Tuesday, October 19, 2010
Liveblogging the Death of the Lease Deal
As I tune in, it is still the public comment period. Tons of fire fighters and police officers are yelling at the Council not to play politics with their pensions and not to kill the Mayor's deal, at least not yet. The last public commenter is...
Alan Lazowski, LAZ - He was surprised over these last two weeks that Council wasn't happy about the deal. "The infrastructure world was surprised." He says he met with Council members, named each one individually, and understands their concerns. Maybe there needs to be some changes or modifications. Maybe look at a revenue-sharing arrangement. We need time. We need you to table this plan.
Then we get to the meeting, and the vote to reject or table for later the 50 year LAZ / JPMorgan parking facilities lease:
Patrick Dowd - We've had a lot of testimony on this issue in many formats. [On your alternative?] "The city would be lucky to have a partner like Alan Lazowski" ... who is passionate about his business and earnest about his desire to help the city. Mayor deserves credit for getting us here. My vote today is a decisive rejection of false choices and Chicken Little approaches. Believes in city's ability to control its destiny and solve its problems. A loss of control for 50 years is too long; he'll have grandchildren watching it. Some have said in the media it's a choice between the lease, a loss of control; and a state takeover, a loss of control. Those are two lousy options. The Mayor has said up until yesterday that he'd consider options. Still, over all this time, Mayor and his team dismissed "out of hand" his alternatives. One time the Mayor even sent three law firms to do that. His asset transfer / bond idea now is exactly the same as Mayor Tom Murphy's sale of city water assets to the Water Authority, which was bemoaned at the time. He's looked at engineering reports for our Parking Garages and ... yeah, they need maintenance, but we shouldn't sell our house or soul over it -- certainly not to JPMorgan, who is awful. This can only work if the Mayor joins with this Council. This vote will be a vote to maintain the city's control [the more you tighten your grip, Tarkin...].
Theresa Smith - We need to wait until the facts come back from the state and until all the plans are all on the table. Doing anything less would be irresponsible. Everyone here talks about making data-based decisions, what is this then? Ms. Harris I know you've been a big union supporter so I guess this is directed toward you.
Darlene Harris - I've been a union supporter for 35 years. One thing I've learned is not to privatize. Doesn't believe the state takeover's an option either.
No further discussion! Hm! (Very disappointing!)
Ayes 1 (Burgess); Nays 7; Abstentions 1 (Smith). Pittsburgh's $452 million payday has been successfully, resoundingly vanquished.
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Big mistake.
ReplyDeleteA simple city politics primer seems to be in order. Who votes in local elections? People like firefighters, police officers, and their friends and families. Enough of those people vote as to propel Ravenstahl through the primaries without any serious worry.
Who doesn't vote in local elections? The chronic complainers that habitually stroke the egos of council members - then turtle up on election day because they had baking lessons or something.
Council appears to have forgotten the former in favor of the latter. The simple fact of the matter is this - "progressives" talk a good game, but they do not back up their talk with voting action. They cannot be bothered to participate meaningfully in local politics, while the working-class folks whose jobs and pensions now appear to be in jeopardy certainly do participate.
How unfortunate is it that council chose to ruffle the feathers of their non-voting (and perhaps non-city) adherents with the threat of parking rate increases? Parking rate increases are inevitable no matter what solution is discussed, sorry to say.
If you want to oppose the mayor just to say you did, then you should choose a more trivial issue with which to conduct the exercise.
The union leaders sold their members down the river with complicity (they were on the boards) in the stripping of pension funds. The union members supported those union leaders and voted for the likes of Murphy, Ravenstahl and the politicians who oversaw the mistreatment of pension funds. It is difficult to see them as victims of much more than their own mistakes.
ReplyDeleteHere's another city politics primer: The city is insolvent and continues to refrain from doing much about it. If city voters continue to elect officials who mismanage the city, the city will capsize. Again, it will be difficult to see city residents as victims of much more than their own mistakes.
There is scant evidence supporting the conclusion that the lease would have been a good choice. Its proponents failed to carry their burden to demonstrate the value of their proposal, in large part because they did not try.
I believe the value of their proposal was ruled to be a net $50 million positive by an outside, scholarly source.
