The Harvey City Council voted unanimously to apply for a rare status designating the city financially distressed at a contentious special city council meeting Thursday night, at the urging of Mayor Christopher Clark.
Clark also announced an imminent partial shutdown of city government to deal with the city’s financial situation.
The Illinois Financially Distressed City Law gives the state broad authority to intervene in a city’s financial affairs in order to “provide a secure financial basis for the continued operation of a financially distressed city.” The law has been invoked once before, when East St. Louis was given the designation in 1990.
Harvey’s finances have been turbulent for years, and most of the meeting was taken up by a 90-minute presentation by Clark that laid the blame squarely at the feet of the previous mayor, Eric Kellogg, who led the city from 2003 to 2019. Kellogg’s administration was marked by multiple high-profile scandals, including the disappearance of millions in bond money intended for hotel construction, the diversion of water bills owed to the city of Chicago, and a yearslong strip club extortion scheme.
Clark argued during the meeting that due to the overwhelming debts and legal obligations the chain of scandals left Harvey with, combined with chronically low tax collection rates, applying for financially distressed status and submitting to direct state oversight was the only way remaining to remedy the city’s dire financial situation.
“We’ve been riding on heat for quite some time, and you know how you get when you’re riding on heat, and you’re trying to figure out, okay, am I finally on fumes? Or when is the car going to just stop?” Clark said. “The amount that’s lost by the defaulting property taxpayers, that 25 to 27 million, puts us in a hole so deep that we can’t even meet our obligations.”
Illinois does not otherwise have a process in place to allow financially distressed municipalities to declare bankruptcy. Earlier this year, Harvey laid off 10% of its city workforce in an effort to stabilize the city’s finances.
“We don’t have what all the other municipalities have,” Clark said. “And that’s what we’re trying to get to. That’s what we need to get to.”
The ordinance’s passage is only the beginning of the process to declare the city financially distressed. The city has now appealed to the state to determine whether Harvey qualifies for the status, which requires the city to be in the top 5% of tax rates and the bottom 5% of tax collection.
The mayor also said that he intended to exercise his powers to temporarily shut the city down “in case of emergency,” with the emergency being a lack of sufficient revenue to continue operating. He did not give an exact timeline as to when city services would be reduced or shut down, or details on which services, if any, would cease to function.
“The only thing that I can give you at this particular point in time is ‘soon,’ because we’re still figuring out everything as far as employees are concerned, as far as our departments are concerned,” Clark said.
Clark’s critics saw his presentation as an attempt to avoid accountability for alleged financial mismanagement by his own administration.
“We need to start (talking about), since we done took over this administration, the unnecessary fees we’ve incurred. The lawsuits we’ve incurred. The people we done laid on off and didn’t lay off nobody from city hall, but we laid off our street workers and our police department,” said 4th Ward Alderperson Tracy Key.
2nd Ward Alderperson Colby Chapman, the mayor’s most vocal critic on the City Council, called for Clark’s resignation during her comment.
“I just can’t even believe the slideshow presentation. No bank statements, no nothing. Just straight blasphemy about the previous administration,” Chapman said after the meeting. “We already know that. I called for his immediate resignation because it’s insanity to continue to do the same thing and expect different results.”
Chapman said there should have been more detailed information supplied about the city’s current financial state, as well as more discussion of the potential negative effects of declaring the city financially distressed.
“We should’ve walked away with a handout. We should’ve had something that we can look at and have a reflection point to, right? That’s why they make banking statements,” Chapman said. “You can only think, what are we hiding?”
Residents were not given a chance to share their thoughts on the mayor’s presentation during the meeting, as the agenda was amended at the start of the meeting to move public comment ahead of the presentation.
One of the residents who offered comment, Amanda Askew, expressed frustration at the rearranged agenda. Askew said she attends the city’s finance committee meetings regularly, and the possibility of invoking the Financially Distressed City Law had not previously been discussed, despite the significance of the move.
“Here we are at the eleventh hour screaming for help, when, what’s the purpose of having a finance committee if we’re not discussing this? This Financially Distressed City Law didn’t happen overnight. This has been years of mismanagement. And what are you all meeting for every quarter if you’re not going to address the elephant in the room?” Askew said. “Whatever you’re going to say in the presentation you’re going to have after this, it really doesn’t mean anything, because we never should’ve been to this point to begin with.”
One resident was escorted out by police for interrupting during the comments of the 5th Ward Alderperson Dominique Randle-El, who was defending the mayor.
“He only threw one person out,” said Ryan Sinwelski, who runs the Harvey Historical Society. “That’s really good, for the mayor.”
Harvey Public Library District trustee Chapelle Hooks said the blame for Harvey’s financial struggles doesn’t start with Kellogg or with Clark. She said it dates back to the 1970s, with misbehaviour by James Haines, the last in an unbroken line of white Harvey mayors, as the city’s demographics were shifting.
“We were purposely put in a decline,” Hooks said. “I don’t think that (the city is) coming out. Because everybody is still being greedy, and they’re taking, and they’re steady taking, and they’re steady taking. Nobody is trying to come up out of it, they steady trying to find slicker ways of getting what they want to get.”
Chapman said despite her opposition to the mayor and her problems with the way the process was handled, she voted in favor of the ordinance because she hopes state oversight will bring transparency she said is long overdue.
“I voted in favor of it because I believe that the state can really provide financial oversight in a way that I’ve never historically seen with the city of Harvey,” Chapman said. “We got here because they’re not answering any questions.”
elewis@chicagotribune.com
