CityLedes: Pension Tension – Next City

Quality news about cities is critical to democracy. Can you help us meet our goal?

$9,398
$40,000 goal

CityLedes: Pension Tension

CityLedes is a weekly roundup of urban-related news happening across the country and globe, as compiled by Harry Moroz, Mark Bergen and David Sparks.

The Lede: Retirement costs are consuming an ever-increasing share of L.A.‘s budget, and city officials, business leaders, and labor unions are locking horns over proposed solutions. After a six-month legal battle, five Chicago pension funds are able to fire a money-management firm founded by well-placed relatives. Nearly half of eligible NYC teachers are denied tenure. Large bond packages will go to voters in Austin and Houston. Anaheim’s electorate changes; its city council elections stay the same. Examining the lessons of T-PLOST’s failure. The Detroit school board convenes after a three-year break. A controversial bridge project in Portland (which still has 65 miles of gravel roads, by the way) gets a boost from the Prez. New York City’s still-dismal unemployment numbers raise troubling questions. Radioactivity complicates Frisco’s Treasure Island development plans. Abstinence-only sex ed is linked to the high HIV rates of African-American youths in New Orleans and Louisiana. Casino fever hits Spain. The Chinese rural/urban income gap grows.

Click to jump to a topic:
Budget
Education
Transportation and Infrastructure
Economy and Development
Labor
Housing
Energy, Environment, and Health
Public Safety
Immigration
Mayors and City Councils
International
Culture and Other Curiosities

Budget

  • Retirement costs for L.A. police and firefighters will increase 56 percent in the next four years. The conversation about how to confront these rising costs is heating up. San Francisco’s pension investment strategy is too risky.

Five Chicago government pension funds have won a six-month court battle to fire the money-management firm founded by a friend of President Barack Obama and a nephew of then-Mayor Richard M. Daley.

Chancery Court Judge John Noble ruled last week in Delaware that the pension funds had sufficient cause to fire DV Urban Realty Advisors, which was formed by Obama’s friend and onetime employer Allison S. Davis and Daley nephew Robert G. Vanecko.

For the past six years, DV Urban has managed $68 million for pension funds representing Chicago teachers, police officers, other city employees and transit workers, investing government workers’ and retirees’ pension money in risky real estate deals that haven’t done well.

After months of tortuous haggling and bitter division over a revised plan between Mayor Chris Doherty and the council majority led by council President Janet Evans, they have finally agreed on a version that will be up for adoption by the council Thursday.

They need to adopt a plan that is acceptable to the city’s Act 47 recovery coordinator, Pennsylvania Economy League, to qualify for a state aid package of $2.2 million, and to convince banks that the city would be able to pay back loans the city desperately needs to end the year in the black.

The $2.2 million aid package from PEL’s overseer, the state Department of Community and Economic Development, would tide the city over for about a month by covering two $1 million payrolls, and give some time to try to secure financing from lenders.

  • Municipal bond defaults are more common than previously thought:
The economists said the widely held belief that municipal bonds almost never default is based on only a narrow slice of the market — the safest part, consisting of bonds that are graded by the main ratings agencies when brought to market. When the researchers looked at a much broader sample, which included unrated bonds, they found there have been about 36 times as many municipal defaults over the past 40 years as the conventional wisdom suggests.

As part of the wide-ranging regulatory changes that followed the financial crisis of 2008, the Dodd-Frank Act included a provision that would make municipal advisers “fiduciaries,” meaning they must show an undivided loyalty to the communities that hire them, putting local residents’ interests ahead of their own.

That’s a much higher standard than the one for the banks that underwrite municipal bonds. The law in that case takes for granted that underwriters are looking out for their own interests in bond deals, and requires only that they deal fairly and not mislead.

  • The fate of a $385 million bond package will be decided by Austin voters, while Houston adds $410 million to its $2.7 billion bond package.

Education

The totals reflect a reversal in the way tenure is granted not only in New York City but around the country. While tenure was once considered nearly automatic, it has now become something teachers have to earn.

A combination of factors — the education reform movement, slow economies that have pinched spending for new teachers, and federal grant competitions like Race to the Top that encourage states to change their policies — have led lawmakers to tighten the requirements not only for earning tenure, but for keeping it.

  • The NIMBY battles over NYU’s expansion plan continue. NYC schools will shut down a school lunch program that engaged professional chefs because it does not meet federal requirements.
  • Twice as many Georgia high school students dropped out in 2011 than was previously calculated:
The discrepancy came to light because this year the federal government made all states use a new, more rigorous method to calculate graduation rates. Under the new formula, the state’s graduation rate plunged from 80.9 percent to 67.4 percent, one of the nation’s lowest.
  • The Charlotte-Mecklenburg School Board is frustrated by academic setbacks:

And the district’s nationally acclaimed strategic staffing program, a signature effort for the past five years, yielded disappointing results at schools that were supposed to be models of success by now.

Strategic staffing provides financial rewards and prestige to teams of educators who volunteer for duty in low-performing schools, with a goal of long-term changes that break the cycle of failure. But the schools that have been in the program longest saw some of the weakest results — in some cases, performing little better than they did before the efforts.

