2011 (Out of the Frying Pan)

TOCK... **** [Clock Stops?]

*-UPDATE 2:13: I have a rinky-dink liveblog of the afternoon session in the comments underleaf, and this just came in over the wire:


**-UPDATE 3:24:


Starting to think he's not happy about how things went down and is not coming. He was cooler than lukewarm towards this idea from its inception.

***-UPDATE 3:47: Striking that:

http://plixi.com/p/66967966

****-UPDATE 3:57: Vetoes overriden 9-0. Meeting recessed until 11:00 PM, apparently because everyone is nervous for more emergency last-minute communications from actuaries, state officials, or persons better at math.

As Ball Drops, Council to Fix Takeover Avoision Measure Again. [**-UPDATES X2]

Hie thee to 2 Political Junkies, which is carrying a lengthy process story...

The hold up -- the reason why Council must meet again tomorrow -- is that upon further reflection by everyone (PERC, ACT 47, ICA) it was decided that the City must dedicate $735,680,000 over 31 years instead of $414.7 million (the difference between a 5% and 8% discount rate). (2PJs)

The P-G update linked to therein places a different emphasis on who first noticed there was a maths issue:

But the city's actuaries, brought in this morning to review the plan, thought otherwise, firefighters union President Joe King, a city pension board member, said. (P-G, Joe Smydo)

According to Maria, it's all going to be finished at 11:00 PM tomorrow. I had a strong feeling all along it was worthwhile to keep running the countdown widget to the right.

MORE: You're giving Null Space skin failure: LINK.

*-UPDATE: Now this is innovative -- in an e-mail labeled "RELEASE -- PENSION PLAN TO STAY IN CITY", the Council President's office forwards a PDF document of a preemptive, anticipatory veto override of a bill that hasn't been passed (written?) yet, signed by six members of Council (Dowd's not in town).

**-UPDATE, THE DEUX: In a sneak-preview of an article running tomorrow...

Responded Doven: "You don't need to be an economics professor from CMU to understand that council's latest three-ring circus act puts our city's financial future in great distress. Council's actions will put a giant hole in the city's budget next year and for each and every year after that for 30 years. And our pension fund will still face serious funding obstacles, even with council's action to drastically increase parking rates." (Trib, Bill Vidonic)

Well, then what is this? I mean, really? All of the concerns about the near-term solvency of the fund, the holes in future annual budgets, the inefficiency of investing this funding stream in this way and the uncertainty of it being judged sufficient yet being utterly intractable really do make sense. And clearly it's important for the Mayor to signal his disapproval by vetoing all this. So then why not do what's available to put a stop to it? Enough has changed.

Thursday: Politics and Realities

Some links to some stories:

"It seems like everybody has squared off and they aren't really communicating anymore," state Sen. Jim Ferlo, D-Highland Park, said Wednesday. "What people feel out in the community is this sense of dysfunction." (P-G, Lord, O'Toole & Smydo)

One thing making yesterday's public meeting necessarily awkward was the continued entrenchment of positions -- Council's majority still not open to sharing any assets with the private sector, and Mayor Ravenstahl of the conviction that no pensions strategy not involving an assets deal could possibly be worthwhile; that it would be like trying to bail out the Titanic with a Styrofoam cup.

Another factor was Council's continued bilious, ill-concealed frustration. At one point Councilman Peduto openly theorized that the administration was now trying to engineer a state takeover in order to place the determination to privatize local parking assets before an incoming, privatization-friendly Republican state legislature.

And yet a third factor, perhaps at the very forefront: many participants and observers cited a pervasive sense of "bizarreness". Others spoke of a feeling like "living in an alternate universe." Quite aside from the whole "cooperative veto" thing, something about the conversation with the Mayor was like he was participating from inside an aquarium, or wearing a wire, or on careful alert not to be tricked into saying his name backwards. It was not a subtle thing.

And we're moving...

"It's still unclear to me how you can make use of future revenue streams to meet your unfunded pension obligations up front," said state Rep. Mike Turzai, R-Bradford Woods, the incoming House majority leader. (Trib, Bill Vidonic)

One would think that's not a good sign as far as dodging the takeover, certainly not for very long -- but apparently for now the decision on how to calculate assets is in the hands of the state Public Employee Retirement Commission, whose director now seems to be flashing the thumbs up signal. One hopes the City will not get tripped up in a game of Red light / Green light.

"Right now, there's only enough money in the fund to pay our obligations for the next three or four years," Ravenstahl said. (P-G, Joe Smydo)

That -- what? That is a bracing shot of frankness out of nowhere! What? Holy cheese!

Best to change the subject....

Downtown's only strip club is proposing a $1 million expansion.

Blush, located on Ninth Street near the Pittsburgh School for the Creative and Performing Arts, is "looking to significantly upgrade the facilities and operations of the club," said Jonathan Kamin, attorney for owner Albert Bortz. (P-G, Mark Belko)

I still think this city-wide deluge of investment from the adult entertainment industry is indicative of some species of economic good news -- all happening without a sliver of public subsidy! But not that there's anything right with that.

Takeover Dodge Awaiting Finishing Touches

Council at first voted 8-0 to divert the entire Local Services Tax or "commuter tax" of about $13 million a year for 30 years into the pension fund, in a bid to avert the takeover. The Mayor, not liking the idea, pledged to veto it promptly, so that his veto might be promptly overridden and Council's will be done before the deadline.

