Allen Park Mayor William Matakas (left) said at the June 11 city council meeting that the amended disclosure policies and procedures for municipal bonds might have prevented the city’s financial crisis with the movie studio bonds had it been in place, as City Administrator Mark Kibby listens.
By SUE SUCHYTA
Sunday Times Newspapers
ALLEN PARK – The city’s movie studio bond financial fiasco might have been averted if a motion approved by the City Council June 11 had been in place, Finance Director Robert Cady said.
The resolution approved Tuesday creates amended disclosure policies and procedures for municipal bonds for the city.
During the study session preceding the June 11 council meeting, Mayor William Matakas explained to council members and city officials in general terms that a signing page is handed to officials who must approve them, and sometimes they don’t see the entire document beforehand.
“There is every good chance that you probably never saw the document until they handed them,” Matakas said. “They don’t give you the whole document, so if you are not on the team, you don’t get to see the document. You get a signing page. The document is about 100 pages.”
“And the print is really small,” Cady added.
“I think any future mayors would be well-served to be at least sitting in and asking questions on the financial data that we are putting into the documents,” Matakas said, with the four mayoral candidates, currently council members, in the room.
Council members Angelo DeGiulio, Tina Gaworeki, Gail McLeod and Kevin Rourke are all running for Allen Park mayor. City Councilmen Harry Sisko and Larry Templin are not running for office.
Matakas recalled how former Mayor Gary Burkta and former City Administrator Eric Waidelich were charged with fraud in 2014 by the U.S. Securities and Exchange Commission for the failed movie studio project, which crippled the city with millions in bond debt.
The SEC claimed the two provided misleading information about the sale of $31 million in bonds in 2009 and 2010 to purchase a 104-acre site southeast of Southfield Road and the I-94 freeway. They projected that revenue from the site would pay off the bonds, but when plans were downsized to a less revenue-rich plan, and the city experienced a $2 million deficit in 2010, borrowers were not made aware of the changes.
In 2012 the state appointed an emergency manager to take over Allen Park, citing the failed Unity Studios project as a major cause of the city’s financial woes.
Cady said if city officials had received full disclosure, the past city council probably would not have approved the movie studio bond deal.
“What that says you have to have is a preliminary official statement, and you have to have an official statement, and both documents have to state what the bonds are for, and it has to state all the city’s financial information, so the reader gets a concise idea what it is about and how the city is going to repay it,” Cady said at the June 11 study session.
Matakas said at the meeting that the change was required of the city by the SEC because of the problems which occurred after the city bought the property for the ill-fated movie studio.
He also said wording which referred to the former emergency manager has been changed to refer to the mayor or finance director.
“It is important that the public always knows what the standing of the city’s financial statements are,” Matakas said. “That is the purpose of this disclosure.”
(Sue Suchyta can be reached at [email protected].)