Public Employers are Dangerously Confused about Protecting Workers’ Pensions

PensionsShreveport    Pensions at their core are deferred wages set aside for the future use of workers when they are unable to collect their salaries.  If there were no pensions, presumably wages would be higher, depending on tax policies of course.  Employers and politicians would never think they had the right to raid their workers’ money once it is securely in their pockets, depending on tax policies of course, but when it comes to pensions they seem not to hesitate for a moment at least if we look at recent examples of confusion run rampant in Detroit, the United Kingdom, and, sadly, some of the controversial, so-called “model” charter schools running unaccountably in New Orleans.

The situation in Detroit is now well known.  In the city’s bankruptcy officials and bondholders both high and low felt it was open season to reduce and eliminate pensions for career public servants, finally saved somewhat by the state government coming in and passing a measure to bailout most of the pensions.

In New Orleans, The Advocate spoke of a pension mess in the ReNew six-school charter operation perhaps too kindly as needing “clarity,” when the real demand should have been about the missing level of accountability when schools have no elected boards to oversee their financial shenanigans and think every dollar is fair game.  The rules for the Teacher Retirement System of Louisiana are clear:  all are in or all are out.  ReNew tried it all sorts of ways.  They tried to put one school in, keep the other six out, allow 21 teachers in out-schools in, and enroll 41 other school workers in that shouldn’t have been in.  This isn’t about clarity, it’s about chaos verging on criminality, because neither did ReNew pay the required Social Security payments on the workers.  The IRS and the state will have to straighten it out, but administrators clearly felt when it came to pensions way down the road, it was anything goes.

According to a columnist, Pauline Skypala, writing for the Financial Times, that about sums up what the Cameron government is trying in the United Kingdom as well, but not just for public employees but all of their workers.  She refers to it as “confusion,” but writes about the scheme as contradictions.  The government allowed pensioners to cash out of the system after they retired, which seems crazy and irresponsible, and on the other hand created something she refers to as a collective defined contribution (CDC) plan where everyone stays in, a defined contribution is made, and the benefits go up and down based on the security or volatility of the market-based investments.  Yikes!  Supposedly there is no “too low to go,” but when pensions mix politics, who really knows.  Supposedly, they are copying a similar system used in the Netherlands, but there everyone is in, the investments are mostly in not-for-profit huge pension funds, and long term trusted, “safe” holdings.

Since the devastation of the great recession in 2007, not even George W. Bush wants anyone to remember he once proposed converting the entire Social Security retirement system in the US to 401k plans that undoubtedly would have had a feeding frenzy on collateralized debt obligations and fancy products that no one understood based on algorithms from another planet, while leaving millions of seniors with nothing.

The only sure thing is that everyone gets old, and if they worked, and voted, to defer their earnings for a safe and secure retirement with the wolf far from their door, then politicians and employers need to make sure they view at least that commitment as a sacred trust.

Facebooktwittergoogle_plusredditpinterestlinkedinmail

Donors Muscling Democracy in Detroit

QPIMG_5892New Orleans No matter how jaded we might be about the ways and means that the deep pockets of philanthropies muscle up and try to force their will on desperate grant seekers, the article in the Wall Street Journal by Matthew Dolan, “Revival Bid Pits Donor Against Detroit,” was a shocking tale of arrogance, elitism, and autocracy by Rip Rapson and the $3.1 billion Kresge Foundation.

Reading the article it was hard to see any controversy.  Rapson and Kresge had backup on their heels in a face of wills on whether or not they knew what was best for Detroit and could impose their “vision” accordingly or whether or not the newly elected reform mayor and former NBA basketball player, Dave Bing, and the citizens should drive the process.  Clearly they were flat ass dead wrong and the article couldn’t have been clearer.

The foundation had put money into Detroit Works, a standard issue, consultant driven planning apparatus for looking at Detroit’s future similar to what virtually every city in the US has tried to unite business, labor, and other “stakeholders” to come together behind a plan.  Bing had put the operation together before he was elected as a transition vehicle for his emerging government.  Nothing much of a surprise here either.  It’s all standard issue in big time, big city politics.  The difference here is that Bing was elected and, appropriately, moved to integrate planning and other functions in city departments and, as mayor, make sure everyone got their fair say.

Rapson seems to have petulantly pulled Kresge’s money out of Detroit Works trying to insist that an outside planner from Harvard recruited earlier to run roughshod over the local players still got to push the program.  He also doesn’t like the way a rail plan is developing and the fact that the City of Detroit wants to drive the engine, not Kresge with him wearing an engineer’s cap, so he’s also suspended the foundation’s money there, arguing that without Kresge the project is DOA.  Whoa, doggie!  Kresge’s big bucks do give them a big stick and a loud voice because unfortunately that is the way things work in America, but didn’t he at least read a couple of the pages in the foundation executives’ handbook that says they should at least pretend they care about what others thing?  What country is Rapson from that he thinks this is the way the world works?