Then suddenly specific legal covenants were discovered upon revenues collected from the LST. So now they're instead going to pledge $13 million annually from the Parking Tax (which also ordinarily becomes a part of the city's general budget) along with cashing out the $45 million Fund-No-Longer-In-The-Nature-Of-An-Irrevocable-Trust-For-Debt-Service-Reduction. I don't recall the Mayor promising anything specific about what he'd do or not do with this "new" wrinkle, and there appears still to be some concerns over whether the present value of this pledged revenue will ultimately be calculated as sufficient to achieve 50% funding when the figures are calculated on both ends. But politically, we seem close to settling on this course of action.

APPLICABLE TROPES: It Was With You All Along, Too Spicy For Yog Sothoth

On Governing by Hearth Wisdom

Today once again, Mayor Ravenstahl is being fetched, clapped in irons and hauled before the Council, so that he might discuss with them -- oh I don't know, the forecast for Sunday's Winter Classic.

Quickly right now I simply have to share with you my favorite exchange from yesterday's meeting. I'm not trying to embarrass anyone with this selection, and I don't think that I am. It's just my favorite for so many reasons. It works as a very belated closing argument, or as Jerry Springer's Final Thought, or on so many other levels.

We join Councilman Bruce Kraus's second round of questions; he has arrayed before him Controller Michael Lamb, council Budget Director Bill Urbanic, city Finance Director Scott Kunka and city Assistant Finance Director Cathy Qureshi. Kraus and Kunka have been jawboning at each other, as you do...

Kraus: And Ms. Qureshi's chomping at the bit here, and I don't mean to be disrespectful of you -- we should have included you from the beginning. Because I value your opinion and you're here for a reason. And I'm going to formulate an opinion based on the four different versions that I'm hearing here today. But I damn well guarantee you my decisions going to be based on making sure our obligations are met to our pensioners, and we are going to meet those obligations. That is the sole focus of this conversation. That's what we're going to accomplish here today. No matter what. However, in terms of parking and pensions being tied together -- I didn't offer that up from day one. That clearly was the will of the Mayor's office. That was the wishes, that these be co-joined.

Kunka: That was something completely different though.

Kraus: Okay, but -- and clearly that's where we are six, eight, 10 months later now so. And I apologize, we'd like very much if you would, Cathy, to weigh in on this conversation and offer up your perspective.

Qureshi: Sure, um. If it [slightly inaudible] state takeover, I hear everybody saying that, but I certainly haven't heard anything from McAneny or anybody yet. If there was some statement this could work, that's a good thing. But there are some serious concerns about the liquidity of the fund -- and that's something that we should, you know, as we work toward, we should not forget that we have 300 years left of payments. We can't -- on paper we can get to $565 million or 50% funded, but our real money is still what it is. And so all the interest earnings are only going to be based on the real money -- and presumably the negative cash flow concerns will still all exist -- and we'll get less and less percent funded, and become less and less liquid.

Kraus: But what was virtually offered up to this Council for consideration did not solve the inherent problems with the pension system either...

Kunka: It did!

Kraus: If I may -- thank you. It didn't inherently solve the problems.

Qureshi: It didn't solve them, it came a lot closer. Put in several hundred million dollars, which you can get interest on...

Kraus: Listen, we're projecting about $287 million...

Qureshi: Not -- you can't get interest on it.

Kunka: It really is a paper transaction, it's not a real asset to the fund.

Kraus: Having said that, um. Um. What I am, uh (oh god) what I am charged with accomplishing here today, it is to avoid the state takeover. I don't believe the first plan helped to inherently solve what the pension problem was. And yet there's a strong will on this Council to make sure reform does take place. We don't have but 2 or 3 days, but I guarantee that's going to be a topic of this Council clearly in the next year, to ensure reform. But um, on the plus side, of this agreement as opposed to the lease agreement, is that: we do not see borrowing of money, we do not see us paying interest, and we do not see us losing physical assets. To investment bankers. On that alone -- we avert state takeover, we ensure our pension obligations to our pensioners, we ensure that public assets remain public, we incur no debt and interest. Somebody better convince me why that's not a viable plan and why I shouldn't be saying yes to that today. Sounds pretty good to me!

Urbanic: It -- it is a temporary solution. It is simply to avoid state takeover. As Mr. Kunka and Ms. Qureshi said, it does not solve that problem. Uh, however, regarding cash flow issues: if we put in approximately between, um, between employee contributions, $50 million; and additional revenue of approximately $10 million, you get in the 60's; um, we have approximately $300 million in the fund; if the fund earns a conservative 6% as it would in PMRS we should be able to receive about $20 million additional -- $18 to $20 million additional in interest payment; um, that is if conservatively, the market does okay next year, even with conservative investment, we should be able to at least float even, and not lose money in the fund.

And then Kunka took issue with the optimism of Urbanic's "rosy" assessment. And that's where we're at.

Pittsburgh's body politic has "advanced" to the point where we're mostly kneeling before each others' favored golden idols -- No new debt! No investment bankers! No state takeover! -- but somehow, that to which everybody pays lip service as being most important -- the health of the pensioners' retirement fund and the seriousness of our long-term commitment to it -- keeps winding up rather stubbornly in the back seat by comparison.

TICK...

Mayor Inscrutably Unenthusiastic Towards Today's Plan, and Perhaps Technically Has Rebuffed It.

This is blasphemy! This is madness!

Wait, no. WDUQ is reporting that though Mayor Ravenstahl won't sign the measure, he won't veto it either -- thus the law-parts would become law. He says the Parking Authority would have to commission a study before it could raise rates(*). He says he doesn't like the plan because it relies on taxpayers as a backstop, because it won't solve the pension crisis and because there's no guarantee the state won't take over anyway. (On that first point, Council's plan states that should parking revenue fail to meet the required total in any year, the city's general fund would be tapped to make up the difference. No idea how likely or how significant that would be.)


