The Mayor has ten days from the bill’s passage (December 19th) to either veto (with a potential Council override), sign, or let the bill become law without signing. If the bill becomes law, Pittsburgh will become only the third city in the country to include Responsible Banking legislation as part of our city code. (Cleveland and Philadelphia have already enacted similar ordinances.)

Pittsburgh’s checkered past when it comes to debt is well-known to many of you who remember the Act 47 takeover by the state and the fight over the Ravenstahl Administration’s attempt to privatize our parking assets. We have finally been able to wrangle control of our debt and the outlook is, while still not perfect, better than it has been in many years. Debt is not necessarily a bad thing for a City that wants to invest for its future and lay the groundwork for long-term growth, but it is a tool that must be used carefully and sparingly. Since the Act 47 takeover, the state oversight body has asked the City to implement a debt management policy to ensure that decisions made regarding the issuance of debt are not made lightly and that there are clear policies that must be followed. This month, I introduced a strong, clear debt management policy today that will achieve these goals.
 
My Debt Management Policy pulls together recommendations from the Government Finance Officers Association (GFOA), an international body of experts in municipal finance, as well as best practices from other cities to put in place clear boundaries for how and under what circumstances the City can take on more debt. We must be sure that debt is only being used to fund long-term projects that will benefit the entire City and that these investments will pay off in the future. The legislation will also allow the Council to bring in an independent financial advisor to provide an assessment of any potential debt deal and make the findings public.
 
With this legislation in place not only will one of the unmet conditions of our Act 47 plan finally be met, but the citizens of Pittsburgh will know that important financial decisions are being made with a clear policy in place and that they are being made free from the influence of politics.

Though the worst of the Great Recession is over and the United States economy is beginning to grow again, people who were put out of work or saw their hours cut when the economy collapsed have not fully recovered. Unemployment and underemployment are still too high, corporations and banks are holding cash instead of making loans, and development projects have stalled throughout the country. The prospect of help from Congress looks dim as the 2012 Presidential race kicks into gear so Pittsburgh City Council must step up and do what we can to spur economic growth and get our residents back to work.
 
The Pittsburgh Stimulus Plan, introduced last month, will do just that. The plan provides anyone interested in starting or continuing a residential, industrial, or commercial development 10 years of property tax relief on a graduated scale. In the first two years the tax bill is cut 100%, the next two years it is cut 90%, and so forth until in the final two years, taxes are cut 60% before the plan is phased out. The temporary relief and flexibility provided by this plan will get the shovel in the ground for projects that have not been able to secure full financing. Construction and trade workers who have seen their hours cut and their jobs grow fewer and farther between will get back to work and long-awaited projects will finally break ground.
 
This measure is based off an identical plan that currently applies to residential projects in certain neighborhoods. Under the Pittsburgh Stimulus Plan, all neighborhoods and all projects will benefit. The project also mirrors a program that the County has for suburban communities. This legislation will get people back to work in the City of Pittsburgh, while also fighting the suburban sprawl that has impacted this region for so long.
 
We can’t wait for the Congress to get its act together and provide economic relief to struggling families in Pittsburgh, the time to act is now.

In 1977, the United States Congress passed the Community Reinvestment Act (CRA) as part of a larger push to end discriminatory practices in mortgage and consumer lending that had led to large portions of, primarily, African American neighborhoods to be redlined. Redlining was the practice of banks and other lending institutions literally drawing a red line around certain neighborhoods and dictating that no loans could be made for residents and business owners there.
 
The CRA effectively ended redlining and led to a renaissance in bank-community relations that lasted several decades. While CRA has been incredibly important, it is federal legislation that doesn’t always capture the unique conditions on the ground in cities and states around the country. It is for this reason that I introduced the Responsible Banking and Neighborhood Reinvestment Act last month.
 
This legislation builds upon the success of the CRA, requiring that any banks holding City of Pittsburgh deposits provide documentation and reports to the City Controller outlining the ways in which they have reinvested public monies into our neighborhoods. The City Controller will then compile a “report card” showing the City Council and the public which banks we’re doing business with are excelling, which are maintaining steady progress, and which are falling behind in their commitments. The City invests tens of millions of dollars in banks each year and that money must be put back to work for our City and its neighborhoods.