Continue reading

Facebooktwittergoogle_plusredditpinterestlinkedinmail

Florida: Detroit with Palm Trees

West Palm Beach
The boosterish headline in the West Palm Beach paper was
curious and somewhat contradictory. They were trumpeting the fact that the “values” of houses
were “bargains” and should be swiftly picked up because the comparable available prices in this
normally high flying market had not existed for 15 years or more. Not many writers can spin a
full-on recession front page story and a graph that must be gut wrenching to many homeowners
and foreclosure resisters into something that pretends to be good news all around. The real
estate market and homeownership in Florida may be in the dumps, but hucksterism is still alive
and well, so Florida has a future.
More sobering were some notes I exchanged with a good friend in the Tampa/St.
Petersburg area, who has been following the housing market up there in one the nation’s top
foreclosure hotspots with a close eye, while I was passing through the state over the last several
days. In detailing the disaster she was seeing in her area, she made the following points,
including a telling description of her area as “Detroit with palm trees,” which says it all in my
book. Here are some of her points from the front line observation post:
….the shadow inventory of foreclosed homes in Florida is being snapped
up at an alarming rate by cash buyers (investor flippers) so the whole
cycle appears to be poised to start again. The City of St. Pete
renovated a buncha single family homes in distressed neighborhoods
with the NSP funding — guess what; there are no buyers in those
neighborhoods who can qualify with lenders right now; and the state
program (SHIP) which used to provide down payment assistance is all
over also.
….Pinellas County has a twenty percent vacancy rate for single family
homes. We are Detroit with palm trees. Meanwhile the homelessness
population has jumped astronomically, particularly homeless families
who could live in those homes.
….We have a mobile home park down Fort Myers way right now that houses
every farmworker within like a 200 mile radius that is in the process
of being shut down. The greater community is just starting to figure
out they won’t have anybody to pick the crops. No dinner, oops!
…once the “Hardest Hit” funding is used up that appears to be the end
of the federal government’s contribution to foreclosure prevention.
The “new” philosophy being espoused by the industry (and I think the
government, too); is let the foreclosures all happen; and then we can
begin to come up with a system for valuation of real estate again.
When it comes to housing, housing policy, foreclosures, bank supervision, foreclosure
prevention, foreclosure modifications, there is simply nothing going on anywhere. What I
watched close at hand in the Phoenix area over the last year is happening the same way in
Florida.
It is not just a matter of “who is on first, what is on second,” but more disturbingly, no
one in the federal or state government seems to even been suiting up to play in the game.
President Obama may think Arizona is a lost cause, but Florida is still one that he needs.
Standing under a palm tree with the beach at his back, when the President and his yes
men and women look out and see the For Sale signs, abandoned houses, and soaring numbers of
homeless squatting in what used to be their own homes, and he realizes he’s in Detroit, as my
friend notes, it may be too late for find his way back in good graces.

4977923001_fb4c74db64West Palm Beach The boosterish headline in the West Palm Beach paper was curious and somewhat contradictory. They were trumpeting the fact that the “values” of houses were “bargains” and should be swiftly picked up because the comparable available prices in this normally high flying market had not existed for 15 years or more. Not many writers can spin a full-on recession front page story and a graph that must be gut wrenching to many homeowners and foreclosure resisters into something that pretends to be good news all around. The real estate market and homeownership in Florida may be in the dumps, but hucksterism is still alive and well, so Florida has a future.

More sobering were some notes I exchanged with a good friend in the Tampa/St. Petersburg area, who has been following the housing market up there in one the nation’s top foreclosure hotspots with a close eye, while I was passing through the state over the last several days. In detailing the disaster she was seeing in her area, she made the following points, including a telling description of her area as “Detroit with palm trees,” which says it all in my book. Here are some of her points from the front line observation post:

….the shadow inventory of foreclosed homes in Florida is being snapped up at an alarming rate by cash buyers (investor flippers) so the whole cycle appears to be poised to start again. The City of St. Pete renovated a buncha single family homes in distressed neighborhoods with the NSP funding — guess what; there are no buyers in those neighborhoods who can qualify with lenders right now; and the state program (SHIP) which used to provide down payment assistance is all over also.

….Pinellas County has a twenty percent vacancy rate for single family homes. We are Detroit with palm trees. Meanwhile the homelessness population has jumped astronomically, particularly homeless families who could live in those homes.