ReplyDeleteI have no doubt at all that our town can borrow $220 million to accomplish the worthy, civic-minded, taxpayer-protecting goal [/sarcasm] of avoiding a PMRS takeover in two months. It'll be interesting to discover whether the Parking Authority will transform into its Bishonen Form so we can cope with paying it back.
You all realize, if you REALLY wanted to beat Darth Verbanac at his own game -- he who helped position this Sword of Damacles over Pittsburgh's head in order to incentivize a leasing arrangement -- you'd charge headlong into the state takeover without looking back. Otherwise, we're looking for another infrastructure lease / sale /bailout maneuver in what, a couple years maybe?
Are you serious about scant evidence? It may not be evidence you believe, but there is a decent amount of evidence supporting the plan.
ReplyDelete(Repost)
The prevailing wisdom in academia is that charging market rates is the best parking policy. UCLA professor Donald Shoup has led a crusade saying as much. http://www.nytimes.com/2010/08/15/business/economy/15view.html?_r=3&sr
Also other municipalities such as San Fransisco and Seattle have been raising parking prices and having quite a bit of successful. Additionally, the impact on drivers and on businesses has been minimal.
http://www.publicola.net/2010/10/12/mcginns-parking-rate-proposal-didnt-come-out-of-thin-air/
http://sfpark.org/
Unlike these cities however, Pittsburgh was fortunate to actually get fair value to sell this parking asset, have private industry assume the risk, and perform the function that is avant garde parking policy.
The mayor may not be a policy wiz, but its sad that the one time he really gets something right, it isn't even fully being examined.
Bram said: "No further discussion! Hm! (Very disappointing!)"
ReplyDeleteMaybe not in Council Chambers.
But elsewhere there is in erneast, talk of replacing Council Members.
Not only Fire and Police but a majority of employees both Union and Non Union.
Throw Mike Lamb into mix...
Most feel as I do, most have twenty plus years service...
I have never seen the workforce so united.
The feeling is, just can't let Luke win another issue. Council is bunch of mealy mouthed simpletons, who lack direction. Darlene Harris is biggest offender...
Time to go to unpaid Council. Good place to cut....
G20 was supposed to be chaos. It was not...
Name a better Mayor in last 30 years? And, explain your choice.
monk
It is strange and a little sad to pretend that there was ever a fair evaluation of the options on the merits.
ReplyDeleteIt didn't matter what the proponents argued about the merits with regard to the city's finances and rational parking policy. It didn't matter that Council's own hired guns couldn't help but conclude the lease was the best deal available. It didn't matter that the alternative "plans" only involve a lot of handwaving and no actual, numerical, verifiable answers to key questions. All that mattered was Council successfully summoned the pitchfork crowd with stunning arguments like "Der gonna raze yer rates!" and "Banks iz da DEVIL!" and "Whatsiz da guvmints must staysiz da guvmints!"
In other words, the lease deal got tea-bagged. And why not? Seems to be a winning strategy these days, as long as you are cool with the relevant government never addressing any problems, making any investments, or so on.
Dear Anonymous 12:59, your political calculus is a little outdated. As just one example, consider dist 4, where probably more firefighters and policeman live than any other district. Neither the Mayor's nor the Firefighters candidate won there last year.
ReplyDeleteAnd if you think the opposition to the lease plan was only coming from rich, non-union, and/or non-city progressives, you must not be talking to your neighbors. Or maybe you live in the suburbs.
Get real people, the game-playing handbook is all Ravenstahl, he's never been open to collaboration or any ideas other than lease. Dowd laid it out this morning-- the many examples of council trying to work with the Mayor on this issue over the last two years. If anything this council doesn't play hard enough with this administration.
We should be appalled at what's going on at 414 Grant.
At least the hand-waving has just been replaced by document-waving ... Downtown meters to go up to $3/hr, Oakland to $2/hr, most garages go up to 5-15% less than Lease rates; it claims the bond's debt service, cap investment, and city pension MMO can all be covered by increased revenue; I wonder with this much specificity, do they have a brokerage house / underwriter all lined up?
ReplyDeleteAnon 3:36
ReplyDeleteDistrict 4 Councilwoman, was a pleasent surprise.
Sold her independence. 260 page report on errors concerning 'storm of a century?' After 3 months on job...water-girl for Harris.
She is all about herself...
...has never been taken to task.
Raised in an enviorment that coddles females first and generation X second. Part of the Mister Rodgers Crowd...