The Pennsylvania League of Cities and Municipalities (PLCM) was set up with a mission to “serve local governments by providing programs, cost-effective services, and legislation which strengthen the autonomy of Pennsylvania municipalities.” A year ago the League created the “Core Communities in Crisis” task force to develop a strategic proposal for the new Governor and administration in 2011 regarding growing municipal fiscal challenges. The committee consists of 28 elected officials from every region of our state, including Pittsburgh City Councilman Bill Peduto. You can read their findings here.

In June of this year, Lancaster Mayor J. Richard Gray (who is also a member of the task force) released a report by Lancaster’s Municipal Finance Task Force titled “Prosper or Perish: Financing Local Government Services in Pennsylvania.” While the report uses Lancaster as its case study, the problems it identifies are the same in city after city statewide. An editorial in the Erie Times-News  noted as much and the problems listed are ones with which Pittsburgh is well acquainted:

“It’s striking how closely the circumstances outlined mirror those in Erie. What’s wrong is no secret, here or there.

The report acknowledges the case it’s making isn’t new and applies to communities throughout the state. What’s different now is that the cumulative damage threatens to send Erie, Lancaster and other cities into a disastrous, accelerating downward spiral of increasing taxes, declining services, urban blight and suburban flight.

Preventing that requires a wider understanding that in general the decline of Erie and other cities hasn’t resulted from mismanagement, and that their elected officials can’t cut their way out of it. The game is rigged against cities, and only changing the rules will help.

The targets for change identified in “Prosper Or Perish” will be familiar to anyone who’s been paying attention:

- Excessive reliance on the property tax, an issue aggravated in cities by the prevalence of tax-exempt property.

- A system of binding arbitration for police officers and firefighters that doesn’t account for a city’s ability to sustain the costs imposed and that routinely awards pay increases and benefits wildly out of sync with the rest of the economy.

- Fragmented, duplicative local governments that combine with a regressive tax system to leave suburban residents, who are more affluent on balance, shouldering less than their fair share of a metropolitan area’s costs and challenges.”

Sadly as another editorial, titled “SOS,” on LancasterOnline  observes:

“Unfortunately for Lancaster, virtually all of the reforms are beyond the city’s control.

The task force, composed of business leaders, says small cities need a menu of tax options to reduce overreliance on property tax revenue. Only the state Legislature can do that.

And, the report says, the contract arbitration system for police and fire unions has to be rewritten. Again, a job for the Legislature.

The report calls for revenue sharing with federal, state, county and tax-exempt property owners, meaning, among other things, that other government offices would contribute a fair share toward the cost of services provided by the city. Lancaster can’t force any level of government — or any nonprofit agency — to cough up the cash.”

“Prosper or Perish” recognizes this and issues a call to action:

“The time has come for Pennsylvania’s legislature to change the rules by which communities finance their local services. Local governments are forced to operate with a fiscal system that is, at best, irrational and, at worst, dysfunctional; a system that effectively deprives locally elected officials and the people they serve of the ability to be the architects of their own communities and their own futures.”

You can read the full report online here.

The act requires construction vehicles for city-subsidized projects to have the “Best Available Retrofit Technology” in order to reduce these emissions. The benefits will spread even wider when these same contractors end up using the retrofitted vehicles on privately run construction sites. While we were one of the first cities to enact clean air legislation under David L. Lawrence, we’ve sadly fallen behind. The Clean Air Act is the first legislation to clean our air in decades and has been over a year in the making.

Now, as the prime sponsor of the legislation, I’m asking for your help in getting the Clean Air Act passed. This legislation has been co-sponsored in Pittsburgh City Council by Doug Shields, Bruce Kraus and Natalia Rudiak — and they deserve thanks for that. But, last week — when it came up for a vote — a majority of Council decided to put it on hold. The Clean Air Act is ready to go and the preliminary vote is scheduled for Wednesday, July 6 at 10:00 AM.

For the sake of Pittsburgh’s air, please contact City Hall now (click here) and let them know that the time has come to pass this much needed legislation. Let them know you want and need a cleaner, greener Pittsburgh.

I would like to thank you for taking the time to contact me regarding the recent changes in the metered parking rates in the City. I appreciate your frustration and agree with you about the negative impact of higher parking rates and increased enforcement hours. To be certain, a bad situation rarely results in a good outcome. That is what we were faced by a state mandate to come up with $250 million in new revenue in one year in order to fix a broken pension system, that has needed help for over 40 years. Failure to come up with the needed cash would have resulted in a state takeover, which would have cost the city twice as much as the new payments.

