(Corrects identity of Jase Bolger's spokesman to Ari Adler from Virgil Smith in 18th paragraph)

By Steve Neavling and Tom Hals

DETROIT/WILMINGTON, Del., Feb 15 (Reuters) - Wanted: A financial whiz with powers of persuasion, an acute political radar and thick skin, for the demanding assignment of taking over a major American city on the brink of bankruptcy.

That's what Michigan Governor Rick Snyder is likely looking for as he decides whether to appoint an emergency financial manager for the city of Detroit, according to restructuring experts and Michigan politicians.

Snyder revealed this week that he has a "short list" of candidates for the job. He still awaits a report from a team of advisers to decide whether Detroit needs an emergency manager, said spokeswoman Sara Wurfel, but is "talking to and looking for prospective qualified candidates."

It's a job few may want as it will probably involve decisions that could lead to further cuts in jobs and services in a city that has been in decline for a long time - with its high crime rate, abandoned buildings and many unlit streets.

Still, success could make the manager a star in the world of restructuring - especially given a number of other financially distressed cities in the United States which might have to seek a similar savior.

"When there is not enough money to go around, somebody is going to be disappointed. And that disappointment will be aimed at whoever is the poor devil that took the job," said Steve Miller, a top turnaround specialist with strong Michigan ties who has worked for automakers Ford Motor Co and Chrysler Group LLC, and parts maker Delphi Automotive Plc .

The ideal qualifications would be someone with both a business background and a sense of public service to do the job for little or no pay, said Miller, who is now non-executive chairman of insurer American International Group, which was bailed out by the U.S. government during the financial crisis.

Scott Eisenberg, managing partner of corporate restructuring firm Amherst Partners and a past president of the Detroit chapter of the Turnaround Management Association, goes even further, saying "a magician" is needed for the job.

"You have a city council that doesn't want to lose control," Eisenberg said. "Who knows how much the mayor will go along. This will be filled with legal challenges over what you can and can't do. Everything the person does that is controversial will be challenged in court."

Snyder isn't talking about the candidates on his short-list, but politicians and restructuring experts say he needs to take their race into account. Eighty-three percent of Detroit's population is black and Mayor Dave Bing and city council members are all African American.

"To forcibly put a Caucasian in that position could have a very negative effect on the workforce, the voting populace and the people he will have to work with," said State Senator Virgil Smith, a Detroit Democrat, who is black.


A HISTORY-MAKING BANKRUPTCY

No large American city in recent history has seen a decline like Detroit. Once the fifth largest city in America, it is now only the 18th biggest, according to the latest population figures. With the exodus has come declines in the tax base and revenue, the flight of jobs, rising numbers of poor, increased crime and a city saddled with the infrastructure and labor costs of a bygone era.

Urban policy experts across the country are closely watching the struggles of Detroit, which could be an example for a number of cities still trying to recover from the housing bust and financial crisis, at a time when their pension and healthcare costs are soaring.

The emergency financial manager could choose to recommend that Detroit files for bankruptcy, although the decision ultimately rests with a board composed of people appointed by Snyder.

If Detroit files for Chapter 9 bankruptcy, its outstanding rated debt of $8.2 billion would make it the largest municipal bankruptcy in U.S. history, almost double the 2011 filing by Alabama's Jefferson County.

Other American cities have gone to the edge of insolvency including New York in 1975, Cleveland in 1978 and Philadelphia in 1991. But none of them filed Chapter 9 municipal bankruptcy.

Republican state lawmakers, who hold majorities in the legislature, said Snyder has not sought their counsel on the appointment of an emergency manager. But in interviews this week there was a virtual consensus among Michigan lawmakers in both parties that an emergency manager is likely.

"Every day that goes by and Detroit does not take action to save itself limits the governor's options," said Ari Adler, spokesman for Michigan's Republican House Speaker Jase Bolger.


NO POPULARITY CONTEST

Snyder has kept the names on his short list within a small circle of advisers, saying only that few people have the financial knowledge and people skills to do the job.

So far, several of the names swirling around Detroit political circles have said they are not in the running.

The Detroit News reported on Sunday that former Washington, D.C. mayor Anthony Williams, now in private law practice, had turned down the job. Repeated efforts to contact Williams for comment were not successful.

Another former politician whose name has surfaced in the speculation said he was not interested in the job.

"I am not a candidate for the emergency manager of Detroit," Thurbert Baker, a former attorney general of the state of Georgia now practicing law in Atlanta and Washington, told Reuters in an email.

If anyone knows the challenges a Detroit financial manager would face, it could be Robert Bobb, who from 2009 to 2012 served as the state-appointed emergency financial manager for Detroit Public Schools.

Bobb closed dozens of schools, outsourced school services, increased class sizes and laid off hundreds of teachers.

"If you are there for a popularity contest, then cast that aside," said Bobb, who said he had not been contacted about the Detroit emergency manager position.

