors: Do not privatize building inspection," Iosco County News, Sept. 24, 2008

Union files lawsuit to prevent Detroit incinerator deal

DETROIT - A Detroit affiliate of the American Federation of State, County, and Municipal Employees has legally challenged Detroit's deal with Synagro to provide sludge incineration, according to The Michigan Citizen. This is part of an ongoing dispute over the city's dealings with the company, which the FBI is investigating.

The suit alleges that the city charter prevents privatization without voter approval and alleges corruption in the bidding process, according to The Michigan Citizen.

A federal investigation is occurring, but at the moment news stories have only reported that people have been called to testify before a grand jury on the issue.

"People must vote on Synagro," The Michigan Citizen, Aug. 17, 2008
"Detroit businessman testifies before grand jury in Synagro probe," Clickondetroit.com, Sep 17, 2008

Macomb County rejects nursing home privatization

MOUNT CLEMENS - A Macomb County Commissioner's committee voted 5-4 against privatizing its Martha T. Berry Medical Care Facility, according to the Detroit Free Press. The facility operated at a $2.9 million loss last year, and is projected to cost taxpayers an additional $5 million next year. The county expects spending to be $33 million over revenue, according to the Free Press.

The facility is unionized and the commissioners voting to continue the status quo did not want to break apart the union, the Free Press reported.

The commission received proposals to take over the facility, looking for an arrangement similar to Oakland County's lease of its Golden Oaks Medical Care Facility, which had been losing money and was in need of capital improvements. Oakland County signed a lease with Ciena Healthcare Management, which became the operator of the facility and took the risk of profit and loss for the facility in exchange for an annual fee of $500,000, according to the Michigan Privatization Digest.

"Panel keeps Berry center," Detroit Free Press, Oct. 3, 2008
"Oakland County leases nursing home," Michigan Privatization Digest, Jan. 19, 2007

Ypsilanti school sale stopped

YPSILANTI - School officials in Ypsilanti had been looking to sell its Ardis School, but have cancelled negotiations with its potential buyer, according to the Ypsilanti Courier. The district was counting on the sale to help offset spending expected to be $5.4 million over revenue.

The board approved a sale of the school to the Hidaya Muslim Community Center in March. However, one of the financial backers of the Community Center withdrew his support and the organization did not make payment. Negotiations ensued, but the school board finally voted to seek other buyers for the building.

The district is currently exploring options to litigate against the state over funding issues, according to The Ann Arbor News.

"Sale of Ardis School killed by board," Ypsilanti Courier, Sep. 11, 2008
"Ypsilanti leads school rebellion," The Ann Arbor News, Oct. 21, 2008

Alma receives union concessions after investigating privatization

ALMA - Support employees in the Alma schools agreed to take a 4 percent salary decrease after the district investigated privatizing services, according to The Saginaw News. The move is expected to save the district $70,000 annually.

"Pay cut in pact," The Saginaw News, Sept. 7, 2008

Leland schools join consortium

LELAND - An IRS regulation on investment tracking led the Leland Public Schools to join a consortium of districts that outsource the job, according to the Leelanau Enterprise.

Part of the regulation requires districts to track the investments made by employee-sponsored retirement funds. In response to the requirements, districts across the state formed a consortium to contract out this responsibility. The consortium selected TSA Consulting, which specializes in 403(b) plan compliance.

"Leland joins school consortium," Leelanau Enterprise, Sept. 8, 2008


Michigan Privatization Digest is a service of the Michigan Privatization Report, a twice-yearly publication of the Mackinac Center for Public Policy with a circulation of more than 22,000. The Mackinac Center for Public Policy is an independent, non-profit research institute located in Midland, Michigan.