...I'm SPECIAL!
And, 19th ward politics..
She 'Universally Panned' Mayor's proposal?
She heard 19th Ward Chairman Pete Wagner speak out against Mayor.
Pete was one of 2 in group of 10 that spoke out @ public hearing!
"Universally Panned"?
Well "Kiss My Grits".
I didn't say ass, Bram...I said Grits...
monk
Updated disclaimer.
ReplyDeleteGrrrr...
ReplyDeletemonk
I actually hesitate to criticize the Lamb Plan because it is better than nothing, and I accept that the lease deal is dead.
ReplyDeleteBut since I can't resist: the only real reason rates would be SOMEWHAT lower is that it generates a lot less money for capital expenditures, and also generates less money to pay down the City's pension liabilities. That's it--there is in fact no magic in this unicorn milk, and they can't even claim they are coming out ahead by taking out the "middle man", because the middle man in this case was offering too good of a deal (per Financial Scholars, who is validating their model in this case).
Oh, but they do make a big deal about preserving the ability to build a lot more subsidized parking--something I personally think is a reason to NOT like the Lamb Plan.
But as I said--better than nothing. And I'm not sure nothing isn't still the leading contender.
Oh, and the Lamb Plan now documents that the dreaded Banks, which are the DEVIL, are going to make over $500M extra in interest on this deal (this being in addition to the interest these DEVILS are already taking on Parking Authority debt), plus fees.
ReplyDeleteBut maybe the Banks are no longer the DEVIL! I suspect drinking unicorn milk may turn them into Widows and Orphans.
Brian,
ReplyDeleteUnicorn Milk?
What is this?
Without knowing, I might make fool of self in reply.
And, believe me..it ain't hard to do.
The big difference between Mayor and Council's plan.
Money in Pocket: Mayor.
Money on Credit: Council.
I don't know, man...
Whole issue is about reducing debt not increasing it.
The argument concerning vailidity of Water Authority Sale and Parking...argued by Dowd?
Government should control life sustaining needs.
But, parking should be goverened by market...
..or lawn chair.
What am I missing "unicorn milk"?
monk
Bram's ultimately going to have to answer for himself on the unicorn milk thing. But here is the sort of thing I have in mind:
ReplyDeletehttp://www.flickr.com/photos/enchanticals/3991926074/
Who cares about the FOP endorsement? Those endorsements don't carry as much weight as they used to.
ReplyDeleteSame with the Committee endorsement.
Bram,
ReplyDeleteyou were disappointed that there wasn't no further discussion?? How much more do you need? They have talked this thing to death.
Time to cut Council?!?1 HAHAH Have you looked at how little that budget is to begin with? How about cutting that $1 MILLION dollar plus budget?
ReplyDeleteThis comment has been removed by a blog administrator.
ReplyDeleteLOL i see the blind have gathered here to discuss the view.
ReplyDeleteI would love to have been the fly on the wall when the NETWORK realized that thier boy has no juice at all in Council. Zero. Not even Smith could or would commit at the end.
The Grant Street Good Old Boys spent millions on this deal after delivering tens of thousands to Luke in campaign money. You think he's going to be able to go back to the well for more? If so, I have a nice little bridge in Brooklyn for sale....
Anon 5:58 - Yes but nonetheless, the nays made some extended closing remarks, framing the issue their way and characterizing their opposition as they will. Didn't think it likely the ayes would pack up their tent and take it. Of course that essentially's been the story all along...
ReplyDeleteThe business crowd and reasonable minded citizens watched in disgust today as most of our council members did nothing but grandstand and make a mockery of a very serious issue. It is now becoming ever more clear that the lease deal may have been the best option. The Lamb plan is quite simply not even a realistic option. Peduto and Shields better get ready to fall on their sword next year, but it is more likely they will blame any pain of budget cuts on Ravenstahl. Dowd, Lamb, Peduto - NONE of you will be Mayor. mark my words. Your populist pandering has gone too far. A new candidate will emerge, can watching. He is known in some circles and quietly garnering support of the corporate leadership and civic institutions alike.
ReplyDeleteRavenstahl's failure in this debacle was his general inability to create coalitions. He has stayed on the sidelines and doesn't have the passion. He will be gone in two years. The question is - who will emerge?
Anon 4:52: What good is money in pocket if you trade a revenue stream for it... seems just as bad as a debt issue to me.