While some described it as the job from hell, others said it could be a huge opportunity for someone to become the leading municipal turnaround specialist in the nation.

"It's a bit amorphous as to what constitutes success in this project, but there are a lot of careers built on one successful job," said Tim Skillman, a managing director in the Los Angeles office of turnaround firm Gavin/Solmonese. (Additional reporting by Karen Pierog and James Kelleher in Chicago, Paritosh Bansal, Jessica Toonkel and Nicholas Brown in New York, and Dawson Bell in Lansing, Michigan; Writing by Greg McCune; Editing by Mary Milliken and Tim Dobbyn)

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    <strong>Credit Rating:</strong> Ba2 <strong>2011 general fund revenues:</strong> $22.4 million <strong>2011 general fund debt:</strong> $13.2 million <strong>Median income:</strong> $44,156 In December 2011, the Greater Wenatchee Public Facilities District defaulted on $42 million of debt associated with the Town Toyota Center, a multi-purpose arena. In order to help pay off that debt, the city imposed a 0.2 percent regional sales tax in July 2012. Bonds also went on sale in September to further alleviate the debt. Despite these plans, Moody’s noted in its May downgrade that any long-term plan to pay off the city’s debt “would further stress city finances … operational flexibility and ability to invest in infrastructure.” Moody’s also pointed out the city faces financial risk associated with litigation following the arena’s default. <a href="http://247wallst.com/2012/10/25/thirteen-american-cities-going-broke/#ixzz2ARQ343N3">Read more at 24/7 Wall St. </a>

  • 12. Le Center, Minn.

    <strong>Credit Rating:</strong> Ba2 <strong>2011 general fund revenues:</strong> $1.1 million <strong>2011 general fund debt:</strong> $8.3 million <strong>Median income:</strong> $41,481 On Feb. 1, Moody’s downgraded Le Center, Minnesota, from A1 to Ba2, with a negative long-term outlook. This small town, located in the south central part of the state, had to borrow to pay debt due in February 2012 , and received an extension on loan payments due December 2011. Besides the payment deferral, Moody’s cites the city’s very small tax base and “weak management practices” to explain the low rating. City management used unrealistic budgeting. In particular, it overestimated the amount of cash it would bring in from a new real estate project. The ratings agency projects that if these trends continue, the city will remain dependent on costly short-term loans to pay its debts. <a href="http://247wallst.com/2012/10/25/thirteen-american-cities-going-broke/#ixzz2ARQ343N3">Read more at 24/7 Wall St. </a>

  • 11. Strafford County, N.H.

    <strong>Credit Rating:</strong> Ba2 <strong>2011 general fund revenues:</strong> $52.8 million <strong>2011 general fund debt:</strong> $19.9 million <strong>Median income:</strong> $57,809 Strafford County’s financial state improved in fiscal 2011, when it eliminated a general fund deficit of $7.2 million from fiscal 2010 and ran a small surplus. Still, because of its tight budget, the county has had to regularly borrow money to cover short-term cash needs. Moody’s described Strafford’s ability to reduce its future borrowingas a “key factor” in determining its poor rating. According to Moody’s, Strafford County has no plans to issue any more long-term debt, and will shed an estimated 83.8% of its existing debt within 10 years. Moody’s altered its outlook from last year for the county from “negative” to “stable.” <a href="http://247wallst.com/2012/10/25/thirteen-american-cities-going-broke/#ixzz2ARQ343N3">Read more at 24/7 Wall St. </a>

  • 10. Menasha, Wis.

    <strong>Credit Rating:</strong> Ba2 <strong>2011 general fund revenues:</strong> $16.2 million <strong>2011 general fund debt:</strong> $43.4 million <strong>Median income:</strong> $45,897 In 2007, the city of Menasha defaulted on bonds it had issued to fund a steam plant. The utility operation closed down several years later. The fallout from this venture has left the city permanently in the red. As of 2011, it brought in just over $16 million in general fund revenue, but had $43.4 million in outstanding general fund debt. In 2010, nearly 20 percent of the city’s budget was devoted to paying off debt, which was the second-largest expense on the balance sheet in 2010. The city recently repossessed the abandoned steam plant, and is currently deciding whether to repurpose it or demolish it for scrap. <a href="http://247wallst.com/2012/10/25/thirteen-american-cities-going-broke/#ixzz2ARQ343N3">Read more at 24/7 Wall St. </a>

  • 9. Harrison, N.J.

