July 29, 2013

Main South CDC

I am going to wait another day before I make comments, but let me make one today.  You are on the Board of Directors of the Main South CDC and you know that HUD is investigating how monies were spent by the CDC's and that there is a chance monies will have to be paid back.  Turns out your CDC, Main South, will owe I believe a million dollars.

That is a good time to give your Executive Director, who is making 100K per year plus another 15K in benefits, a three year guaranteed contract?   This when completely blows me away

July 25, 2013

Armory Street landfill

Still nobody from the South Worcester Neighborhood Center or their partner in the development has answered me..  

July 23, 2013


Stopped by to buy some stuff from Sprout and found the following picture.  Thoughts are with you.

July 22, 2013

Found this on line

The top 10 biggest U.S. cities on the brink of pension bankruptcy

According to Business Insider, here are the top 10 U.S. cities whose pension obligations will soon collapse: (this article was originally published in 2010, so we have updated the "years" to reflect 2013
#1 Philadelphia - Unfunded liability of $9 billion, $16,696 per household, only 1 year before the pension accounts are empty
#2 Chicago - Unfunded liability of $44.8 billion, $41.966 per household, money runs out in 4 years
#3 Boston - Unfunded liability of $7.5 billion, $30,901 per household, money runs out in 4 years
#4 Cincinnati - Unfunded liability of $2 billion, $15,681 per household, money runs out in 5 years
#5 St Paul - Unfunded liability of $1.4 billion, $13,686 per household, money runs out in 5 years
#6 Jacksonville - Unfunded liability of $4 billion, $12,944 per household, money runs out in 5 years
#7 New York City - Unfunded liability of $122 billion, $38,866 per household, money runs out in 6 years
#8 Baltimore - Unfunded liability of $3.7 billion, $15, 420 per household, money runs out in 7 years
#9 Detroit - Unfunded liability of $6.4 billion, $18,643 per household, money runs out in 8 years

#10 Fort Worth - Unfunded liability of $2 billion, $7,212 per household, money runs out in 8 years
Note that some of these numbers were actually optimistic. Detroit, for example, was predicted to run out of money in 2021, yet it already declared bankruptcy in 2013. What you are looking at here is a looming cascade of municipality bankruptcies over the next 10 - 20 years

Learn more: http://www.naturalnews.com/041298_unfunded_liabilities_retiree_pensions_government_confiscation.html#ixzz2ZnQilTJS

Detroit Museum of Art

As part of bankruptcy , assets like these may go up for sale

July 19, 2013

Muni bonds rates today

Yields in the $3.7 trillion U.S. municipal bond market rose on Friday, a day after Detroit filed for the largest municipal bankruptcy in history.

Longer dated rates on maturities ranging from 2037 to 2043 rose by 5 to 9 basis points, according to a preliminary read on Municipal Market Data's triple A scale.

Muni market

Is going to be a mess!!

Interest rates will need to be jacked up.

This could end up costing the City of Worcester millions in higher interest rates on muni bonds

Detroit files bankruptcy

USA Story

The city's two pension funds, which collectively have claims to $9.2 billion in unfunded pension and retiree health care liabilities, filed state lawsuits this week in a bid to prevent Orr from slashing retiree benefits as part of a bankruptcy restructuring

July 18, 2013

Decision day nears for Detroit bankruptcy

The expected bankruptcy filing would come after Kevyn Orr, the emergency manager, failed to reach agreements with enough of the city's bondholders, pension funds and other creditors to restructure Detroit's debt outside of court.    Rumor has it they will declare by end of the week. 

Full story 

Moody's cuts Chicago bond rating

Mounting pension liabilities have cost Chicago another cut in its credit standing as Moody’s Investors Service reduced the general-obligation debt rating for the nation’s third-largest city by three steps to A3, citing a $36 billion retirement-fund deficit and “unrelenting public safety demands” on the budget

Full story 

Armory Street Landfill update

No response

July 17, 2013

Boston Globe

Fantastic story on municipal pensions

Springfield is ranked lowest, its pension 29 percent funded, down from a high of 57 percent in 2000. The city has a pension liability of $925.6 million and assets set aside so far of $258.7 million. It has 2,900 retirees and 4,800 active workers.