We were given a puzzle where all of the pieces do not fit, however City Council did their best to come up with a plan that would have the least negative impact on our City. Like you, I am concerned with the harm this may do. To help you understand the dire situation, here are some answers to the most commonly asked questions I have received these past two weeks.

What initiated this rate increase?

In 2009, the state legislature passed Act 44, which required the City’s pension system to be funded at a 50% level by December 31, 2010 or be taken over by the state. As a result of this law, Mayor Ravenstahl proposed privatizing the City’s meters, lots, and garages under a 50-year lease with private financial interests. City Council, which was opposed to the Mayor’s proposal, developed an alternative. The City Council plan used guaranteed future revenue (parking tax) to get the plan up to the 50% threshold. This averted both privatization and state takeover. In order to fill the gap in the annual budget created by promising parking tax revenue be dedicated to pension, the parking rates at meters were increased. Council hired the consulting firm Financial Scholars Group that was headed by the former Chief Economist of the Security Exchange Commission and present CMU Tepper Business School professor to analyze all plans before making any decisions. We also conducted public meetings in all Council districts and a series of special meetings downtown over a nine-month period.

Why not let the state takeover?

Prior to 2010, the City’s annual pension payment obligation was approximately $45 million. If the state took over the pension system, they would raise the obligation to $100 million per year - an increase of over $50 million annually. The Council alternative that raised rates required an additional $9.3 million in annual revenue (achieved through the rate increase) and met the required state threshold. This is due to two specific criteria. First, the State would require that the pension fund be 100% funded, under Act 44, the city is only required to fund the plan to 50%. Secondly, the state would use more conservative estimates in determining the rate of investment over the long-term of the plan. Although this would be a better way for the city to operate, it was not something that we could afford without doubling the present increases or raising property or wage taxes.

Why not privatize the system?

The Mayor’s proposal to privatize the system would have resulted in the loss of this public asset for fifty years. It included raising parking rates at meters, garages, and lots 300%-400%. Parking meter rates would have been as much as double the increases that went into effect – for example, in Shadyside, the Mayor’s privatization proposal would have increased rates to $3.50 per hour instead of $1.00 per hour. In other neighborhoods like East Liberty and Garfield, privatizing the system would have resulted in meters costing $2.00 per hour. The affects to our neighborhoods would have been devastating.

It also would have added enforcement until 10:00 PM and added Sunday enforcement. This City would have lost billions of dollars in revenue of the 50-year period. This plan would have raised rates to a level that would have devastated our city’s business districts. Furthermore, it would have driven drivers to park on residential streets, lowering property value and decreasing quality of life for city residents. Additionally, any closing of a street or removal of a meter would have required taxpayers to pay the bank for any lost revenue. This plan would have resulted in a loss of over $2 billion in revenue over the life of the lease.

Why not change the pension systems?

While the state legislature passed Act 44 mandating we bring our pension funding up to 50%, they gave us no authority to change the pension system. All pension requirements and laws are controlled by the state legislature. City Council has no authority to change local pension requirements. State laws obligate municipal governments to provide a defined benefit program. In terms of the age of retirees or any other significant cost to our pension plan, the rules are also governed by the state, not local government.

Why raise parking rates as a solution?

The State controls the rates of most revenue sources for the City. The City only has the right to increases property tax, wage tax, deed transfer tax, and parking rates. Property taxes, when combined with the school district, are one of the highest in the County. Additionally, we must prepare for the upcoming reassessment that may raise property taxes as soon as next year.

The deed transfer taxes are one of the highest in the State and the highest in the County. It is a deterrent to homebuyers to move into the City and is full of loopholes that allow the purchasers of large properties to remain exempt.

Combined with the School District, the wage tax is the highest in the County and second highest in the State. State law mandates that it can only be applied to City residents - we do not have the right to tax people that work in the City, but live outside of it (like almost all other cities in the country). State law also prohibits us from having the right to tax non-profits or create a new source of revenue. We were under a state mandate to come up with additional revenue, but only had the options to increase wage tax, property tax, deed transfer tax, or parking rates.

Parking rates at City meters had not been increased for most neighborhoods for over twenty years. Since the mid-1980s, they have remained at fifty cents per hour for most neighborhoods, far below the national averages. It is difficult to find anything, including parking rates, which cost the same today as they did in the 1980s. Again, we were required to find $250 million in new revenue and of the four choices that we had only one – parking rates - that were below the average rates and had not been changed in over twenty years.

How were these rates determined?

