Friday, November 12, 2010

Friday: Core Temperature Rising...

Councilman Bill Peduto just fired off a doozy to the ICA (which is meeting on Monday) and to the Act 47 team, and to the rest of city government and to the press. After raising some technical issues with Mayor's latest, somewhat rhetorical 2011 budget submission, Peduto objects:

But what is worse is the harmful and destructive tactics being utilized by the Mayor to cover up shortfalls within his Administration and penalize those who are opposed to his parking scheme. (Letter)

Also Peduto complains of "blatant lies" and "sophomoric retaliatory actions." And then:

This Council has resoundingly rejected ANY plan to lease our parking assets. Let me be very clear on this issue, City Council will not support ANY plan that would lease out our parking assets to a private firm. There is an alternative plan supported by the Controller and seven Members of City Council that has passed and is now law. The only person blocking it is the Mayor. (ibid)

This is all in the event that the ICA has been living in a cave, which is indeed possible.

Council President Darlene Harris is also on record at a recent high-profile meeting of Council declaring that "A lease is a lease is a lease, and privatization is privatization is privatization -- is privatization." So it would seem City Council is in an uncompromising mood.

What seems to be far less widely understood is that Mayor Ravenstahl, for his part, is apparently every bit as dead set against being any part of a "revenue bond", at least not in the $300 million ballpark necessary to elude a state takeover on its own.

There seems to be a widespread perception that once the Mayor spiritually or emotionally comes to terms with the fact that his lease has been rejected, he will acquiesce to doing his part to issue this debt -- and to either commanding or liberating the Parking Authority to do the same -- out of fear of getting blamed for the resultant takeover. Contrariwise, every indication so far seems to indicate that the Mayor would rather fight a large revenue bond with his last eyeteeth, on his own conviction that it is impossible in the remaining time-frame, or unworkable as written, or ill-advised, or maybe most importantly worse over the long term than even the takeover.

Now, there are several reasons the Mayor might feel politically comfortable with this position. For instance, somewhat vulnerable Council members Harris, Kraus, and Dowd, as well as Controller Michael Lamb, are all up for reelection just this coming May -- whereas Ravenstahl gets two whole years to repair any damage. Yet what would truly chill the Harris Council to their core (if they would credit it) is the possibility that the Mayor actually adopted his position because he feels it is the responsible choice for the city.

At any rate, what is news today is that The Fund that is Something in the Nature of an Irrevocable Trust for Debt Service Reduction -- remember, that which was to be locked down most responsibly to pay down debt and debt alone, formally even under a defeasement agreement, so that we couldn't do something else with it like prop up the pension fund -- is now being tapped to pay down debt whereas others might desire it to help with the pension problem.

NO, WAIT! What is news today is that Council would now rather have the City itself retain its own parking assets, and use raised rates and penalties to create "dedicated funding" for the pension fund -- cutting out the middleman (and obstacle) that is the Parking Authority. It does not appear from today's news that the Council intends to take out a bond leveraged against that revenue and deposit cash into the fund, but rather "infuse the fund with value"; so too is it unclear how much this differs from the original Council-Controller plan. I suppose it is also unknown at this time whether the state would acknowledge a "value infusion" in its calculations, since hypothetically the city could change its mind in February and do something else with the money (sort of like it may do with the Irrevocable $45 million) *-UPDATE: Nah, it's sounding like they intend it to be drawn up and notarized, possibly.

At any rate...


Who's up for some oversight NOW, y'all?

If this furious last-minute financial and political jujitsu goes on very much longer, there is a real possibility that it will cloud this blogger's faculty for parsing truth from nonsense. Evidently it has shattered the capacities of our newspaper of record some time ago, which plainly threw up its hands. We realize that our oversight boards under Act 47 for Financially Distressed Municipalities are not "authorities" in the sense that they are our lords and masters -- but the establishment of a few common sets of facts, and some insight as to which assertions floating around are credible, would be extremely helpful.

Finally, in a somewhat roundabout but a very real way, our tax dollars are paying your salary. And it's a high salary. Get overseeing, oversight boards!