July 16, 2013

Worcester Pension Fund "rebounds"? You got to be kiddin me!

Assets Liability Unfunded Pecentage

1/1/2007 $716,797.00 $837,608.00 $120,811.00 85.58%
1/1/2008 $759,410.00 $889,924.00 $130,514.00 85.33%
1/1/2009 $631,894.00 $929,569.00 $297,675.00 67.98%
1/1/2010 $679,510.00 $987,692.00 $308,182.00 68.80%
1/1/2011 $724,998.00 $1,025,076.00 $300,078.00 70.73%
1/1/2012 $712,110.00 $1,051,191.00 $339,081.00 67.74%
  1/1/2013              $729,400.00       $1,139,900.00         $410,500.00             63.27%

Worcester Pension Fund Rebounds is the headline in the Telegram.   Year ending 2011, we had an unfunded liability of $339 million. Year ending 2012, we have an unfunded liability of $410 million.    An increase in our liability of 71 millions is considered a rebound??   

Granted we had a good investment return at 14.1% last year (2012), but the year before (2011) it was -.84%.    The actuaries assume 8%, which I think is insane, and we averaged approximately 6.6%.  We did not even meet the actuarial assumption of 8% the past two years.

Look at the "Unfunded Liability" which is the only number that really counts!!

The unfunded pension liability increased $71 million dollars.  Let me say that again.   We just got a 14.1% return on our pension funds and our liability increased $71 million dollars!!!     The headline should be we just fell $71 million dollars more behind.    This is not a rebound.

Over the past 6 years our pension liability has increased $290 million dollars. Let me say this again.   On average our pensions system has fallen behind approximately $50 million per year.   I will not even get into the health insurance unfunded liability!!

The City of Worcester will go bankrupt on this pension liability unless huge changes are made.     You can believe what you want, say what you want, but numbers do not lie..  

Sorry this really scares the hell out of me..  No matter what you think about any issue.  Please simply look at the numbers, they do not lie.  This is unsustainable, unless huge changes are made.

One caveat, I need to get a better understanding of this one line in the newspaper.  "The greater than expected $70.6 million increase was primarily due to the final year of deferred investment losses going back to 2008." 


July 15, 2013

Armory Street landfill update

No response back yet from the South Worcester Neighborhood Center and the developers of Southgate Place.


July 14, 2013

Residency law

This has to be the craziest thing I have ever heard.  First and foremost we need talented people working for the City of Worcester to make us successful.   There are several people listed today in the newspaper who live outside the city that are huge assets to the City of Worcester.  We should not have hired them?  Maybe we should require all City Councilors to work in the city of Worcester?
Maybe we should ask ourselves why they do not live in the City of Worcester?   It all goes back to the Housing Policy!   We need to change the Housing Policy.     When you really think about it the Housing Policy effects everything especially the School Department.

Maybe if we followed the recommendations that RKG laid out in this report, which we didn't when they (RKG) gave us recommendations in 2002, we will naturally see a higher concentration of department heads living in Worcester.  

July 13, 2013

Does the RKG Housing Study say that CDC's should be out of business?

Answer is a resounding "no".  Not sure why many are saying this...

The RKG study merely outlines what our housing policy should be and there is no reason why the CDC's can not work with the City of Worcester, private developers and individual home-owners to implement the recommendations in the study.

At the next meeting in August I hope that the comments are centered on the recommendations from RKG.  

Remember this one important thing, this very same company (RKG) did a great Housing Study in 2002 and pretty much none of the recommendations were followed.  Do you think the Housing Stock has improved during the past ten years??

  • If you like the direction Worcester Housing stock is going, then we should not pay attention to their recommendations again.
  • If you do not like the direction Worcester Housing stock is going, then we should follow the recommendations that RKG has laid out for us. 