  • Houston school trustees renew talks about tightening ethics rules. A look at the Chicago school that’s “doing something right.” The Detroit school board officially convenes, for the first time in three years.

Transportation and Infrastructure

  • Dissecting the Atlanta T-PLOST vote further:

Are there generalized lessons to be taken from the Atlanta experience? Two important ones:

First, regional votes in places without a tradition of regional institutions and decision-making are an extremely heavy lift. In our focus groups, the idea of a regional solution held a lot of appeal. But in reality, voters were being asked to send a lot of their money to a “regional” approach with unclear lines of accountability. The money would have gone to GDOT, MARTA, the Georgia Regional Transportation Authority and to local jurisdictions throughout 10 counties.

But with money spread all over the place, where did the buck actually stop? They were being asked to trust, not just their local electeds, but government writ large. In this day and time, with this electorate, that may have just been too much to ask.

And second, important though it is, a project list is not necessarily a plan. The Atlanta proponents understood that the 70 percent of transportation tax measures that pass nationwide almost always have a clearly articulated list of promised projects. Given the legislature-mandated process and the resulting list of 157 projects, voters perceived the T-SPLOST as a grab bag of pet projects, offered with a plethora of justifications.

  • Yonah Freemark handicaps the presidential candidates’ transportation policies:
The Democrats have a choice: Accept Mr. Ryan’s commitment to undermining the role of government by agreeing that “things need to be reformed,” just with more moderation than Republicans would allow; or projecting a strongly held view of the importance of the role of government in American society. The fact is that significantly improved transit systems in the nation’s cities will require increasing federal investment, and that simply will not happen if Mr. Ryan gets his way.
  • NYC’s bike-share system won’t open until March 2013. Mayor Bloomberg’s efforts to allow livery cabs to legally pick up fares are struck down.
  • The feds promise Georgia $11 million for transpo projects. Pedestrian deaths rise in metro Atlanta. Opposition to a proposed South Dade expressway builds. New Orleans’ Louis Armstrong International Airport receives approval to refinance existing bonds to help fund additional parking facilities. A controversial bridge project that would link Portland with Vancouver, WA receives “expedited” status from Pres. Obama. The Bureau of Governmental Research opposes a proposal to renew tolls on the Crescent City Connection. Three new light-rail stations on Dallas Area Rapid Transit’s Orange Line open. A Cleveland transit center plan sits in park. Mayor Sam Adams wants to improve Portland’s 65 miles of gravel roads before leaving office.

When BART received $92 million in federal stimulus funds in 2009, it promised to create “thousands of jobs.”

But to make its numbers after the money was spent, the transit agency resorted to pressuring and cajoling, e-mails obtained by California Watch show. In a 2009 exchange, a BART supplier received a disapproving e-mail after he said no jobs had been created with a $4.8 million stimulus grant that BART used to buy auxiliary power supply equipment for transit cars.

Economy and Development

  • New York City’s consistently dismal unemployment numbers — the city’s unemployment rate was 10 percent in July — are raising questions:

“The recent divergence between the brisk growth in jobs in the city and the lack of growth in the number of employed residents in the city is unprecedented,” the report by New York Fed economists James Orr and Jason Bram stated. “Moreover, this gap between the two measures continues to widen, raising some questions as to how strong New York City’s recovery actually is.”

“While there are several potential explanations, the stagnation of resident employment remains largely a puzzle,” Messrs. Orr and Bram write.

  • Hiring slows in Miami, while Miami-Dade restaurant-tax collections continue to surge. The DNC provides a convenient deadline for improvement projects in Charlotte.

Development corporations, land trusts, and local governments are orchestrating a flurry of development that has taken off in neighborhoods once considered ghost towns or worse. It could signal a transformational moment for the region, as areas known for sprawl make long-term bets on the city in an attempt to rebuild hollowed-out tax bases.

But is the deck stacked against them? Redevelopment tends to carry more additional costs—demolition, environmental inspections—than turning green fields into suburbs. And mass exoduses have left many Rust Belt cities with aging infrastructure and housing stock whose repair bills and vacancy rates are outsized even for rebounding urban areas.

  • A report says Cleveland’s economy is still behind in the skills game. A local retailer in Milwaukee picks a fight with the biggest big box boy in the yard.

Housing

The findings appear likely to complicate the environmental cleanup and new construction on Treasure Island after years of debate — much of it shielded from the public — over the island’s radioactive hazards. Internal emails and documents obtained by The Bay Citizen leading up to the findings reveal numerous new areas of concern squarely in the path of the planned development.
  • Boston rents soar. Rising D.C. home prices mean less affordability. Seattle officials are divided over tent encampments for the homeless. Florida-backed Citizens Property Insurance announces major changes to its home reinspection program after public outcry over premium increases. Many New Orleans church properties are still in limbo in the wake of Hurricane Katrina. Portland starts over on its effort to implement annual testing to root out discriminatory housing practices.

