The Mayor's budget address can be listened to HERE (c/o WDUQ).
The Council President's response statement can be read HERE.
Words I feel like offering:
1) We haven't heard much from Council members Dowd or Kraus since before Thursday. Nor has Shields lately drawn any particularly deep lines in the sand.
2) Council's majority didn't find the lease to be at all acceptable. The Mayor and the Parking Authority didn't find borrowing through the Authority to be at all acceptable. I'm not sure why to some, one of those equates to "ridiculous" insistence on a "dead plan", while the other equates to "a workable plan that's before us on the table."
3) I guess Pittsburgh is never going to do any business with Wall Street as long as Sheriff Harris and Deputy Peduto are wearing their stars. (There's that categorical imperative again.)
4) Remember in the future, people, never outright sell a thing capable of generating revenue, because then you will literally forfeit an infinity amount of money forever. Nobody can afford that!
5) Although the messy rhetorical door again swings open with the President's assertion that the lease on the shelf would allow "investment bankers" to "drain the life out of our city" -- expect a more empirical, numerical fight to be waged over whose course of action actually drains what out of where faster. This is not something your average newspaper article is capable of conveying with sensitivity but I have some faith. Of course some might say as long as it's not Wall Street that is wounding either ourselves or our egos, whatever drainage we experience will somehow be more tolerable.
6) How about we lease the Downtown and Oakland lots and meters to Lazowski Morgan Draper Pryce, while retaining the rest of the city's community assets and taking out a revenue bond leveraged against those? First of all, Downtown and Oakland comprise the juiciest part of the deal for investors, so the dowry we negotiate should still be pretty good. Subsidizing parking makes far less economic development sense in well-established Downtown / Oakland than in gently percolating areas like Bloomfield / Garfield / Lawrenceville, for example, or the South Side with its myriad issues. Besides, space age parking meters might actually look impressive to visitors in Downtown and Oakland, whereas in Beechview and Larimer it's like, don't make things complicated. By the way there are valid city planning reasons to keep control of our fringe neighborhood meters, so we can alter their layout as needed in an unfettered way. But there are clearly a lot of good fiscal reasons to maximize and fully ensure capitalization on as much as we can obviously. And you know, you can really add Squirrel Hill and Shadyside to the lease pool as far as I'm concerned; they can afford it, are already well-established and thrive more on foot traffic than most -- but I'm trying to be nice here. Meanwhile tighten up the language and envelope on "compensation events" and attempt but don't expect terribly much on shortening the duration.
The only problem I foresee is the concern, "Oh, if you deviate from the bid proposal too much, people will sue!" People won't sue. These infrastructure world dingbats all know each other and work together, and don't want to get litigious amongst each other for years, and for what? To whine over spilled milk in a crumbum town? Let's split the baby as outlined above and compromise within reason, within our ability to collect at least
Remember when Bram used to write this blog? Those were the days.
ReplyDeleteBram:
ReplyDeleteDon't forget about the Authority's debt? It must still be retired under any permutation of a lease agreement.
Anon: Remember when reason used to govern the wills of men?
I can remember when Debbie Gibson had a career.
ReplyDeleteAlso, does the city own lots or garages in Oakland? I've never noticed any, but I've not paid attention to who owns which garage.
There are definitely meters in Oakland. I thought there might have been one public garage in or near Oakland ... Moorewood or something?
ReplyDeleteRex, good reminder ... but I think we could get away with retiring only a majority of PPA debt if we retain revenue from community meters (debt's all not due tomorrow) AND remember a nice price is still possible; make it a cool $300 mil? I dunno.
ReplyDeleteThey do own the one at Forbes and Semple. I had to check the website. There are a ton of meters. I think all of Oakland is either metered or restricted to residents (or way away from anything).
ReplyDeleteEvery time I hear "dead" and "off the table" I can't help but think 9 politicians pushed $125 Million of surplus off the table too.
ReplyDeleteAnonymous 9:07-
ReplyDeleteWorse than that, because generally when you consider that most of the surplus would have been plowed into the beleaguered Pension Fund, 9 politicians (7, but who's counting) nuked half a billion dollars without a backup plan.
For what?
crumbum town?
ReplyDeleteStop selling yourself short Brambo.
Every time I hear "dead" and "off the table" I can't help but think 9 politicians pushed $125 Million of surplus off the table too.
ReplyDelete$125 million? Are you kidding me? The garages are owned by the public. They are worth much more than that. You can bring in "experts" to diminish their value all you want, it doesn't change the fact that they will make $125 million in less than a decade. JP Morgan knows this and wants to buy the rights for the next 50 years.
TED says, "You can bring in "experts" to diminish their value all you want..."
ReplyDeleteYou mean the experts YOU brought in?
$401 million, my friend. That is the outside, scholarly expert present valuation of the 50 year lease which was put on the market, for which we were offered $451 million at auction. I am plum, cold stone tired of hearing baseless "ripoff" accusations from folks who wouldn't believe this mayor if he told them it was November, or brake were he crossing the street. It's a lie already. You may believe it, but only if you're lying to yourself.