July 12, 2013

Pension Liability

Page 108 of auditor's report 

Assets Liability Unfunded Pecentage
1/1/2007 $716,797.00 $837,608.00 $120,811.00 85.58%
1/1/2008 $759,410.00 $889,924.00 $130,514.00 85.33%
1/1/2009 $631,894.00 $929,569.00 $297,675.00 67.98%
1/1/2010 $679,510.00 $987,692.00 $308,182.00 68.80%
1/1/2011 $724,998.00 $1,025,076.00 $300,078.00 70.73%
1/1/2002 $712,110.00 $1,051,191.00 $339,081.00 67.74%

Keep in mind the numbers above are thousands.  On January 1, 2007 we had approximately  $716 million in assets and we had accrued liabilities of $836 million in accrued liabilities, short 120 million.  In other the pension was funded at 85%.

Last January we had about the same assets of $712 million but liabilities have increase to 1 billion and 51 million, short 339 million.  In other words the pension was funded at 67.74%.  

City finances

One of the main reasons I supported the Worcester Slots was the finances.  The City of Worcester needs the money and the unfunded pension and health liabilities is huge and may end up crippling the City of Worcester down the road.

Remember from my college days how it was literally said that Muni Bonds were one of the safest things you could ever invest in.   Tell that to the people holding Detroit muni bonds, click here.    20 cents on the dollar!!!

Insurers, including Assured Guaranty Ltd. (AGO), are on the hook for at least 95 percent of the $2 billion of unsecured Detroit debt that wasn’t issued for city utilities, data compiled by Bloomberg show. Kevyn Orr, the city’s emergency financial manager, proposes paying investors less than 20 cents on the dollar on those bonds as the auto-industry capital bleeds cash.

Kevyn Orr

July 11, 2013

Southgate Place

Think that was the name of SWNIC's Southgate Place Project.  Remember $7,000,000 for 25 units equates to 280,000 per unit..  All affordable units..

Well when they build the project there is excavation and often it is left on site to the side until the job is done. Once the job is done they remove any excess fill, landscape, put up fences etc.   Evidently this is a "green" project.  Pictures taken from the back of 87 Southgate Street.

July 10, 2013


Here is the RKG Study link.  Last one I had may have been wrong?    There is nothing is this study that says we should disband the CDC's.     Read pages 182-185, is there anything there that you can disagree with???

In the past CDC's have focused solely on building affordable housing.   They have done a great job!  We are at 13+%, way above the state requirement of 10%.    This study recommends affordable housing distribution throughout Worcester County.    ""Partner with other local jurisdictions in the region, affordable housing advocates, employers, and community groups to advocate for a more equitable distribution of affordable housing opportunities in Worcester County."      Look at my numbers below of the other communities around Worcester.  This recommendation makes all the sense in the world.

This is not about ending the CDC's but a change in Housing policy, which the CDC's can be a part of.  I see the importance of the CDC's and in fact have, with two others, asked to be on the Worcester Common Ground Board.

Frank Z

Watch his comments at 1 hour 57 minutes and 44 seconds.   His comments are 100% dead on correct. 

From his comments, we need to get both the HDIP  and the Philly Plan going.  

