Michigan Bond Expert Assumes Task : City Takes Debt Medicine: Loses Its Power to Govern

The public library, once the pride of this gritty, blue-collar city, is locked up tight. Behind bolted doors and plywood-covered windows, dusty rows of imprisoned books, thousands of them, go unread.

The shuttered library, just a few blocks from the Ecorse City Hall, stands as a symbol of both the city’s past and its present.

It first gained notoriety as a safe harbor for Prohibition smugglers bringing booze across the Detroit River from Canada. Today Ecorse has a new distinction. The 2.2-square-mile city just south of Detroit is home to one of the most severe remedies ever forced upon an American city to save it from bankruptcy.

“Draconian,” is how Standard & Poor’s municipal finance expert, Hyman C. Grossman, described the extraordinary measure.

Tax Base Undermined

Ecorse found itself in trouble because of the Midwest’s changing economy. Suppliers for auto factories closed up shop or moved away, its one steel mill teetered on the brink of closing, its housing stock aged along with its population, all helping to undermine the city’s tax base while a long series of inept politicians, many of them accused or convicted of corruption, occupied City Hall.

Burdened by $6 million in debts, beset by lawsuits seeking to collect unpaid utility bills, and paralyzed by bickering officials unable to agree on a budget, Ecorse, with a population of about 12,000, was stripped of its local government by a Michigan judge in December, 1986.

Authority and responsibility normally held by elected officials were handed to Louis H. Schimmel, a municipal finance expert who lives in a different county and never visited Ecorse before being named receiver. The chief judge of the Wayne County Circuit Court gave Schimmel total power to operate the city unhindered by politics, voters or history.

In 30 months, he has sharply lowered the cost of running Ecorse and almost wiped out the debt by almost wiping out government. He has cut the municipal work force of 140 almost in half and, more important, hired private companies to provide normal city services. And what he could not privatize was closed, sold or scaled back.

He even tried to cut out salaries for the mayor and the six city councilmen before learning such a step was prohibited by state law.

“There is something wrong . . . when you have one guy come in who’s almost like a dictator and take home rule away from people,” said Schimmel, who is also executive director of the Municipal Advisory Council of Michigan, a municipal bond evaluating service. “You can justify it . . . . when somebody is flagrantly abusing the system, which is what was going on here.”

“The receiver is the absolute chief executive officer,” said Mayor Larry B. Salisbury, who was elected after Schimmel was appointed. “The council, by court order, yielded all the power vested in them. The receiver doesn’t have to discuss what he’s going to do with anybody. But he’s a polite enough person that he does.”

Large, Small Cures

Polite, but tough. In the last 30 months, Schimmel has turned a chronically cash-short city into one that is living on much less than it is collecting. He’s done this in ways large and small, including:

--Firing 40 political appointees who, Schimmel said, “weren’t doing anything” and either eliminating or consolidating their jobs.

--Abolishing the department of public works, forcing 27 workers to retire early and selling the public works garage and all the heavy equipment. A private contractor was hired for snow removal, tree trimming, debris removal, weed cutting, street sweeping, water and sewer system maintenance and street, alley, and sidewalk repairs--saving Ecorse $1 million a year.

--Renegotiating contracts, including the rubbish collection pact, with a private company. Garbage pickup now costs the city $120,000 a year less.

--Installing new water meters throughout the city increasing revenues by $500,000 a year for a one-time $370,000 investment.

--Phasing out full-time firemen and replacing them with volunteer and part-time paid firemen.

--Closing a variety of public facilities, from the ice rink (built when there were 6,000 children in Ecorse schools compared to an enrollment of about 1,600 now) to the library, which costs $40,000 each year to operate, a minute portion of the city’s annual $6.5-million budget.

“The library costs too much for a city that has such a small tax base. There are loads of other libraries nearby Ecorse,” said Schimmel. “And they built the ice rink when they had lots of kids and it wasn’t a senior citizen community. There’s nobody who wants to ice skate now.”

Ecorse was once one of the richest communities in the industrial strip south of Detroit. “In the 1950s we had more money to spend per capita than almost any other city this size in America,” said Mayor Salisbury.

A major steel mill, salt mines and a shipyard where giant Great Lakes iron ore carriers were built all contributed to the city’s prosperity. The legendary Edmund Fitzgerald was the last ship launched in Ecorse and like the library, the freighter, which sank in Lake Superior in 1975 with all 29 crew members, is a symbol of what Ecorse was and is today.

Virtually all of its industry--and its tax base--is gone now except for the steel mill, which has been upgraded but employs thousands fewer workers than it did in the past.

The city’s population has slipped from 20,000 to 12,000. More than half of them are senior citizens living on fixed incomes in tract houses built after World War II for returning GI’s and factory workers. The town is divided evenly between blacks and ethnic whites and divided by a wide band of railroad tracks with blacks living largely to the west and whites to the east.

Ecorse is nestled in a strip of other equally small cities, some of which are also beginning to experience financial problems for some of the same reasons.

Although he has saved the city and believes that when he leaves later this year it will be only $1 million in the red and able to be out of debt within a year, Schimmel says in the end the city may fail anyway.

“I’m glad I did it once,” he said. “I think I’ve blazed a trail for others to follow.” But, he added, “I don’t think when a municipality gets in the kind of shape that Ecorse was in, to send someone like me in to bail it out does any good because now, when I leave, it is just going to fall apart again.”

Not everybody in Ecorse is pleased with Schimmel’s work. In fact, half the elected city council opposes his cost-cutting.

“Look man, I can’t go along with nothing he’s trying to do,” said James W. Parker Sr., a veteran Ecorse city councilman. “The man came into this town to destroy Ecorse, and he’s doing a damn good job.”

Schimmel said the city ought to be merged into another neighboring city. “Ecorse ought to disappear,” he said.

Michigan officials agree. They are working on legislation providing a formal mechanism for dissolving cities in the kind of fiscal trouble Ecorse was in at the end of 1986, in effect forcing them to merge with neighboring communities.