    <strong>Credit Rating:</strong> Ba2 <strong>2011 general fund revenues:</strong> $36.8 million <strong>2011 general fund debt:</strong> $113.8 million <strong>Median income:</strong> $51,193 In 2006, Harrison guaranteed $39.4 million in bonds to buy land for the Red Bull Arena, the stadium used by the New York Red Bulls. The deal has not been profitable for Harrison. Condominium developments, expected to help pay off the stadium, were not finished as of last June. Additionally, for several years the  Red Bulls refused to pay property taxes. In July, the franchise paid the town $5.6 million in overdue taxes after a judge ruled the arena was taxable. In late 2011 the state of New Jersey created a $1 million reserve fund to help pay off the city’s debt. Since last October, the town’s credit rating has improved from Ba3 with a negative outlook to Ba2 with a positive outlook. <a href="http://247wallst.com/2012/10/25/thirteen-american-cities-going-broke/#ixzz2ARQ343N3">Read more at 24/7 Wall St. </a>

  • 8. Salem, N.J.

    <strong>Credit Rating:</strong> Ba3 <strong>2011 general fund revenues:</strong> $8.0 million <strong>2011 general fund debt:</strong> $36.0 million <strong>Median income:</strong> $25,682 In 2007, Salem guaranteed bonds to finance the construction of the Finlaw State Office Building. The project was a disaster. There were construction delays and the state leased the building for just 20 years, while the town will have debt repayments for 30 years. Lease revenue was not high enough to cover both maintenance fees and debt payments. As of May, the city had already spent all but $772,000 of the $1.8 million set aside in reserves to cover shortfalls in revenue from the project. If this fund is exhausted, the city, and possibly the taxpayers, will be on the hook for any debt payments that lease revenue does not cover. Moody’s describes the deal as “a liability which is disproportionate to the city’s size and ability to pay.” <a href="http://247wallst.com/2012/10/25/thirteen-american-cities-going-broke/#ixzz2ARQ343N3">Read more at 24/7 Wall St. </a>

  • 7. Riverdale, Ill.

    <strong>Credit Rating:</strong> B2 <strong>2011 general fund revenues:</strong> $12.9 million <strong>2011 general fund debt:</strong> $7.0 million <strong>Median income:</strong> $42,690 Riverdale, a community of under 14,000 people about 20 minutes south of downtown Chicago, had its credit rating downgraded in October due to a growing deficit in its general operating fund. The village is expected to report a deficit of $1.5 million for fiscal 2012, bringing the total general fund balance to -$1.95 million, or 15.8 percent of projected revenue. Riverdale is also underfunding its four pension plans. Moody’s said Riverdale’s coffers are hurting due to “declining full valuation, taxpayer concentration, elevated unemployment and a net population loss.” According to the U.S. Census, the village population fell 10 percent from 2000 to 2010, while per capita income was only 61 percent of the U.S. average income. <a href="http://247wallst.com/2012/10/25/thirteen-american-cities-going-broke/#ixzz2ARQ343N3">Read more at 24/7 Wall St. </a>

  • 6. Woonsocket, R.I. 

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  • 5. Central Falls, R.I.

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  • 4. Detroit, Mich.

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  • 3. Pontiac, Mich.

    <strong>Credit Rating:</strong> Caa1 <strong>2011 general fund revenues:</strong> $36.2 million <strong>2011 general fund debt:</strong> $86.7 million <strong>Median income:</strong> $30,753 Pontiac is the only city on this list to have a speculative rating predating the recession — since March 2006. Pontiac’s financial troubles, mostly the result of its reliance on the declining automotive industry, have been evident for years. As of June 2012, the city’s unemployment rate was a whopping 22.2 percent, or about 2.5 times the national rate. The city’s tax revenue continued to dwindle as its population diminished — the population of 59,515 as of the 2010 U.S. Census was 10.3% lower than in 2000. During 2012 alone, the city outsourced its police force to Oakland County and its fire department to Waterford township. Despite these moves, Moody’s projects that the city will close out fiscal 2012 with a deficit of $8.4 million due to retiree healthcare obligations and debt service expenditures. And if Pontiac doesn’t make reforms in regards to health care and debt service expenses, the deficit could rise to $14 million by the end of fiscal 2013. <a href="http://247wallst.com/2012/10/25/thirteen-american-cities-going-broke/#ixzz2ARQ343N3">Read more at 24/7 Wall St. </a>

  • 2. Jefferson County, Ala.

    <strong>Credit Rating:</strong> Caa3 <strong>2011 general fund revenues:</strong> $311.1 million <strong>2011 general fund debt:</strong> $1,141.3 million <strong>Median income:</strong> $45,244 In November 2011, Jefferson County, Alabama, filed for the largest municipal bankruptcy in U.S. history in terms of amount owed after county leaders and investors couldn’t reach agreements to refinance $3.1 billion in sewer bonds. The bonds have been in default since 2008. The county has continued to pay school and special tax bonds while in bankruptcy, although its sewer bonds remained in default. Moody’s placed a negative outlook for the bonds because “losses to bondholders once bankruptcy proceedings conclude could exceed the levels implied by the current ratings.” <a href="http://247wallst.com/2012/10/25/thirteen-american-cities-going-broke/#ixzz2ARQ343N3">Read more at 24/7 Wall St. </a>

  • 1. Stockton, Calif.

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