The rates were chosen through analysis by multiple outside consultants. The initial report was conducted by a national parking consultant in conjunction with the Mayor’s plan to privatize parking assets. Further analysis was provided by Financial Scholars Group and compared with national parking averages through 20 comparable cities by City Council. In general, rates were increased by half of what the Mayor proposed through his plan. Rates remain on average or below with most other cities.

Is it fair across the City or are some neighborhoods being singled out?

The rate increase as a percentage is even across the City (other than Downtown and the North Shore) to what the Mayor proposed and what had been debated last year. The original proposal was to also have Shadyside and Squirrel Hill increase at a larger percentage, but I amended the legislation to protect neighborhoods where the majority of businesses are local, even if shoppers are city residents or from elsewhere. Parking rates are one of the only fees that are paid equally between city residents and commuters. The goal was not only to lower the rates proposed by the Mayor, but also to make them more equitable by neighborhood.

Instead of increasing rates, why not reduce the cost of government?

First of all, the City was required to have cash to fund the pension system; a reduction of services would not have met the requirements of Act 44. Second, since 2004, the City has been under Act 47 status with the State. This requires that both the Act 47 Coordinators and the Intergovernmental Cooperation Authority (ICA) approve all financial decisions. This includes having an approved five-year financial plan. As result of Act 47 and state oversight, the City has already reduced the workforce by 25% (1,000 employees). There have also been cuts in almost all city services, including fire stations, police, pools, recreation centers, senior centers, and street cleaning. While there is always room for improvement, the City is operating in a much more lean and efficient position than we did in 2004. Even if we were permitted to fund our pension system with reductions in city services, eliminating $250 million of services would decimate operations to a point that would be unacceptable to city residents.

What can we do now?

The rates are dedicated to the pension. Removing them would trigger state takeover of the pension fund and as described above, we would need as much as an additional $50 million annually. This is something we cannot afford. Under the plan approved by City Council the increased rates will be met by 2018 with additional funding from a reduction in our debt payments. It may not be apparent, but the plan that was approved was by far the lowest cost to the taxpayers of Pittsburgh. But, that is not enough.

It is obvious, the entire parking system needs to be overhauled. We are operating a 1970s system, while other cities have transformed into a 21st century transportation plan. While this new approach would need to guarantee the $9.3 million annually for the pension, it would also include reforms and improvements that would benefit residents and businesses. Cities like San Francisco are moving toward a market-driven rate system for meters, Washington DC has utilized smart phone systems for payments and cities throughout the world have realized of the importance of parking as a key ingredient in a successful urban development planning strategy. In the next few years, we must do the same – or better.

Once again, I appreciate you taking the time to contact me about the parking changes. I sincerely appreciate your concern and share that concern with you. I hope the information provided at least helps you to understand the difficult position that state mandated and the decision process we struggled with for over a year. I remain committed to protecting our City and the businesses and residents that choose to locate here. If you have any other questions or concerns, please do not hesitate to contact me.

Bill

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Burgess Campaign Finance Reform Statement
May 10, 2011

“In 2009, City Council passed campaign finance reform legislation - a reform that was long overdue for the City of Pittsburgh. It is disappointing to learn that Councilman Burgess would bow to the pressure of big money interests and reverse the reforms that Pittsburgh fought so hard to enact. Councilman Burgess’ attacks against the law are hollow and wrong. He is simply giving in to special interests and working to hide who is funding his campaign. The voters deserve to know who is pay-rolling this effort before they vote – and state law requires he tell them.

The City’s laws on acceptance and disclosure of contributions follow the federal rules and this was clearly discussed during Council’s debate in 2009. These efforts to rewrite history and create turmoil for political gain right before an election are being done at the expense of good government and transparency.

I look forward to the debate on this issue. It is further regrettable that Councilman Burgess would try to waive the rules of Council to vote on this bill tomorrow even further taking away the public’s ability to voice their position on this matter. I am dismayed that Council Members Lavelle, Dowd and Smith would support the waiver of rules to bring this up for a vote before the public has an opportunity to comment.

The people of Pittsburgh should be vigilant. Those who favor a “pay to play” government have given their orders and Councilman Burgess is working to deliver a gift for them – at the public’s expense.”