Hmm ... well, if he wants zero credit for holding off the state takeover then all the blame if something turns sour later on, then this is the right play call. Unless there's more to come.

(*) - That ... that could be a death knell.

The End Is Near...

... I mean, like, in a good way?

*-UPDATE, POST-GAME: "Mr. Lamb said revenues from increased garage and meter rates could total nearly $900 million over 30 years," provides the P-G, along with "Council President Darlene Harris and members Patrick Dowd, Bill Peduto, Natalia Rudiak and Doug Shields said they've received the state's go-ahead..." (See also WTAE, Janelle Hall)

So this would be akin to a voucher good for approaching $30 million a year towards our pension obligations ... does anyone know what would our annual MMO's look like under this plan? Because the reason to avoid the takeover is to prevent our annual payments from skyrocketing too badly -- seems to me this would first need to be judged on that basis. (Also have to account for continued facilities maintenance and operations at the Parking Authority w/o access to that revenue.)

Original post follows:

... or that is the idea. Big show tomorrow after much
seclusion. They've been working like cats and dogs.

And wait, is the Controller a presenter or an
invitee? It's clear the Mayor is an invitee but...

MORE / UPDATE:

Ah, the P-G's Joe Smydo lets the genie out of the bag: "Rather, one official said, it would call for the city and the parking authority to pledge revenue from parking rate increases to the pension fund for about 30 years, an infusion of value that could be enough to satisfy the state."

ANALYSIS: Council floated something a lot like this a while ago, but kept holding it without much further discussion. One drawback to the idea would seem to be that you probably can neither invest nor accrue interest from pledged future revenue -- but it's better than nothing. Another drawback is at least some assumption of risk -- but life is risk, no? Considering where we are in the conversation, the only salient concern might be whether or not the state legislature plays ball and will acknowledge a municipally-legislated I.O.U. as a paid account.

The Trib's Bill Vidonic adds: "Mayoral spokeswoman Joanna Doven said Ravenstahl hadn't seen specific details on the plan."

Missed this: the Allegheny Institute provides a superlative and concise backgrounder, for its first two and a half paragraphs. Then they veer into a polemic which is in part reasoning, in part inoperative bluster, and in part a discomforting echo of the same cognitive dissonance over which Null Space has been getting queasy.

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More ... Merry Christmas & Happy Holidays!

The Artists: Hall and Oates

The origin: Bobby Helms (1957)

Thursday: Anatomy of a Clusterfrack

Yesterday's Post-Gazette article did a pretty good job summing up the gist of Tuesday's marathon 7-hour City Council meeting, marking-up the city's 2011 annual budget.

But the one critically important feature left unwritten was:

Voting for the amendments were Mrs. Harris, Bruce Kraus, Bill Peduto, Ms. Rudiak and Mr. Shields. Voting against them were... (P-G, Joe Smydo)

Those five members were the five consistently least compromising in terms of entertaining any permutation of Mayor Ravenstahl's parking deal as a solution to the city's pension problem. They were also the same five who voted at the beginning of the year to elect Councilwoman Darlene Harris as the body's president over Councilwoman Theresa Smith. The no-votes were in the opposite camp on both scores.

So at least 2010 has a lovely matching pair of bookends.

What occurred in those several dozen budget amendments can be accurately described as providing neighborhood groups and initiatives (in those five members' districts) with the critical funding necessary to do important work that had been deferred for years and years, often despite repeated assurances: community and recreation centers, senior centers, youth programs, business district improvements, neighborhood master plans, and blight removal.

All of that can also be just as accurately described as pet projects comprising "reelection insurance" to those five Council members who are likely to be challenged by the assembled forces of mayoral allies, the city and county Democratic party, and any labor groups and other constituencies outraged over the city's failure to stave off a state takeover. Of course, along with reelection insurance comes the camaraderie of victors divvying up hard-earned spoils.

During deliberations, viewers literally heard "Won't somebody please think of the children?" tearfully employed on multiple occasions. And the story of each individual amendment, taken in isolation, was 100% legitimate on that very basis; in some cases these groups had been promised very humble forms of civic support since the Caliguiri administration, and had simply fallen on the wrong side of Act 47 cuts or mayoral political whims past and present. Yet taken together and in context, the many amendments were just as much a textbook example of pet projects being allocated in those districts whose political representatives are holding a slim but surprisingly firm majority on the Council opposing this mayor.

Flip sides of the same coin.

##

The next stage of this particular mini-drama involves the mayor's line-item veto -- one drawback of Council having passed all the mark-ups by only that 5-4 margin.

Now, budget hawks of Pittsburgh take heart: none of the items in those amendments would actually swell the size of the city's gross annual expenditures. It was all paid for with matching cuts elsewhere in the budget.

In several cases, the trade-offs made common sense -- the cost of a specific named demolition project was taken out of the city's yearly allocation for building demolitions, for example. But in what seemed like a whole lot of cases -- particularly the community development projects -- the allocation came out of one of several accounts in the Urban Redevelopment Authority (URA). Even "personnel" in at least one case.

This mayor, as all Pittsburgh mayors, is fond of his URA.

So Mayor Ravenstahl could veto all the amendments, which might bring with it the collateral PR advantage of being able to say he "acted on principle" -- but in addition to throwing gasoline on our present civic inferno, these vetoes would not necessarily restore funds to his own submitted line-items. It might just take the money out of the spending budget on both ends and in entirety, if Council doesn't eventually allocate it towards something -- and government oughtn't quite be allowed to grind to a standstill.

Or he could choose to not veto any of them -- perhaps cooling intergovernmental relations a titch -- and then he could hand over the keys to the mayor's office while he's at it. So we're pretty likely to see a Solomonic splitting of the vetoes somewhere around 50% of the group, although with only a modest reduction in outrage and further drama.