July 09, 2013

Housing meeting at 4 today

Very tight schedule today with Summer Camp and swim lessons.   I was there at 4 to find out the first of two items on the agenda was a TIF for the Telegram Building.    By 4:30 with the discussions still on the TIF, I had to leave.    I was able to get to a TV by 5:15 and catch the 2nd item on the agenda--RKG Housing Study.  You can watch it here.
  • Housing Report starts at 28 minutes
  • Public comments starts at 1 hour and 25 minutes
  • Paul's hat at 1 hour and 26 minutes 
  • Ex Red Sox star Dwight Evans (Dave Zimage) at 1 hour and 52 minutes
Let me focus on some comments by the Executive Director of the Main South CDC starting at 1 hour and 44 minutes and 50 seconds, that I found interesting.
  • He is right we do not have any 40B projects.   A developer uses this (40B) as a tool in towns to circumvent local zoning when the underlying town/city is under 10% minimum.   In Worcester we are over the Commonwealth of Massachusetts of 10% minimum threshold, thus a developer can not try to invoke 40B.   A developer of affordable units in Worcester can not utilize the 40B tool.  He is correct, but a developer of affordable units has never had to worry about local zoning stopping them so there has never been a need to invoke project 40B status.
  • "We need to keep rents down because a large proportion of our population qualify for affordable housing.  If we keep the rents down, they will have more disposable income to generate a vibrant economy."  Who says Main South CDC keeps rents down?    Maybe we should attract more market rate tenants to Worcester who have disposable income to create a vibrant economy.    A rising tide lifts all boats.  Let's actually follow the RKG recommendation, the reason for the meeting, to partner with other local jurisdictions in the region to advocate for a more equitable distribution of affordable housing opportunities in Worcester County. 
My favorite was Joy Hart at 1 hour and 53 minutes plus, she is against housing.

Bottom line is this RKG has hit it out of the park again and the majority of the comments were dead on.   You don't have to read it twice like Paul, but once would be a good idea.    The sad thing is they have done this once before in Worcester about ten years ago and were 100 percent correct then but we did not follow their recommendations.  Let's hope we get it right this time.

Lastly there were many mentions of the Philly Plan!!!    It was also great to see a representative from the Worcester Realtors Association showing their support for the RKG study.  As a member of the Chamber of Commerce, I plan on asking them to weigh in on this for the next meeting.

July 07, 2013

RKG Housing Study

A committee, forgot which one, has a meeting to discuss the Housing Report from RKG.     I plan on speaking and here is what I will be saying.   One of RKG's recomendation concerns affordable housing distribution and that we should partner with other local jurisdictions in the region affordable housing advocates employers and community groups to advocate for a more equitable distribution of affordable housing opportunities in Worcester County.  I agree more with this recommendation. Every city and town in MA is required by state law to have 10% of their housing stock as affordable. According to Massachusetts Affordable Housing Alliance:
  • Worcester 13.60%
  • Shrewsbury 6.5%
  • Grafton 5.3%
  • Millbury 4.4%
  • Leicester 4.0%
  • Auburn 3.3%
  • Holden 3.2%
  • W Boylston 2.5%
  • Paxton .8%
This begs the question.  If we are over the state minimum, why do we keep building more affordble units?  RKG is correct.    If you are still not convinced how about this report from MassINC  Going for Growth: Promoting Residential Reinvestment in Massachusetts Gateway Cities,   Small part:

With no housing investments designed to support comprehensive neighborhood revitalization projects, Gateway Cities rely heavily on the state’s affordable housing resources. Since 1993, about a fifth of state affordable housing investment has gone to Gateway Cities. These communities often employ affordable housing funds reluctantly because they are the only capital available to address blight.

While affordable housing redevelopment can resolve concerns on a given block, it may further destabilize Gateway City neighborhoods by drawing families away from the existing housing stock. Reliance on affordable housing funds for neighborhood revitalization may further concentrate low-income families in high poverty areas, thwarting efforts to restore healthy demand for housing.

What did people think about this report? Check out Boston Globe Editorial:

In many cases, affordable units can draw stable families into poor neighborhoods. But as the Pioneer Institute pointed out in a separate study, the deed restrictions limiting the income level of buyers can place a long-term freeze on a neighborhood’s prospects. The same policies that keep units affordable in and around Boston can prevent upscale neighborhoods from emerging in Springfield, Holyoke, and Lawrence.

Affordable housing remains a vital need across the Commonwealth, from Boston to Springfield to Pittsfield. But it won’t bring the upper middle class back to gateway cities, and it won’t create enough new customers for the shops and restaurants that give life to Main Street. At this moment, the ability of the gateway cities to serve their current citizens depends on a larger tax base, and there are signs that higher-income people want to come back to city centers. The state owes its gateway cities programs that help them to seize this opportunity now

  The question you need to ask yourself is RKG, MASSINC and the Boston Globe all wrong?