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MEMO
To: Pittsburgh City Council
From: William Peduto, Author/Sponsor of Campaign Finance Reform Act
Date: May 13, 2011
Re: Dishonest Statements Regarding Campaign Finance Reform Act

During the past few weeks, the public has been barraged with unethical and illegitimate statements regarding the Campaign Finance Reform Act of 2009.  I spent five years working to pass legislation that would limit the undue influence of those who believe that our local government should operate under a “pay to play” system.  During those years at least four versions of campaign limits were debated. Finally, on May 5, 2009, Pittsburgh joined the ranks of most other cities and established rules on campaign contributions.  Now with the 2011 primary just days away, a Mayor-backed faction supported by Pittsburgh’s version of the classic political machine has launched a campaign to twist the language and intent of this bill in order to damage their opponents.  It is critical that the attempt by Councilman Ricky Burgess to rescind the Campaign Finance Reform Act under these reprehensible tactics be dismissed immediately and that the public be given a full understanding of the legislation and the process.

As you all know, in 2009 we debated two proposals regarding campaign finance limits.  After vetoing the original bill, Mayor Ravenstahl and County Executive Onorato offered a modest proposal to set limits–these limits would have been some of the highest in the country and did not address the important issues included in earlier versions.  The Mayor’s bill would have set limits for contributions to Council candidates at $4,600 per individual per election cycle and $10,000 per Political Action Committee per election cycle. Under the bill finally approved and passed by City Council and signed by the Mayor, these monetary limits and campaign periods were changed.

The Campaign Finance Reform Act set limits at $1,000 per individual per covered election and $2,000 per PAC per covered election. As was discussed during the debate and contained within the legislation, a covered election is any primary, general, or special election.  Therefore a contribution of $1,000 could be made by an individual, or $2,000 could be made by a PAC to a candidate in both the primary and the general election.

            “COVERED ELECTION - Every primary, general or special election for City Elected Office” - 2009-1039, §198.01 Definitions

Read the rest of the memo here.

In March, Scenic Pittsburgh, a civic group dedicated to banning billboard blight, went to court to demand that the illegal sign finally be removed. Yesterday, Scenic Pittsburgh announced that an agreement has been reached and that Lamar will pay to have the sign removed and that removal will occur by September 1st. Here’s a letter by Mike Dawida, Executive Director of Scenic Pittsburgh and former Allegheny County Commissioner, announcing their victory:

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Dear Friends of Scenic Pittsburgh,

  I am pleased to announce Scenic Pittsburgh has negotiated an agreement the Parking Authority, the City and sign owner to remove a billboard erected in violation of the City of Pittsburgh Zoning Code. We expect the 19′ x 58′ electronic billboard that hangs on the Grant Street Transportation Center in Downtown Pittsburgh will be removed on or before September 1, 2011. We are pleased about the agreement as this partially completed sign hanging at a prominent downtown intersection has remained an eyesore for more than three years.

  Although this long-running legal fight has ended, the controversy continues. It is unfortunate that this billboard should have been handled as a simple zoning variance issue. Instead, an unconventional permitting process eventually led to the dismissal of two zoning commissioners and the URA Director. The removal of this sign validates the position taken by Councilmen Shields, Peduto, Burgess, Kraus and Dowd, who were sued for their opposition to this billboard. These councilmen should be commended for defending the people’s right to due process in the well established zoning process.

 The story of this billboard is a lesson as to why it is important to carefully consider the consequences of allowing electronic billboards in our neighborhoods. Once you allow billboards to be built, they are nearly impossible to get rid off. Scenic Pittsburgh is moving forward to remove other illegal billboards, but because of state law, most billboards in Pittsburgh enjoy grandfathered legal status. Hundreds of non-conforming billboards would be illegal otherwise.

  Rand McNally, Forbes, and The Economist recognize Pittsburgh as among the best. It is time to take a close look at what makes Pittsburgh exceptional. For many years our riverbanks and skylines where dominated by commercial interests but the “smoky city” eventually reclaimed its riverbanks and skylines. Today we bring our
visitors to the overlooks to gaze down on our proud city. This happened because of an advanced understanding of the value of these resources and the vision of a better Pittsburgh.

  In the vision of a better Pittsburgh, where do billboards fit? How much of our reclaimed city should we surrender to corporate interests? What do electronic billboards contribute to riverbanks and skylines of our scenic city? Do you want an electronic billboard in your neighborhood? These questions are not rhetorical, and will soon be up for debate in City Council where their decision will affect Pittsburgh’s image for another century.

Mike Dawida
Executive Director

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Congratulations to the citizens of the City of Pittsburgh who will finally soon be able to enjoy their Downtown without this eyesore.

A PowerPoint presentation from this meeting can be see here.