Michigan Governor Rick Snyder declared financial emergencies in Highland Park and Royal Oak Township, the first step toward possible appointment of emergency managers in the Detroit-area communities.

The towns have until Feb. 6 to request hearings on Snyder’s determination, according to a statement by the Michigan Department of Treasury. If no appeal is made, the communities could choose among a state-appointed emergency manager, a financial consent agreement, mediation with creditors or bankruptcy.

A state review team found Highland Park had $19.5 million in unpaid bills, of which $18.2 million is due to the Detroit water-and-sewer system. Highland Park lies within Detroit’s borders.

Royal Oak Township saw its year-end balance drop to a deficit of $298,983 in 2012 from a $200,324 surplus a year earlier, according to the Treasury Department.