##

All of which is to put off discussion of the fact that we're 9 days from the state pensions takeover deadline and despite the furious work and alarmed advocacy of various civic parties, we don't seem to be any closer to a break.

Council's majority bloc has most recently demonstrated its solidarity against any form of business deal involving the LAZ and JPMorgan ownership group (which is the only one we can deal with if we're even going to pretend to honor the proper process for these things before the deadline). So in tennis terms you might say it's ad-Harris.

In any consideration of what the mayor's next move ought to be, one needs to keep a few facts in mind:

1) The "Council-Controller plan" was kept a state secret for the better part of a year, under a fairly flimsy pretense of its advocates being "cooperative", while the Mayor's plan marinated in in full public scrutiny as one plan that would definitely raise parking rates sky-high.

2) The very day the Council-Controller plan was unveiled to the public, six (6) members of Council unloaded fire on the mayor's parking plan and on Mayor Ravenstahl himself in the loudest, most alarming, most vicious, least walkable-back way possible, while the mayor was off the continent, and demanded his plan be erased from consideration prior to discussion of their own.

3) Upon returning to Pittsburgh, the mayor did what anyone in that situation would be expected to do, and vilified the stuffing out of the Council-Controller plan right back in return.

4) Other than the Council-Controller plan, all of the other ideas floated by the Council majority are pretty goofy. *-CLARIFICATION / UPDATE: Or sound pretty goofy. You know.

5) In the ensuing months, the mayor's plan was modified in several ways, bringing the rates way down to Earth (at the cost of reducing the payoff) and even, in one modification, actually taking many of the "public assets" off the table so Council could do its Council-Controller thing. So as I see it, although neither faction deserves to win the Nobel Prize in Compromise, the mayor's side at least merits a table at the reception ceremony more so than the Harris majority.

Now, what can I say. Very little.

In 20-20 hindsight, the smart play for the Mayor might have been to fight for the lease deal through Thanksgiving, and then find some pretense for giving in, gaining a say in Council's vision, and declaring a victory. I for one never anticipated that five Council members would actually, at the end of all things, prefer the state takeover to a less-preferable but cleanly viable solution.

In 40-40 hindsight, the optimal play for the Mayor might have been to even more assertively explain his case for his parking deal to the public over all those long and dreary summer months, to begin with an RFP prescribing lower rates at the outset instead of having to be bargained down later, and definitely to horse-trade some of those irritating Council members' votes with the very kinds of initiatives they are now demanding via budget amendments, not to mention for political support or at least non-interference.

What the best play is now, I don't know. I don't fracking know. I just hope people are bargaining constructively and creatively is all.

Disarming...

Tuesday: Bring It On

First Night is going to be safe: LINK.

Also, the city is ready for winter storms: LINK.

Live your lives! Go on vacation. Buy that new car.

Also, at this time, City Council is in its 6th hour of a meeting in advance of a preliminary vote on the 2011 budget. It seems a few dozen budget amendments came in at the last minute, but in this instance it was less unfair to the groups in anybody's districts than it was last time. Apparently there are accusations flying around as to whether CDBG funding is being transferred improperly to areas and for projects for which they do not / should not qualify, but I'm not even going to pretend to understand the validity of the specific claims yet. Apparently some if it is being tabled for legal review, though its hard to imagine the progenitors of the amendments could have drawn quite that far outside the lines.

*-UPDATE:


Celeste Taylor and the whole Regional Equity Monitoring Project (REMP) eat CDBG issues for breakfast.


Amendments just passed 5-4 along strict party lines.

Wow, and now it's on to the hunger groups and Meals on Wheels again and where that money is to come from. I've got to say, I don't envy these folks their jobs sometimes.

TOCK...

Wow...

Council today formally rejected the latest framework for doing business with LAZ Parking, with no discussion except for one speech by Councilman Ricky Burgess. Selections...

Today, right here, right now, in Pittsburgh, we have Democrats who refuse to fix the City's pension problems because they can't be Mayor and because they envy the man who is Mayor. Democrats who refuse to fix the City pensions problems even though they ALL know that their actions will inflict needless pain and suffering on the City's residents... (ibid)

And...

But today the majority of Pittsburgh’s Democratic City Council will vote for the interest of wealthy business owners and suburban commuters in rejecting the revenue sharing plan rather than supporting the interests of our City’s workforce and our City’s homeowners. What kind of Democrats are we? (ibid)

I agree it's hard to argue that releasing and partially opening to the market our government-run and government-subsidized car parking system -- the brunt of which lies Downtown, in Oakland, and in Shadyside, Squirrel Hill and Eastside -- does not relatively advantage suburban commuters and our more affluent business owners and customers, while relatively disadvantaging less-than-affluent city residents upon whom a larger funding burden and / or austerity measures would more likely fall. Not without making reference to a trickle-down theory of economics.

It wasn't framed in the most constructive or collegial manner, but I guess oh well. Maybe "long-term" constructive was the idea.

Clutch Moment for Darlene Harris?

Picture it: City Hall, January 4th, 2010.

Robert Daniel Lavelle and Natalia Rudiak have been sworn in as freshmen members of the Council, and then Darlene Harris elected its Council President. Mayor Luke Ravenstahl sits in the background, with something of the look of a UFC fan during the 3rd act of a ballet recital. Council President Harris mounts the dais to deliver her speech.

"I look forward to working with this mayor," she says at one point, turning to look him in the eye. And, given the fact that she won her presidency in a surprise bid on the strength of four votes that had until moments ago been futilely pledged to Councilman Bill Peduto (Ravenstahl's sharpest critic on the Council) she repeats it, switching up the emphasis. "I will work with this mayor."