And there's absolutely nothing to indicate the assets would be worth the same sum to us were we to have to retain, repair, price and manage them on our own ... especially considering there's this small matter of a brutal state takeover in our hallway which will impact our present and future enjoyment of a lot of things.
Sometimes you have to sell off your rental property in order to meet your own home's mortgage payment, or your bail bond.
When it came down to it, Luke brought in a guy connected to the lease to try to discredit the Council Controller plan.
ReplyDeleteYou can get plum cold stone tired of it all you want Rex, but our elected officials know better than to give up our publicly owned parking assets to JP Morgan for a short term infusion of cash.
Why would Morgan/LAZ be scrambling to renegotiate "a good deal" if their wasn't any value in the garages?
Three thoughts:
ReplyDelete(1) Seriously, how are people getting away with the notion that a huge municipal bond issue would have nothing to do with Wall Street investment bankers? Among many silly arguments, that has to be among the silliest--although I suppose the refusal to make present value calculations, nicely demonstrated above, retains the crown.
(2) From a wonk perspective, I like limiting the term more than limiting the geographic scope. But the latter seems like a promising idea from a political perspective, so hopefully someone is paying attention.
(3) In addition to paying down the Parking Authority's debt, some people also seem to be ignoring the immediate capital infusion for upgrades. If pressed, I gather their response is that rate increases will eventually generate the funding for those improvements. But those numbers are significantly lower, and also in the future.
But I guess that is consistent with the refusal to do present value calculationz. Generally, I'd suggest a thought process which requires ignoring the dimension of time is somewhat suspect.
All the blather comes down to this: privatizing Pittsburgh parking is a last resort, save for those who stand to profit financially and/or politically from such a deal. If you think Pittsburgh's budget and pension problems have pushed the city to the brink, then you grasp at the privatization straw; if you think there is room to maneuver and options exist, then you continue to fight and search for solutions. Council has decided not to throw in the towel. I'm with them.
ReplyDeleteIf you think Pittsburgh's budget and pension problems have pushed the city to the brink, then you grasp at the privatization straw;
ReplyDeleteNot really. I think we're at the brink, but I'm opposed to privatization outside of a state takeover and a long term fix.
I think leasing the parking assets would be a good idea even if there wasn't a looming pension issue. The lease would likely lead to a better parking system, and one with rates set closer to optimal levels. And the City could use the proceeds in any number of productive ways, including paying down other debts, capital projects, or so forth.
ReplyDeleteIn fact if the City had $450 million in cash available but wasn't already in the parking business, I doubt many people would be advocating the City use that money to buy up a bunch of private parking assets, many of which were in poor shape and all of which needed a lot of expensive upgrades. We've got higher priorities than that . . . and that same logic applies whether the City would be on the buying or selling side.
I bet if the city had extra money and didn't own the outter 25% of its own main streets, people would very much advocate that it try to own those.
ReplyDeleteand that same logic applies whether the City would be on the buying or selling side.
ReplyDeleteNo, it absolutely doesn't. The city is about to take an asset that produces income that goes to its general fund (i.e., the thing that pays for the services that run the city I live in) and turn it into an asset that pays only for the retirees. Out of all the people to whom the city owes money or services, one group gets paid for sure (retirees who die before the fund goes broke again in 2017 or whatever). The rest of us (including residents, taxpayers, current employees, and the younger retirees) lose revenue that could help them. It would be pointless for the rest of us to agree to any plan that isn't part of a broader fix for the city's financial hole. And, given that the city is functionally broke, I don’t see that paying one small group of the city’s debtors and ignoring the rest is even ethical.
T-Rex - The guy from Scott Balice chimed in once, rather incidentally, against the CC plan during a presentation made mostly by the Mayor, Kunka, and somebody else. The arguments against CC haven't hinged on what Scott Balice added (actually they've hinged on what D'Addario added at PPA and what Allen added during the PMRS post-agenda). It also seems true that Balice gets NO FORM of additional compensation if a lease happens. I think the mayor is allowed to have hired a consultant and it's fair for that consultant to dare to speak. Calling him "connected to the lease" is enough of a stretch / falsehood that it opens the door to calling Council's bond guy connected to Doug Shields' election efforts, and there's no reason to go either place. I think we should rely on understanding the substance of arguments more than we rely on our assumptions about how much we trust the people vocalizing them.
ReplyDeleteI added a dash into your name to better distinguish you from Rex.
MH - I've heard it said by Suze Orman types that you have to "prioritize your debts" once you're in too deep. I'm not sure if we're even comparably behind or in peril with any of our other creditors or constituencies, but the state has righteously made that decision for us. I'd prefer a more holistic fix also, but we're all crawling before we're walking. I should add that from where I'm sitting, a state takeover followed by cash infusion(s) during a rebooted political climate so as to mitigate the true nightmare several years hence would be just fine -- but acceptance of the takeover I'm still judging to be a political nonstarter on Council's majority. Yes, even more so than a watered down lease. ;)
ReplyDeleteI bet if the city had extra money and didn't own the outter 25% of its own main streets, people would very much advocate that it try to own those.
