The state's Local Government Commission is stepping in to take over the accounts and assume responsibility for Princeville's finances. Officials in the state treasurer's office say town leaders were warned of problems for two years.

 

Officials say Princeville is in danger of defaulting on a $310,000 loan to replace its water meters and has failed to comply with bookkeeping requirements.

 

The town was settled by freed slaves in 1865 and is one of America's oldest black-founded chartered towns. Allegations of mismanagement have been around for years. About 90 percent of the town was submerged under 20 feet of water from Hurricane Floyd in 1999.