Notice she didn't say she'd enjoy it, or get very much thanks for it, or that it'd be easy or pleasurable. But she said she'd do it.

$60 million per year worth of public assets are on the chopping block during the next two weeks, and there seems to be only one practicable avenue remaining for keeping them public -- though several side streets along this avenue may still be open. I like to think she's a bit like me; we don't take sides, unless it's the North Side. We'll soon see if this compromise leader can deal, dance and bend effectively enough to engineer a minimally acceptable solution for all parties involved.

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Thursday: Squaring the Circle

So this is also interesting:

"If they refuse, it is my understanding that the city could remove the partially constructed sign on their behalf and then charge the company and/or the Parking Authority for that expense. Either way, it is time this blight and sign of poor government administration be removed from such an important location," Mr. Dowd said. (P-G, Joe Smydo)

What happens if LAZ Parking and their Wall Street investment bankers add yet another sweetener to the deal -- if they offer to cover the Parking Authority's expenses in dismantling this troublesome sign on its headquarters, including any hypothetical lawsuit from Lamar Advertising?

On this issue, I'm finally going to have to play the self-interest card. I have a hard enough time impressing anybody with the idea that I'm a local political blogger. One of my best moves is to arrange a meeting somewhere near the corner of Grant and Liberty, and then casually mention, "Oh, funny story about that half-a-sign over there..."

When I first started this writing experiment, there was another blog -- anonymously authored -- which was the most entertaining and by far the most informative portal onto Grant Street at the time. Most of what I learned about the scene, I learned from it. These were the very early days of the Ravenstahl administration, so much of which was regrettably slapstick at its improvised outset. It is a matter of public record that this other blog dished the puck onto my stick in regards to that billboard story, and once I pulled the trigger -- well, that was my brand. Viva la revolución.

Lately I've been writing a lot about "pragmatism", and with some distance from those heady events I believe that's where my core political convictions lie. It's consistent then that in my ideal Pittsburgh, sure, I'd prescribe some technocratic outsider for a captain, bloodthirsty after government savings but with a bleeding heart for the poor -- or maybe more of a mercurial, swashbuckling intellectual. Yet the Pittsburgh we all know and love, like any other mid-size metropolis, is going to produce leaders whose core strengths lie in human politics -- a lifetime of coming up through the apparatus, forging alliances, working the community, making enemies and pandering earnestly to constituencies. Just like every one of the folks we happen to know.

The mission is to remove impediments to getting that motley human concerto to perform well, which can be defined as being far-sighted, innovative and compassionate. "Mission impossible", one might quip -- but most public servants sincerely desire nothing more than to perform well. It only helps to provide them with a safe and inviting space for working out that which is most "well", and to expose and remove those impediments.

I don't happen to think that a $60 million annual aggregate penalty for a lack of negotiating skills, or a billion dollar surcharge for coming around to a compromising attitude a little too late, qualifies as doing particularly well. Some residents actually depend on city government services to a degree that such latitude is not an acceptable option.

##

All of which is to say it sticks in my craw that we were credulously instructed at the table yesterday that the most recent proposal to contract out our government-run parking system is "just like the deal in Chicago", and that those who believe otherwise must be poorly read, dimwitted or much worse. The evidence presented for this was a few national news stories describing increasing interest in infrastructure partnerships across the country, the highlight being a potty-mouthed ideologue at Rolling Stone with his own branding concerns.

The Mayor of Chicago presented his parking deal a mere 24 hours before that city's council was asked to vote on it -- a procedural crime deserving of the boycotts and vandalism which followed. In Pittsburgh we were informed of the proposal almost 2 years in advance, had the complete contractual details in hand 2 months prior to a scheduled vote (during which time said proposal suffered in a vacuum of any discussion of our alternatives) and have all been substantively and successfully negotiating for an additional 2 months and counting. Very different.

In Chicago there was no competitive process for the concessionaire, or for the broker / transactional advisor. In Pittsburgh, both functions were subject to formal RFPs and long bidding processes to which no one can credibly raise any objection. Very different.

In Chicago no study was done to ascertain the value of the assets until after the fact, which made for a very unpleasant and clear demonstration of Chicago having gotten ripped off. In Pittsburgh the Council rightfully ordered a such an outside professional analysis beforehand, only to discover that the present value of the assets is about $50 million less than the dowry which was actually offered. Very different indeed.

Lumping in the Pittsburgh deal with that of Chicago, if you will excuse the muddled metaphorical time line, is like arguing that since the Iraq War was such a fiasco we should never have stormed the beaches at Normandy and liberated Europe, because war is war is war. Then again, opposition to a serious monetization of our government-run parking system has rarely roused itself very much beyond a noun, a verb, "Wall Street investment bankers" and "Chicago". It has been distinctly (and shockingly) hackneyed, political, non-empirical and anti-intellectual at almost every turn.

There have been better arguments against a professional services accord, and sounder considerations including some real popular opposition -- and this blog will respectfully engage these while there is still time to forge a new compromise solution. But I thought it best to dispense with the crap first.

The Song: Powerhouse

The Artist: Raymond Scott

TICK...

Liveblogging the Failure to Make Progress on a Pensions-Funding Plan.

Right now, Council is debating how and how much to fund the city's hunger groups in 2011. Councilman Burgess has recommended an increase to $125,000 worth of its CDBG funds, and Councilman Peduto is pointing out that this "has always" been matched by the mayor's "ULO". Burgess is now offering to withdraw his budget amendment for one week so as not to turn this into a political football. Councilwoman Smith mentions that she hopes that next year we can add some accountability measures to make sure the funding is going to the people we're trying to reach, but now the question is resurfacing what accounts this money is coming out of. Councilwoman Rudiak says it's "unfair to the groups in [her] district, in all of our districts, who must rely on this funding" to present an amendment on the day of tentative approval of the budget without previous discussion. "A house divided cannot stand."