ReplyDeleteThis, of course, explains the ongoing campaign for the City to buy up all the private driveways, lots, garages, and other currently-private vehicle paths in the City. Oh, and why it forbids privately-owned vehicles from operating on the streets. And so on. The City must own 100% of all transportation systems within its borders!
Back in the real world, governments don't actually need to own things, let alone be receiving the revenues from things, in order to regulate them--that is one of the chief advantages to being a government in the first place.
The city is about to take an asset that produces income that goes to its general fund (i.e., the thing that pays for the services that run the city I live in) and turn it into an asset that pays only for the retirees.
Money is fungible. What you are actually objecting to is making a lump sum payment into the pension fund, a plan which admittedly has to be defended on its own merits regardless of the nominal source of that money.
But my precise point above was that I think leasing the parking assets would be a good idea even if the City wasn't contemplating such a lump-sum payment to the pension.
It would be pointless for the rest of us to agree to any plan that isn't part of a broader fix for the city's financial hole.
Recognizing this is a different topic: unfortunately, the City is not in control of its fate. Ultimately, that is up to the State, and the State may present the current stakeholders in the City with choices they wish they didn't have to make, or think are unfair, or so on.
I'm not ruling out some sort of brinksmanship to get what you want out of the State, but that better be part of a well-calculated plan with a reasonable likelihood of success, not just a self-defeating symbolic protest against the unfairness of this cruel world.
I'm not ruling out some sort of brinksmanship to get what you want out of the State
ReplyDeleteHow about brinksmanship is to get what I want out of the city? I want them out of the pension fund management business and I want the city retirement fund managed by somebody who has enough money under management that they can actually pool risk. And I want it run by somebody who isn’t making stupid assumptions about likely market returns and who gives regular, open reports. You can call this symbolic if you’d like, but on the whole I think that I* am very likely to get what I want out of this. I'd say the self-defeating part of this is the whole "Do this lease or we're all going to live in barrels and people from Harrisburg will come and spit in the barrels" that was the only part of the push for the lease that was made to the public.
If these things do happen, then I’m fine with figuring out how to bolster the pension fund. And I think parking is the best way to get the money to do that.
*I have no actual power. I mean, of course, the city council members who depend on the votes of people like me.
So what happened to:
ReplyDeleteIt would be pointless for the rest of us to agree to any plan that isn't part of a broader fix for the city's financial hole.
Changing management of the fund may be a good idea. But on its own, it isn't such a broader fix.
Changing management, to get a bigger risk pool and to get greater openness, are necessary, but not sufficient, conditions for a broader fix.
ReplyDeleteWon't state-ordered $100 million payments do more damage to the general fund than the parking lease?
ReplyDeleteSeems like the exact same thing could be said about increasing the balance in the pension fund (it is likely going to be necessary, but not sufficient, for a broader fix).
ReplyDeleteAnd increasing the balance in the pension fund removes any incentive the mayor has to do a broader fix and the only leverage the state has decided to exercise.
ReplyDeleteThe steps need to be done in the right order.
It seems there's an impasse at the heart of our impasse:
ReplyDeleteA) The bond concept needs to be studied if we are to consider it (since the city Finance Dept.'s analysis and the Mayor's own policy analysis are not viewed as credible or worthwhile enough by the Harris Council or by the people).
B) Studying the bond plan at an outside agency will take SO LONG, and give that plan SUCH an aura of momentum and inevitability, that IF / WHEN the data comes back confirming that the mayor was right again -- that the plan won't work, or can't in all seriousness be done responsibly, and/or can't be done at anything akin to the parking rate structure which comes paired with it -- then it will be too late to return to a leasing option and too late to start at any new square 1.
The most likely result at that juncture would be to opt for actual irresponsible borrowing, and/or even steeper rate increases and/or a variety of bad endings which would only occur once most of those in the present Chamber have moved on.
If we pursue the bond plan, study it and luck out, the mayor's folks will be wrong and the borrowing will be shown to work truly well. If we don't, I'll be with both Peduto and Ravenstahl, hopefully, in pushing hard for a state takeover and be repulsed by anyone left trying to avoid it only out of narrow and short-term political expediency.
Don't worry, I have the solution. I just need e-mail addresses for Dick Armey and Doug Shields. I'll cc you on the message.
ReplyDeleteThe steps need to be done in the right order.
ReplyDeleteBut you also can't guarantee that both steps will actually get done. In the event of a takeover, maybe the City will instead go with the Peduto non-plan, and in a couple years you will be left wondering what happened to that general fund you were claiming to protect.
since the city Finance Dept.'s analysis and the Mayor's own policy analysis are not viewed as credible or worthwhile enough by the Harris Council or by the people
Given that Council's hired guns actually looked at borrowing, and that the Council-Controller plan isn't really meaningfully different, I think you can include them among the people Council is now deeming not credible.
And presumably they will conclude that about the next hired guns that tell them what they don't want to hear, and on and on. Financial advisors who give the wrong answers from a political perspective just aren't credible!
The problem will never go away when you allow employees to retire with full pensions at age 50!
ReplyDeleteAddress the problem, change state law!