ReplyDeleteLAZ/JPM offers $50M over the present value of the asset, plus pledges to invest hundreds of millions in upgrades. What is wrong with this equation? I truly believe that a public agency can administer a parking facility just as efficiently as a private one.
I would have no problem with a lease or sale of parking lots and garages but including street parking is unacceptable. Perhaps over the course of the next five decades we might as a city wish to utilize our public right of ways for purposes other than automobile storage.
Transfer management of the pension fund to the State. Increase parking rates and payments into the pension fund.... whats so hard about this?
One question that never gets answered in news reports is why the pensions are underfunded. Bad investments? Bad assumptions? Failure of the city to make payments? Do the terms of these plans require an adequate contribution from the employees?
business crowd and reasonable minded citizens watched in disgust today
ReplyDeleteWhatever the politics were on the 5the floor I am pretty sure small business owners in the city were collectively among those most opposed to the plan to increase meter rates. That may be the real backstop of city council opposition to the plan in total. If there had been some way to get businesspeople on board this probably would have passed. So I think the anonymous commenter has it backwards on the busiess 'crowd' for sure. I can't quite place where the ACCD was in all of this, publicly they seemed kind of lukewarm in general, but it didn't build to anything like advocacy.
As for the reasonable minded citizenry being disgusted... I laughed when I read that. Some are following the imbroglio, but this has not risen that high on their radar. Certainly no disgust out there. Befuddlement over the whole process maybe... but nothing vaguely like 'disgust'.
Shall we put a name on the new force in the shadows?
Adam Ravenstahl for Mayor! lol
ReplyDeleteChris, I think anon 10:28 is using "business-minded" and corporate interchangeably. s/he's not talking about business owners on Liberty Ave., s/he's talking about the Network types.
ReplyDeleteand i agree with you re: "reasonable minded citizenry." this is not gonna make or break any council member who doesn't rely on campaign fundage from the privateer types. sorry anonymous city worker and others who think politics works differnetly.
oh yeah, and monk is hilarious.
I think it depends a little on A) what happens regarding the State Takeover Avoidance Bond (STAB) in the coming weeks and B) what is the general perception in two years on how things are going. There's a chance if there's a sense of strugglin', like we peaked at the G-20 and the opening of Consol, there'll be a "You broke it, you bought it" sentiment.
ReplyDeleteChris - Shall we go ahead and call it "Corey"?
Briem - right! the academics have all the answers. Laughable. Incur debt to pay debt. Makes sense, except to anyone that has ever owned or managed a business. For the record, the PDP and most small business downtown are agnostic at worst about the Mayor's plan. Weekend rates are about the same as they are now. Most people driving into the City to park are from the Burbs so it was really a commuter tax anyway. Sounds like a great idea to completely leverage an asset only to fund the pension plan to barely over 50% so that it can dip back down and then we have nothing left to leverage and worse off bond rating. So what is the game plan to fix the real issue, i.e., the fact that we put in less than we take out of the pension plan? Come on academic, cough up the answer. Pathetic.
ReplyDeleteAnon 9:04 - For the record, Briem (somewhat uncharacteristically, but late in the game) originally came out in favor of the Lease and the PMRS takeover, ie the Burgess plan. I'd hate to see him now taken out of context cuz of something he wrote as part of his hobby, political analysis.
ReplyDeleteOh... I'm not worried about being taken out of context. I just can't figure how to respond to above because it's all over the place. Is that the same anonymous?
ReplyDeleteI'll point out that I still think the garages should be sold. In fact I suggested as much before anyone was talking about it Downtown. It has been decades since the garages have worked as economic development policy, have lots of private market competition, and really provide a private sector service that is both excludable and rivalrous. Sorry.. darn academic speak... otherwise known as economics... something as anonymous points out clearly is not well regarded Downtown.
As for a solution. At this point I suspect the only way younger retirees will ever see their retirement is via a state takeover. I agree with the Mayor that there is not a certain amount of pain associated with that, but at least there will be a pension fund a decade from now. Left to the pension board we will keep winding up in this debate. It would all have been better if we had been talking about this years ago. Alas.
The sad sad thing. Lets say we did the deal and put the $220 million into the fund. We will pretty much be back at the funding level the pension system was at when I wrote that oped 5 years ago. Back to the future?