  1. raise the rates and pre-dedicate the revenues to the pension fund -- cutting out the middleman (and obstacle) that is the Parking Authority.

    I don't see how that can possibly be counted as far as the state goes. As reasons go, that doesn't even rise to the level of "the check is in the mail."

  2. Two reasons I like the "infuse with value" plan (not as a plan per se, but as an instructive device):

    (1) It helps clarify that if Council had its way, there would be no money available for upgrading and maintaining the garages, lots, and meter system for the next 30 years or so;

    (2) "infuse with value" is almost as good as "unicorn milk".

  3. I suspect the important thing is not so much WHAT IS the new plan but that THERE IS a new plan. That way they can ultimately say, "He's rejected every plan!"

    By that logic, well I'll turn it over to the peanut gallery...

  4. There's no money to upgrade anything else, so I don't see it should matter with the parking garages.

    My guess would be that both the city council and the mayor each prefer the state takeover to the other's plan and everything happening now is about who gets blamed. And blaming people is where the internet really has the comparative advantage.

  5. Or what Bram said. I didn't see that before I commented.

  6. It helps clarify that if Council had its way, there would be no money available for upgrading and maintaining the garages, lots, and meter system for the next 30 years or so

    Actually, if council had its way the PPA would seriously consider the council-controller plan. A plan that would fund the pensions, keep public assets public, cut out unnecessary middleman and finally, would generate the money necessary to upgrade and maintain the parking system.

  7. Anon 2:36 - Why then the self-admitted necessity of studying it, if you can assure us it's that obviously a slam dunk?

  8. There's no money to upgrade anything else, so I don't see it should matter with the parking garages.

    It just helps clarify why the Parking Authority, which is actually supposed to care about the parking system, isn't on board with these plans to load up the parking system with increased liabilities and give it nothing in return. Speaking of which . . .

    and finally, would generate the money necessary to upgrade and maintain the parking system.

    No it wouldn't, even given their own numbers. That pretense depends on ignoring the fact that the additional revenues would be spread over many future years, whereas many of the upgrades are needed now, and if deferred to the future, would cost more. And they only budgeted for a minimal number of improvements. And the Parking Authority would bear the risk of revenues falling short of projections leaving inadequate capital funds.

    Which is why this latest plan is helpful: it clarifies that Council doesn't actually care about such matters, it just cares about fighting The Man and keeping parking rates to a minimum.

  9. Just to give some numbers:

    The Council-Controller plan claims that over the next ten years it will generate about $77 million in funds that can be used for capital upgrades. It get that through a combination of about $21 million in capital currently available, another $9 million in the baseline budget assumed by Financial Scholars, and $47 million in additional cash flow through revenue increases.

    But here is the thing: the estimate needed for fixing the three garages and upgrading the meters is about $60 million. Even assuming ALL $21 million on hand could be devoted to these projects and ALL of the baseline budget CAPEX could be devoted to these projects (meaning the Parking Authority would have absolutely no other capital needs--an unlikely scenario), according to their own schedule the Council-Controller plan wouldn't generate $60 million in total until 2018 or so.

    Is the plan that contractors will accept IOUs until then?

    Again, it isn't a mystery why the Parking Authority doesn't see this plan as being in the interests of the parking system.

  10. Alright, guys: it's now my understanding that Council intends for there to be a contract (or some similar legally binding arrangement) with the state, committing this revenue stream from its parking assets. So it's not exactly just a pinky swear.

    The issues now seem to be 1) will the state go for that 2) what percentage of those future revenues is it prepared to accept, because it is aware we need some to deal with overhead and 3) how much overhead is there, considering not only routine operations and the maintenance, but now also the Authority's ability to pay back the $100 M debt it already owes. So it needs studied. Wonder if there is some groundwork completed or if it is just getting underway.

  11. Again, it isn't a mystery why the Parking Authority doesn't see this plan as being in the interests of the parking system.

    The parking system can go pound sand.

    But, I don't think the state is going to go for the new plan regardless.

  12. The parking system can go pound sand.

    That attitude is not exactly consistent with the promise that revenues from the parking system are going to pay off the pension shortfall. And, for that matter, it isn't exactly consistent with the view that the parking system is a very important public asset that these very important public officials must continue to oversee.