Energy, Environment, and Health

  • A medical professional should inspect porn shoots to make sure actors are wearing condoms. A study links abstinence-only sex education to epidemic HIV rates among young Louisiana African-Americans. Planes spray insecticide over Dallas to combat a West Nile outbreak. The Portland City Council will vote in favor of fluoridating the city’s water.
  • U.S. carbon monoxide emissions drop to a 20-year low. Baltimore replaces its streetlights with energy-savings LEDs. Solely solar will power this 4-acre urban farm. A D.C. task force explores whether more of the city’s power lines should be buried.
Just outside the tent, the bosses of the operation had corralled a cluster of news reporters at the water’s edge to tell their story. They were the ones who were killing the river, they explained. They had decided to poison it because they were at war — with a fish.

Public Safety

Milwaukee Police Association president Mike Crivello said the FBI audit doesn’t add much to understanding how deep the problems are or why they occurred.

“I find it to be troublesome because if you already know that there are so many more issues, because they’ve proven it themselves, then a small test just doesn’t have much to offer,” he said. “I don’t see a whole lot of worth it in it I guess.”

The 45-page audit contains no specific descriptions on the type of crimes misclassified, just general crime categories. It also doesn’t state from what period of time the sample was taken.

  • Chicago’s top cop elaborates on the city’s choice to deter crime by ditching i-bonds. Nine Charlotte-area counties and municipalities follow the city’s lead and clamp down on camping on public property to curb Occupy protests ahead of the DNC. Dallas police announce a series of policy changes. Miami voters retain a ban on pitbulls.

Immigration

But city officials say they must ask for the information in order to comply with oversight requirements attached to the $6.8 million federal grant that covers the bulk of the city’s after-school program costs. Congress requires grant administrators to ensure that no federal funds benefit illegal immigrants, and the District is making a concerted effort to adhere to those requirements in hopes of shedding its status as an “high-risk” grantee. (Note that illegal immigrants generally cannot be barred from public schools, but after-school programs appear to be treated differently.)

City officials, however, took pains in a follow-up release to note they have “no intention of turning students or families away for afterschool programs or services” if they cannot document their citizenship or legal residency. Those students will have their after-school costs covered by local tax funds that aren’t subject to the congressionally imposed restrictions.

  • Nearly 1,000 people showed up to an Atlanta forum on the new immigration deferral policy, which many undocumented immigrants are finding out is narrowly tailored.

Mayors and City Councils

Disneyland helped spur a development boom that has made the city California’s 10th largest. Once a suburban and almost entirely white town, it now is 53% Latino and about 15% Asian. Whites make up about 27% of the city’s population.

But one thing hasn’t changed. The city continues to elect its representatives just as it did in 1955: Four council members and a mayor all are elected by the city at-large. The result: Four of the city’s five elected leaders live in the wealthy, and predominantly white, area known as Anaheim Hills. Only one comes from the center of Anaheim, and none lives in the poorer, denser western part of the city.

  • Groups lobby for an Asian-majority voting district in Brooklyn. The Oakland City Council will change significantly come November.

International

  • The Urbanophile picks apart “Global City” indexes:
Looking at these, I can’t help but think that the criteria were the product of an iterative process where the results were refined over time. Thus in a sense the outcomes were likely somewhat pre-determined. That’s not to say that the game was rigged necessarily. But I suspect if anyone were doing a global city survey and London and New York did not rank at the top, the developers would question whether they got the criteria right. In a sense, a global city is like obscenity: we know one when we see it, but we don’t necessarily have a widely agreed upon objective set of criteria to measure it by.
  • A mass, often panicked, exodus from south Indian cities prompted by violence in the northeast throws into question Bangalore’s position as a cosmopolitan safe haven.
  • Madrid dreamed big. Those dreams will have to wait. Barcelona and Madrid court a Sheldon Adelson Las Vegas Sands casino. Some are skeptical:

Still, some Spanish politicians are acutely aware that the longstanding rivalry between the two cities is helping the politically savvy Mr. Adelson.

“It has worked great for him to have two cities competing so fiercely, with everybody trying to make the maximum efforts to meet his wishes,” Xavier Trias, the mayor of Barcelona, said earlier this year. “But if he thinks the European casino model can become the same as in China or Vegas, I think that he is wrong, because there are laws here that really cannot and shouldn’t be changed.”

Culture and Other Curiosities

One to a country, and mostly chosen for their wealth and population size, the “world cities” are Berlin, Istanbul, Johannesburg-Gauteng, Mumbai, New York, Paris, Sao Paulo, Shanghai, Singapore, Sydney, Tokyo, and, of course, London.

  • And how about this? We didn’t make the cut, but they’ve gone and stolen our culture-as-an-economic-driver strategy. Or maybe they just read Richard Florida too, a decade ago, when The Rise of the Creative Class was published.
Practitioners of parkour, therefore, engage their immediate, physical world at the same time that they draw upon an imagination enabled by their on-screen lives. As such, urban researchers need to consider the ways that virtual worlds can change and enhance how individuals understand and utilize the material spaces of the city.

Tags: chicagomayorsmichael bloombergpensionsurbanismrichard daley

×