Worcester Herald

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CDBG funds

There have been alot of stories about the 6,000,000 in the newspaper this week.  Here is my take.

The NRSA, which I was involved in with the Chandler Buiness Group, was funded with CDBG (Community Development Block Grant) monies.  We found out that these monies are handed out by HUD (Housing and Urban Development) and that we could not spend the monies any way that we wanted.   The underlying project needed to meet what HUD called a National Objective and be an eligible use.  Here is a good link.

Every single thing we proposed to City of Worcesters employees (who are no longer there), they would basically say it did not qualify. One day we would be told that a project qualified and then three months later told it did not?  Every single thing except housing monies for their pet projects was met with resistance.   We would have to argue and fight and come up with reasons, why it qualified. We even met the HUD rep, Rick Potaski.  

After months and many many e-mails, we were finally able to get many of our projects approved:

1. Facades
2. Summer work crews
3. Cameras

Remember even asking once if they could tell us some things that we could do that HUD would consider as being eligible.  We were told that was our job, not theirs?  It was extremely frustrating and not very user friendly.  In fact Paul and I drove to Somerville to meet people there who ran the same programs with the same CDBG monies monitored by HUD to get answers.  They were great! 

The part that I find amazing after reading these reports is why weren't these agencies held to the same standard as the Chandler NRSA?    The thing that is really too bad about this whole report is that the people, who were responsible for the mismanagement have all moved on.  The people remaining, who are doing a good job, fixing their mess and setting the right systems in place are left to answer these questions.   

I guess the silver lining here is that these past mistakes are not happening now.  Lets make sure this, however, this does not happen again and all people utilizing CDBG monies are held to the same standard.  

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

Armory Street landfill

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

Sprout

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

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

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

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

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.

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."

Armory Street landfill update

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

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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.  

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. 

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