So basically, everybody is getting in the mood to discuss saving the pension fund.

Council votes without discussion to hold for one week (?) its consideration of the "present value calculation" solution concept (not hearing much about that one these days).

On the Revenue-Sharing Services Contract, Burgess motions to hold for one week (?) with discussion. Kunka and LAZ are invited to the table. Burgess's introductory spiel takes us back to 1787 and the compromises in the framing of the Constitution.

And here comes the PowerPoint.


"This compromise plan has been supported by I think all of the unions who work for the City of Pittsburgh", says Burgess, and he rattles off almost a dozen. "We have perhaps a week or less to do something against a state takeover." Burgess says despite his previous strong advocacy, from here out he'll be an honest broker and try to work out an agreement. "This is just a framework for us to have conversations."

Councilman Lavelle, to Finance Director Kunka: "With the time we have left, how do you see this being done?" Kunka says we can't get to a closing by the end of the year, but if we reach an agreement we can get some bridge financing.

Alan Lazowski from LAZ comes to the table, thanks Council for the opportunity, and the opportunity to hear constituent concerns to respond to them. Says people were not comfortable with a 50-year plan without revenue sharing, and not comfortable with high rates in neighborhood business districts. Says its not a lease, but a revenue sharing services agreement. Most rates, hours consistent with Council-Controller plan. LAZ also to chip in $340 million on construction, including $93 million in first (was it 10?) years. Plus new technology for the city's own residential parking permit program -- license plate recognition and online permitting, will be provided by LAZ.

In short, this is "a wonderful blend of both plans that everyone can be proud of."

Nobody has questions for Mr. Lazowski, but some have some comments.

Councilman Kraus: "I have remained relatively quiet throughout this issue, though some have belabored their comments ... as though to convince themselves of the validity of their arguments." Has met resounding opposition from his constituents. "You cannot lease public assets to investment bankers." "It's liken to tearing up the floorboards of your house to heat it." If we're not managing the assets good enough, we have to do it better, so people profit not investment bankers. Has done extensive reading on Chicago, where there are boycotts and vandalism.

More Kraus - Somehow vehicle management got mixed up with pensions and that's a shame. We should be talking about light rail from Downtown to Oakland. Some members are choosing to waver. Calls out Dowd in the paper, who sat here and pontificated about rejection and now says it's the centerpiece. I will be more than happy to work with whoever we need to work with to solve this, but will not go against "99.99%" of his constituents.

Lavelle: I agree with Kraus that our constituency, 99%, have voted down original plan. Public has NOT had the opportunity to learn / sound off since real State takeover consequences came out, and since this new plan came out. "I think there's a conversation to be had."

Councilman Dowd: Hasn't wavered one bit since 2009. Doesn't believe everything he reads in the papers. Will now take as much time as he needs (he warns us). Has always said public assets should remain public. That includes management of the pension fund. That includes managing our assets, but it doesn't mean not working with anyone.

More Dowd - "For someone to say they're totally opposed to anything and for the status quo ... that's a very easy path. But the reality is we've got to do something." He doesn't walk the streets and hear anyone happy about the status quo. "We have to get something going here." "We'll never get anywhere if we continue to dig our heels in and stick our heads in the sand."

Smith - "We either want to solve this or we don't." Doesn't even want to hold this for a week; wants to vote it. We shouldn't be leaving this building until we solve the problem -- no Christmas parties or anything. It shouldn't matter who put the plan on the table. Is getting "fed up."

More Smith - "If you want to bring up Chicago, we've learned something from Chicago, we're doing things differently." "LOOK AT OUR OWN BLOGS LOCALLY AND SEE WHAT THEY'RE SAYING ABOUT THIS." :) :) :) "Somebody call a meeting and let's sit down and work on this.

Peduto - The Wall Street Journal, Huffington Post, Bloomberg News, Rolling Stone have been covering this. Wall Street is using this to make money. Anybody who says this isn't the same as Chicago "doesn't even understand this issue a tiny bit." :( :( :( "This is a deal that was struck by this mayor, and that's why we can't compromise -- because he can't walk away from this deal."

More Peduto - "Mr. Laz, you're a nice guy, but it's time to go home." "I don't return your calls, because I don't want to give you even a little bit of hope." What do we sell next, the Water Authority? The City-County Building? Will be voting no so he can defeat bill and leave it from this chamber once and for all.

Back to Burgess (w/o 1st round discussion by Harris, Shields or Rudiak.) Asks about timeline and says is ready to work 'round the clock about compromise.

Smith - "Wall Street's in it to make money. No kidding. That's what they do. But last week I sat in a meeting with foreign investors (reference to the Harris life-insurance proposal!) and if I had to choose I'd choose Wall Street." Taking umbrage at the suggestion that the problem is people don't understand or aren't well-enough read on the issue.

Dowd - "I do believe the Council-Controller plan is the best possible solution.", doesn't mean it can't go through in the future. Thinks the 40-year duration in the latest LAZ proposal can be shortened further. Must start with that "idea block". We need to go to "somebody".

MOTION TO HOLD: Fails 4-5.

MOTION TO APPROVE: During roll call vote, Dowd asks for his full minute to think, and gets passed over. Finally: "I hate to abstain, but I have to abstain. I abstain." 2-5-2. Motion fails.


What a convenience, to know who are the good guys and bad guys.

*-UPDATE: I don't know why I keep forgetting these Wednesdays are just preliminary votes -- they're going to have the opportunity to make sure everybody understands all the big-picture arguments again through Tuesday 12/21.

