Do. Harris Serves Warning on Pension Efforts (*)

You guys remember F. Dok Harris, right? Ran for mayor?

Well, as attentive watchers of the Comet News sidebar already know, he penned an open letter to Mayor Ravenstahl regarding the proposed parking lease deal and on efforts to shore up the pension fund in general.

We'll leave style notes aside. Essentially, he highlights for us an important and under-discussed fact about our city's pension fund management -- and he makes some familiar and in my opinion hackneyed political arguments against the lease deal -- and he shakes them together vigorously, hoping they'll blend.

First the good point:

In the worst of financial markets the Fund lost over $120 million in a year. Unfortunately, in the best of markets, the Fund did not experience the high returns that it should. In fact, looking between the years of 2005 and 2007 (during the recent bull market), the value of the fund rose $1.8 million dollars -- or 0.4% of the Fund's balance of $373.6 Million. To put this in perspective, the S&P 500 had a 2-year change of 21.75% over the same two-year period. (Harris)

Harris goes on to illustrate how bad this is -- we'd have done 20 times better to put the money in a normal bank account or in no-risk U.S. Treasuries -- and he raises the nauseating prospect of what happens if our multi-hundred million dollar infusion from a lease (or from a bond, or from robbing a train) meets the same fate.

(*-UPDATE: This analysis is proving incomplete in a way which at least exaggerates any under-performance.)

Why did the fund do so poorly from '05 to '07? Anybody? Mayor Ravenstahl can't be blamed too much personally (the buck stopped at his desk for only the latter third of that span at best) but I wonder, if the problem was with the fund managers, has anyone been sacked? If my net worth remained flat while everyone else in my neighborhood grew a quarter, I'd be looking to sack somebody, or at least for a good explanation and then a describable course correction.

So, let's get going on that angle.

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The other part of the cocktail is less novel, but I may as well use it here to jump off with my own take:

I would hope you are able to do a better job of explaining to the citizens of Pittsburgh exactly what the proposed lease means to them on a daily basis // We must, however, be completely transparent at how this transaction will affect the every day quality of life of Pittsburghers // The people of Pittsburgh should not be forced to pay $4.00 to spend an hour at a local store. Our local small business owners should not be punished for the city's malfeasance // Pittsburgh can, and must, avoid the problems that Chicago faced after a similar lease transaction took place. (ibid)

And so forth, with certain details.

Where to begin ... "the problems that Chicago faced", to the extent that there were any, stemmed from their lease being passed hurriedly and with almost no public or official scrutiny, let alone public warning and preparation; with Neolithic and noncompetitive processes for selecting consultants and operators; and with an unfortunately botched roll-out.

Whereas in Pittsburgh, we have been discussing this for almost two years, and at an extremely high if not compulsive intensity for the last few months; we all have the terms of the lease in hand, much to the Mayor's disadvantage (as its alternatives are either top secret, not-quite-existent, or receiving far less scrutiny); we have and are bidding out all work to the reasonable satisfaction of everyone reasonably possible; and hopefully we will have learned from Chicago's experience to get the technology right the first time.

Justified shock and outrage in Chicago aside, I would be interested to learn just how many small businesses therein have dried up like raisins in the sun since the city set market rates for parking. Has its downtown or neighborhood business districts experienced horrific shrinkage? Has the region emptied out? My impression is no.

Because these are not "punitive" rates, rather "market" rates.

For those for whom money is tight -- and that's most of us -- it's fairly easy to park on a side street and walk to a corner business. I've been doing this for years. Or if one has a job or an errand to run Downtown, one can take the bus. Or finally, it's annoying but not impossible to pay four bucks (or Downtown, four bucks more) to warehouse your big heavy gas-guzzling steel palanquin -- think of it as buying a retired police officer or firefighter or road crew worker a beer, in addition to your own three or four.

Nobody "deserves" to be punished for the city's past malfeasance -- but does that mean we must hide from our creditors? Will it "punish" small businesses any less to raise their property or wage taxes?

Parking rate hikes will only impact some people -- typically those resolved and capable of spending a bit of green anyway. And, happily, it impacts many who are driving in the first place because they "live in Pittsburgh" yet noticeably far away. Market parking rates will provide them at long last with the satisfaction of knowing that they are full-fledged contributors to their hometown.

In conclusion: business owners will complain because it is their job to scrape fiercely for their every slightest advantage. Yet we know that if they provide a quality product or service, they will live and thrive regardless. Let's those of us responsible for the whole city and its future demonstrate a little backbone.