    By the way, I should make clear I think this plan is better than doing nothing. But I have now placed all my non-existent chips on nothing--too many veto points, and too much political downside to every viable plan, means the City will just ride this one right over the cliff.

  13. It is a fascinating question who at the state would be the counterparty to such a contract.  Some amorphous executive branch office?  Probably not. It couldn't be PMRS since if PMRS does not take over the pension fund it really has no statutory role in the city's pension administration at all. It really would have to be PERC if anyone at all. Problem with that is that I suspect that the whole idea to get the state to take over the city's pension system came from PERC in the first place.  The only other body that has a role in local pension administration is the state auditor general's office which has a role in both allocating Act 205 funds, but also in its general oversight function. Does not seem to me that either of those roles provides it authority to enter into any such a contract.

    Interesting thought though.

  14. How are Harris & Kraus vulnerable? lol

  15. How are Harris & Kraus vulnerable?

    Exactly. It might not seem that way now, but people who need people are the luckiest people of all.

  16. Anon 7:37 - I qualified it with "somewhat", but you could say Kraus is vulnerable because he won 55-44% last cycle or by 350 votes (and with his opponent suffering one of the worst final campaign weeks in the history of all campaigns anywhere ever) and Harris because well, isn't there a 3rd Ravenstahl child in the pipeline in her district?

    The fact that you didn't object to Dowd being listed as vulnerable makes me suspect who you may be. Or at least narrows the suspect pool down to two digits.

    C.Briem - My info (not that of any banned commenter mind you!) would suggest it's likely PERC they're looking toward, but that's not a for sure.

  17. Oh, I suppose I should add Shields to the "Vulnerable Enough to be Harmed in May 2011 by this Sequence of Events" list, since he's likely vacating his seat only to run for magistrate against McGough etc. Although he now has his cadre of anarcho-environmentalists to lend him comfort and aid.

  18. Don't foreget to add Burgess to the the "Vulnerable Enough to be Harmed in May 2011" list.

  19. And how vulnerable is the Mayor if his minders realize the 6 vote majority in Council are now calling the shots? If the good ol' boys shift $ to these Council races to buy some sympathy, Hizzoner may as well continue to not show up for work.

    Has anyone noticed his absences? Ask a Vet.

  20. Ask a Vet.

    He's hiding that cone that stops him from licking his stitches?

  21. Anon: 11:02, I think Bram didn't mention Burgess because of the "this series of events" portion of his statement.
    I think one would be hard pressed to place blame Burgess for the pension stuff not succeeding. He supported the mayor's plan which was rejected by council, his plan wasn't accepted by council, and the controller plan passed through council without his support. Burgess didn't stop any of the solutions from being implemented; one could argue he hurt the council-controller plan, but while Burgess did forcefully attack the plan, I am doubtful his arguments significantly impacted any decision makers (namely the mayor and the PPA board) who held the plan back. If he gets beat this May, I don't see the pensions being a major factor in his defeat.

  22. Gradstudent1 has it about right. Burgess is generally vulnerable in that he's up for reelection, and since now we're talking about politics that bears mentioning. But that has little to do with the pensions impasse and the dynamic of who may get blamed and when for precipitating a takeover.

    I was just thinking, riffing off of what Anon 12:46 said, how peculiar it is that a 6-vote majority is hanging together against the mayor for this long. The winning bidders may feel betrayed because of it, but the truth of the matter is this never happens. Usually by now either Harris comes around to the establishment, or Patrick Dowd senses an opportunity to step forward with a 3rd way compromise which breaks the impasse and underscores that he is not part of any team or faction, that he is part of the solution to these things and all things. The politics of the middle n'at. Harris and Peduto may be issuing more press releases and may hold the gavel on alternate weekdays, but in the trenches when things get antic it's been Dowd's leadership and improvisation that's been keeping this coalition one step ahead of the Mayor and the press. There's a reason the Council-Controller plan was once called Dowd-Lamb [secret] plan; and there's a reason that during the Mayor's special meeting, Dowd was the only one who recovered from being stunned to counterattack effectively. And all this time he hasn't dropped his oar to make a bid for the quarterdeck to stage a mutiny, and toward the helm to steer Pittsburgh towards "middle" ground. That's damnably peculiar.