9 Days Remaining in CHS Gift Drive...

Info about the nonprofit gift drive is still here; their website to learn exactly how to help is here. These are just a few composite stories, provided by Sue Kerr of CHS, to illustrate the kinds of people CHS helps and what will become of your gift card or other donation:

"Jim and Elizabeth are parents to a 3 year old girl and 4 year old boy. When a fire destroyed their rental home, they were forced to live apart in shelters because there are so few family shelters. Jim was unable to keep his job because of the housing instability. With the help of CHS family programs, they were able to find an affordable apartment and reunite their family. Jim works a full-time job and Elizabeth volunteers at the children's preschool. Now that they are back on their feet, they need your support for the holidays so they can stay on track with their financial plan. Jim and Elizabeth have asked only for gifts for their children."

"Joey is in his fifties, and independent. He lives near staff for a sense of security, but takes care of his own matters. His requests are modest -- a few books of stamps, a VHS tape cleaner kit and a model for his collection. We'd like to treat Joey to a simple meal out (Wendy's is a favorite) often outside of his modest budget as he always pays his bills. Joey is an example of how successful a Mental Health program can be."

"Ken is a single father raising two teenage boys, one of whom is confined to a wheelchair by a physical disability. Caring for his son’s medical needs consumes a lot of Ken’s energy and financial resources. With your help, he can continue to meet those needs and provide a memorable holiday for both of his sons. Ken’s wish is simply to have gifts for his teenage sons, nothing for himself."

"Bronson is in his mid-50s and has held the same PT job for 13 years. He shares an apartment. Bronson is an avid reader and writes many letters to the editor about an issue he cares about – free speech. Bronson and his roommate split the bills and housework 50/50, pooling their money to buy in bulk for savings. Bronson enjoys collecting clock radios and helps his neighbors by taking out the trash each week for those who are a few years older than he is. Bronson’s wish for the holiday is a winter hat and glove set and some blank paper for his printer."

Like I said, here.

DOWD JOINS TEAM PRAGMATISM

UPDATE, NEXT DAY: Council unanimously waved Rule 8 today in order to begin deliberation on the new proposal tomorrow. This could enable final action on it just a week from today, which is more or less what would have to happen to get it done. The P-G carries the so-called latest.

At least I hope** this is verifiable news:

LAZ Chairman Alan B. Lazowski sent council a second revision Nov. 29, and Councilman Patrick Dowd said he thinks it could be the centerpiece of an agreement. The Post-Gazette agrees. (P-G, Edit Board)

Dowd emceed the celebrity roast of the initial lease offer from LAZ, which in retrospect was deservedly dead on arrival. But now it seems his objections to it were detail-oriented rather than religious in nature. Maybe he was simply negotiating aggressively -- while the rest of us got taken in by the "must be completed by October" deadline, which now seems rather quaint.

Irregardless. One step closer.

NOTED: Just in case it surfaces again, this theory sounds so broken I can't even begin to wrap my brain around anyone's supposed motivation to play their roles in it.

DISCUSSION QUESTION: If we're having a difficult time relinquishing our government-run parking fiefdom and/or justifying it politically to some parties -- shouldn't we be asking for more money on behalf of our city? It seems perverse to be shaving features off of the deal while whittling the payoff further downward ... perhaps instead we should be demanding more?

*-UPDATE: It is:


Let's just not allow the perfect to become the avada kedavra of the good. And I'm sorry if I ruined Deathly Hallows for anyone but the book was released in 2007 and your time has expired!

**-UPDATE B: Or not. Or kinda:


How about I just give up trying to understand.

Santa's Goin' to the Su-uper Bowl

TOCK...

Kenney Completes Mission at PWSA.

Chalk up one scalp for Patrick, I suppose...

Michael Kenney resigned today as executive director of Pittsburgh Water and Sewer Authority in advance of a report expected to detail his personal ties to a vendor providing line insurance to PWSA customers. (P-G, Smydo & Lord)

Asked whether it was concerned what comes next for the embattled former authority director, Pittsburgh only shrugged.

Like Mr. Kerr, most of Utility Line Security's principals also are executives with Utilishield, which sells water line warranties outside of the city, and Resource Development and Management, which is led by former Allegheny County officials Joseph M. Hohman and James J. Dodaro.

Mr. Kenney described a long professional and personal relationship with the firms and Mr. Kerr. (P-G, Rich Lord, 3/26/10)

That guy. Always with the reverse-trails of breadcrumbs. Alright, so this might not have been a successful scalping, so much as routine seppuku.

*-ADDED: Reading the article again, it's unclear how near the report was to completion, but apparently there were some proceedings earlier this week:


As a rule I dislike using screencaps from Facebook, but the guy doesn't tweet like he used to and does most of his city-related web-trafficking in facespace.

*-UPDATE: Null Space provides a whale of an update on all things water and PWSA.

AND NOW come the Plaintiffs...

It's been reported that Firefighters Local 1 are suing the city on the grounds that a mandatory state takeover would violate only their collective bargaining agreement, but it turns out it's a little more sophisticated than just that:

5. At all times relevant hereto, the Second Class City Code has provided that a pension fund be established in the City of Pittsburgh specifically for retired and disabled city firefighters...

