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Michigan Gov. declares financial emergency in Allen Park, city on hook for belly-up movie studio

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City of Allen Park
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Governor Rick Snyder has declared a financial emergency in the city of Allen Park.

It could lead to a state-appointed manager running the city. A bad investment in a movie studio helped push the city to the edge of bankruptcy.

Allen Park officials hoped the studio would create jobs and revenue. Instead, the project tanked after Michigan scaled-back its generous film subsidies.
            
The city requested a state review, which found unpaid bills, missed pension fund payments, and a struggle to pay more than two million dollars in annual bond payments on the failed movie studio.
            
Terry Stanton is with the state Treasury.
 
“The city laid out a significant amount of money and sold bonds to finance that, and when the studio didn’t come to fruition, the city’s still, if you will, on the hook,” said Stanton.
 
This is the first time the governor has declared a city in financial crisis since the state’s emergency manager law was suspended pending a referendum in November. The governor acted under an older law that allows state takeovers, but gives managers fewer powers to deal with a fiscal crisis.
 
Allen Park officials have 10 days to request a hearing to challenge the governor’s finding of a financial emergency.
 
After that, the state’s Emergency Loan Board will decide the next steps.

Allen Park Mayor William Matakus said the city requested the review expecting PA 4 to still be in place and hoping the sweeping authority of an emergency manager could help the city dig out. He said he's not so sure the diminished authority of a financial manager is sufficient to fix the city's problems.

He says a decision on a hearing will be made Tuesday night at the city council meeting.

Rick Pluta is Senior Capitol Correspondent for the Michigan Public Radio Network. He has been covering Michigan’s Capitol, government, and politics since 1987.
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