  23. Bram/gradstudent1:

    I think it is a fair analysis that all 11 of the City's elected officials will stand to take some share of the blame if the City falls off of the cliff.

    5 members of City Council and the Controller are all up for re-election next year.

    While it may be true that the Mayor's share of the blame may be the worst, it is worth mentioning that Councilmembers up for re-election in 2011 may catch their share of the blame FIRST, because all anyone will remember is that their lives got worse because of the City's electeds and their inability to dispense with the politics long enough to serve them, all are to blame and here are 6 perfect specimens to voice discontent to.

    The voters may not be depended upon to understand the complexity of this mess, but they certainly, as evidenced by the November elections, know how to "throw the bums out!"

  24. I think Lamb has been calling the shots all along. Isn't he the one that was talking about "present values" a long time ago? He may be up for re-election but is he running?

  25. Deficient planners who are motivated by retaliation will produce deficient plans

  26. TED:

    Speaking of double entendre, I suppose that could be said of many in this saga, n'est-pas?

  27. TED:

    Okay, let's make a couple of clarifications here...

    1. The Mayor submitting a budget balanced based upon legislation not adopted by Council as of the submission date was a presumption, and perhaps a presumption as arrogant as it was reasonable. I mean, who torches a half-a-billion dollars?

    2. A supermajority of Council passing legislation requiring both the acquiescence of that same Mayor AND the concurrence of an instrumentality of the Commonwealth AFTER rejecting said Mayor's lease because it felt that once said lease was rejected, said Mayor would have no choice but to spread eagle on the pavement, get sacked, pillaged and then just "get over it" was a presumption, and likely a presumption as desperate as it was foolish. That premise merely demonstrates that those actors have yet to figure out why things work on the plane of reality.

    So here we are, 45 days before Old Lang Syne, all more aware of the consequences than a month ago yet no closer to a resolution.

    Sadly, the only thing being judged deficient is the public's trust in its' government.

    But fear not, TED, for I assure you that change will come. Change will come

  28. But fear not, TED, for I assure you that change will come.

    I hope so. I'm sick of voting in local elections with only one person on the ballot or where you know who is going to win before they cast the first vote. A little bit of inchoate, "throw the bums out", frothing rage could be good for Pittsburgh. The way we got into this pension mess is everybody trying to push things off past the election. At least that kind of deception will require state permission in 45 days.

  29. MH:

    After watching the November mid-term elections, I'm not so sure I can agree with you about the benefits of an electorate in a frothing rage.

    And unfortunately, Bram has convinced me that it is unlikely that the City's voters will act in their own self-interest until they start receiving bills and invoices, etc., for today's mistakes some 3-5 year in the future, so I wouldn't count on voter discontent.

    I've said it before, but it bears repeating:

    "The rain falls on the just and the unjust alike. Joy comes in the morning, there are no atheists in foxholes..."

  30. Except the biggest injustice is papering over the whole thing until there was no good choice. Pittsburgh's political class has demonstrated that it can't be trusted with money and that state oversight is needed to ensure better management. (The word "better" was carefully chosen.) I'm much more worried that somebody runs up another billion in hidden debt than I am about how to pay off this one.

  31. Can somebody tell me what to make of this? Or should I make nothing of this and consider it unrelated to anything else that might or might not be happening in the council?

  32. Yeah, that's funky. I almost would think there must have been something vaguely nefarious in the genesis of the subsidy. That or the calculation is that $6 to $8 more per household per month is easier to deal with than however many million the authority will save. It could be that PWSA is harder up for cash even than we thought what with those funky bonds.

  33. It could be that PWSA is harder up for cash even than we thought what with those funky bonds.

    #cough# JP Morganstahl #cough#

  34. TED:

    Which is the reason we should be extremely leery of overleveraging our assets, or stealing from our Authorities for purposes unrelated to their core missions.

  35. If this is a roundabout way to get that bond deal back in the news now without donning his JPMorgan & Friends sandwich board all over again, that's some diabolical genius right there.