….We have a mobile home park down Fort Myers way right now that houses every farmworker within like a 200 mile radius that is in the process of being shut down. The greater community is just starting to figure out they won't have anybody to pick the crops.  No dinner, oops!   
…once the "Hardest Hit" funding is used up that appears to be the end of the federal government's contribution to foreclosure prevention.  The "new" philosophy being espoused by the industry (and I think the government, too); is let the foreclosures all happen; and then we can begin to come up with a system for valuation of real estate again.

When it comes to housing, housing policy, foreclosures, bank supervision, foreclosure prevention, foreclosure modifications, there is simply nothing going on anywhere. What I watched close at hand in the Phoenix area over the last year is happening the same way in Florida.

It is not just a matter of “who is on first, what is on second,” but more disturbingly, no one in the federal or state government seems to even been suiting up to play in the game. President Obama may think Arizona is a lost cause, but Florida is still one that he needs.

Standing under a palm tree with the beach at his back, when the President and his yes men and women look out and see the For Sale signs, abandoned houses, and soaring numbers of homeless squatting in what used to be their own homes, and he realizes he’s in Detroit, as my friend notes, it may be too late for find his way back in good graces.

Facebooktwittergoogle_plusredditpinterestlinkedinmail

Abandoned Communities: Detroit & New Orleans

themotorlesscity.comNew Orleans        There is no question that Detroit has been an economically troubled city for some time now.  Apocryphal, urban legends have grown around this great city of quail and bird counts returning to some areas because they have essentially gone “back to wilderness” due to abandonment and lack of population.  Now news of planning reports done for new Mayor and former NBA player, Dave Bing, argue for withdrawing all city services from some sections of Detroit to concentrate resources and push populations into areas that city planners still believe that they can save.
I’m skeptical of such plans partially because of the lessons learned painfully in the battles around post-Katrina New Orleans, where world class, hot shot planners in league with land and business developers (as always!) tried to argue that entire districts of New Orleans should be allowed to somehow return to cypress swamps and green zones.  We stopped it from happening in New Orleans, partially through the democratic engagement of people who wanted to rebuild their homes and neighborhoods and had the opportunity of an election for district based council and the mayor to force their will and partially because in the United States property rights maybe even stronger than democratic values.
It is very difficult, even for sharpie business men and developers, to make the case that someone does not have the right to live on their own property.  Under “equal protection” constitutional guarantees it is also very difficult to imagine legally how cities like New Orleans then or Detroit now could simply abandon citizens and taxpayers by withdrawing all services to favor other citizens and taxpayers.  Detroit officials already seemed trapped by these realities even as they are trying to imagine something different.  They were at pains to try and argue that they were not going to “shrink” the city, but were committed to maintaining their boundaries at the same 139 square miles.  In fact the only way I can imagine Detroit legally getting around this problem is if they redrew the boundaries of the city, thereby disclaiming responsibility for the very ground itself and the people in it.  If they are not willing to do that, this is all just another exercise in doomsday-politics, and the truth is that Detroit also has a district council system, so politicians on the wrong side of the service ban will also be fighting for their futures as well.  In short in all likelihood this is another planning mirage that is simple DOA – dead on arrival.
Nonetheless the problems are real with declining tax revenues and wholesale abandonment of properties that cost an immense amount to tear down (Buffalo is a good example of a city with a removal program that can’t afford to remove) or rebuild which is the problem in both Detroit with its 50,000 properties needing rehab and New Orleans with our more than 60,000.  Furthermore for all the big talk about the “jack lantern” effect of sustaining citizen households in abandoned communities, there is never a real incentive or financing that has existed to buy the old properties and pay for the move to another area and the house there.  In New Orleans in the immediate aftermath of Katrina developers, big shots, and some environmentalists were Cassandras calling for a movement to “higher ground” and the 1850 footprint of the city, but in the wake of the storm higher ground was now phenomenally more expensive and no one ever had a plan on how the moving van would be paid much less the mortgage for the high rises or new homes on the “city on the hill.”
What is the real vision behind the Detroit abandoned communities plans?  It’s not Blade Runner but more dystopian, perhaps a combination of Mad Max with Mel Gibson planted in an urban landscape living behind a 14-foot tall Sarah Palin-Alaska spite fence and Denzel Washington in Training Day.  This would be the new definition of an “urban frontier,” where a homeowner is holding on to their house in the Detroit plan with no police or fire protection, no street lights or garbage pickup or road repairs or for that matter snow removal.
It’s one thing to live in cities where a lot of this is sketchy, but at least we are all pretending that it could get better or that we can make things better.  When a city simply throws in the towel, it’s neither a plan for the present nor hope for the future, but a full scale abandonment of responsibility and duty to citizens.   A city is not a real estate description but a collective community of shared experience and expectations.  Walk away from that and there’s nothing left at all.

Facebooktwittergoogle_plusredditpinterestlinkedinmail