6. At all times relevant hereto, the Second Class City Code has also provided that the care, management, and control of the "Fireman's Relief and Pension Fund of the City of Pittsburgh" be exclusively performed by a local board of managers ("Pension Board") which include City officials as well as members who are directly elected by the city firefighters and beneficiaries of the fund... (Firefighters v. Pittsburgh)

So they're not arguing a takeover conflicts with their contract so much as it conflicts with the Second Class City Code, a prior established state law:

23603 Board of managers

There is hereby created for the care, management, and control of such fund a board of managers, consisting of twelve members, to be known as the "Firemen's Relief and Pension Fund Board of the City of ..........." The personnel thereof shall be as follows: The mayor or chief executive, the president of council, the city solicitor, the city controller, the director of the department of public safety, and the chief of the bureau of fire, who shall be ex officio members, and six elective members from among the following classes of the members and beneficiaries of such fund: One member to be elected from among the deputy chiefs, battalion chiefs, captains, and lieutenants; three members to be elected from among the other members of the fund; and two members to be elected by the beneficiaries of the fund. (PA code)

The lawsuit goes on to establish the various tasks locals have been empowered to perform, frame this mandated empowerment as "rights", and posit that under a state takeover their contractual, statutory and constitutional rights would be eliminated.

Now, this is where it gets interesting: the Firefighters are not suing to invalidate the new pension funding laws in order to uphold the older pensions board laws. They are suing to force the City to act in concert with both -- that is, to cough up the money.

16. The City of Pittsburgh is mandated to appropriate sufficient funds, via tax increases if necessary, to comply with its collective bargaining agreements with its firefighters as a matter of law. Harney v. Russo 255 A.2d 560 (Pa. 1969) ... Tate v. Antosh 281 A.2d 192, 201 (Pa. Cmwlth. 1971)...

17. Additionally, the May 20th, 2009 Act 47 Recovery Plan stated that a preferred option to pay for increased pension obligations would be, among other things, to adopt the Mayor's plan to lease the parking assets...

18. The May 20th, 2009 Act 47 Recovery Plan stated that in the event that the City was unable to obtain sufficient funding for the pension plans, as a failsafe option, the City was mandated to pass as part of its annual budget sufficient tax increases to fund the required additional pension contribution for the budget year... (Firefighters v. Pittsburgh)

And therefore, they assert, since any "unilateral system modification" to the Pension Fund ultimately violates the PA Constitution, and any "dimishment" (not a real word) to the fund would ultimately violate the Home Rule Charter -- the City should be ordered via injunction to get its 50% funding together by January 1, prohibited from allowing a state takeover to occur, and made to accept "one of the stated options to sufficiently fund the pensions": that is, a lease, or taxes now so as to preserve the makeup of the fund, not comfortably in the future.

IMPRESSION: It's hard for me to imagine a judge enacting a parking lease for us, or ordering a tax anticipation bond be issued (and taxes be raised) in this rapid a time frame, but I certainly see the potential for this to get chaotic as all get-out. The Firefighters have a credible enough complaint, and how a judge decides to resolve it, starting on Dec. 20, could ultimately surprise everybody.

POTUS on Impasses, Logjams, Rancor & Division

The Life Insurance Gambit: Let's Do This Right.

In a clear a sign that the pensions funding quandary has passed the Godzilla Threshold, Council President Darlene Harris boldly forwarded a plan that has not exactly been attacked yet:

She said the plan would be similar to "dead peasant" insurance, a controversial practice in which an employer takes out a policy on the employee, often without saying so. If the employee dies, the employer receives a payout.

Under the plan Mrs. Harris is circulating, the city would work with a corporate partner.

That entity would provide an up-front payment, which would be allocated to the pension fund. The corporate partner and the pension fund would split future payouts from the life insurance policies. (P-G, Joe Smydo)

The framework was discussed a bit on the Comet in November. One issue with it is that the subjects of each policy would almost certainly in fact have to sign off on those policies, even under current law. The next problem is, since it has never been attempted on a massive scale and its widespread acceptance would likely negatively impact the insurance industry eventually and as a whole, state or federal lawmakers would probably act to make it illegal shortly after it begins spreading.

And of course, we only have 24 days to get something off the ground if we'd in fact like to retain control over our pension fund.

In light of all this, the Comet has a not-even-modest proposal to get this right:

• In exchange for a proportionately much larger up-front payment, let the corporate partner (or partners) keep the whole future payouts.
• Instead of including only persons vested in the pension fund, target everyone vested in the City of Pittsburgh: that is, every man, woman and child residing in the City and every expatriate in Steelers Nation.
• In order to motivate full willing participation, offer each subject a $10,000 signing bonus.

Assuming that a $1 million life insurance policy can be sold on the market for about $400,000, the City of Pittsburgh would net $390,000 x 300,000 citizens = $117 billion. That is of course a rough estimate based on rough assumptions that some among our population would still not sign on / be unsuitable, offset roughly by many in our diaspora participating out of solidarity. In truth, we may need to motivate our prospective corporate partners to take on such a heavy and untried insurance aggregation project, so let's give them a quantity discount and call it a cool $100 billion up-front payday.

Although this cannot be organized by Jan 01 2011, a hundred billion would offset even the most bearish MMO projections under state takeover. There should even be enough left over to start paving the recommended 80 miles of streets per year -- in gold if we so desire.

In light of the fact that this would motivate a response from the wider insurance industry and their lobbyists, we would only have one shot to execute this -- and would need to do so with a certain amount of speed. Local political solidarity is a must, local opinion leaders would need to be sold on the idea in advance, street teams would need to be organized to garner the contracts ward-by-ward and block-by-block, and certain potentially skeptical lawmakers would need to be cut in on the ground floor. The active public campaign should probably be timed to coincide with August recess or something similar.

Owing to the need for operational security, this post will probably disappear within days. But if you'd like to see a $50 billion infusion into the city's capital budget and put a laser rifle turret on every block of Carson Street, forward this now to a friend who you know loves Pittsburgh. And the next time you see Councilwoman Harris, press your index finger to your nose and wink for me.