New Haven Independent

posted by: City for sale? on March 23, 2010  8:16am

Why not just borrow the money from Yale or some rich New Haven lover? It’d be simpler, and a lot less murky.

And how did the City arrive at the $50 million valuation for 25 years worth of meter revenue? That’s a very round number, and you have to wonder if there was any math or science involved.

posted by: FYI on March 23, 2010  8:19am

“Taking the Driver Out of the Car”
http://online.wsj.com/article/SB10001424052748703580904575131511589391150.html?mod=mostpop

posted by: Our Risk Not Theirs on March 23, 2010  8:38am

Thank god for Alderwoman Bitsie Clark pointing out that the emperor has no clothes! The repayment plan, if it can be called a plan, is made up of more parking tickets, increased meter fees and magical pay stations that generate 50% more money! How did they get the 50% more revenue figure? I bet you they got their information from the Magical Pay Station Manufacturers Association.

posted by: Jeffrey Kerekes on March 23, 2010  8:44am

If you have concerns about this budget and the financial sustainability of the city, consider signing this petition:

http://www.PetitionOnline.com/NewHaven/petition.html

Or get involved.  There is a Mayor’s Community Budget Presentation tonight, Tuesday, 3/23/2010 at 6:30pm at Nathan Hale School, 480 Townsend Avenue in the East Shore Neighborhood.

Or keep up to date at http://www.nhcan.org

posted by: gnuhaven on March 23, 2010  8:47am

Wow, what a bad idea for New Haven.  [My thanks to those who were there asking questions, and to the Independent for coverage.] 

This practice has bankrupted so many cities and towns recently that anyone reading a financial paper knows to question it.  Check the FT for worldwide coverage of this (which is now focusing on lawsuits against those, such as “Gates Capital Partners” in our case, who sold the schemes to everyone from Greece to Alabama). 
http://www.ft.com/cms/s/0/3a6afdf0-32c2-11df-a767-00144feabdc0.html

I note that it’s not being peddled to us by local entities, who I would like to think know it isn’t good economic medicine for their own home town.

posted by: HewNaven?? on March 23, 2010  8:55am

Thank you, Bitsie Clark for addressing a real concern! What will the future of our city be like? Will people even feel comfortable or safe driving in 30 years? We learn more and more every year about how harmful our addiction to driving is. It’s an evolutionary progression toward safety and sustainability that necessitates a shift away from such an unhealthy practice. Think about the recent history of tobacco use. People will probably look back in 30 years in reference to cars and say, “well, they didn’t know any better back then. Remember, even doctors and scientists thought it was safe to use cars.”

Rusconi didn’t have an answer to Clark’s question, and she said she didn’t expect one. But actually, this is the type of thinking that leadership requires. More people should be asking the question, “What will our future be like?”

posted by: j on March 23, 2010  9:27am

She’s on to something….New Haven will be a ghost town in 25 years, so who needs parking…

posted by: Alphonse Credenza on March 23, 2010  9:31am

Cars will be gone because we will all be flying.  Like this:

http://www.darkfaery-subculture.com/wp-content/uploads/2008/03/suburbs_2100-1280x960.jpg

posted by: City Hall Watch on March 23, 2010  9:50am

The problem with this budget is that city officials keep saying there is a crisis. But the expenditures it proposes do not reflect a crisis and even adds employees which then increases the costs of pensions, workers comp, and healthcare which are the main expense drivers after salaries.

On average, each city employee costs $100,000 or more fully loaded with salary, pension and benefits. Education workers are somewhat less because the tab for pensions is a state function, not local.

Point of clarification on this monetization plan is that the city is not getting $50 million. After paying the mortgage on this money, the city will net about $30 million across 5 years, perhaps a little more if it gets it in a lump sum. That comes out to about $6 million per year.

If you escalated the parking plan for pay kiosks which supposedly will double the revenue and raised parking fees to $1.75/hour, I believe you will accomplish the same thing or more and not be in debt or create structural budget problems in your revenue streams.

posted by: Exiled Italian Shill on March 23, 2010  10:27am

For the sake of argument I say why not securitize an asset like parking meters?  Here in Hartford we are going to look at the sale of garages and possibly meters along with it.

This is revenue that is not generated by property tax or handed down by the state only for a city to worry about being taken away at any moment.

This is really no different than a mortgage on a home, right?  You are going to pay more for the mortgage at the end of the 20, 25 or 30-year period than what you borrowed.  Same thing here, you just cannot refinance half way through the deal.

New Haven gets X number of dollars today from meter rates.  A meter revenue dollar today is worth ‘X’ and 25 years from now that same dollar, due to inflation or deflation, is assumed to be worth ‘Y’.  This is all they are doing I imagine to get to the $50M figure that is reported.

So you assume a worth on the dollar value at the end of the deal, get the big bucks up front to do whatever with and than you are going to pay some points on the money which you have just essentially “borrowed.”  Lots of places do it its not something new or groundbreaking.

I think the point worth making is what other revenue options are out there besides property tax?  This is an option.  Maybe one I might not choose but it is an option with limited downside.

posted by: Chris L on March 23, 2010  11:29am

Short term solutions don’t solve long term problems…

posted by: Jonathan Hopkins on March 23, 2010  12:16pm

The trends in development of our country’s inhabitable places has moved towards smart growth, and retrofitting existing areas. Walking, biking, and transit use are becoming more and more viable. As a result, driving will decrease. Driving will likely still exist-probably in great deal-in 25 years. Car storage will increasingly be done on street. As the numbers of cars operating on a road at any given time decrease, the number of used lanes will also decrease, these will likely be turned into bike lanes, extended sidewalks, tree planters, and on-street parking spaces. As urban areas become more viable places to invest, parking garages and parking lots will be developed with inhabitable space. If New Haven can establish a goal to decrease the number of off-street parking spaces over 25 years by some percentage, then we can increase the number of on-street parking spaces simply because the curb cuts that now are used to enter off-street parking places will be gone and replaced with curbs.
While driving will likely decrease and therefore the total number of parking places needed also decreased, it would be smart to consolidate parking on-street, where people prefer parking, where it doesn’t use up developable lots and is much more useful if this parking meter deal passes.

This meter deal is a dumb idea. The budget should have decreased spending this year, not increased it. However, if this does pass, then we need to realize that reducing and getting rid of off-street parking (not including private residences with garages) to increase on-street parking is important.

posted by: streever on March 23, 2010  12:17pm

Thanks Bitsie—glad to see someone is thinking about the future, even if it seems unlikely.

I do think it’s extremely silly to guarantee a company 120 million over 25 years for 50 million today. If it’s the only way, fine, but after seeing City Hall’s poor response to Kereke’s questions (which sidestepped many of the most important ones in my opinion) I remain convinced that this is desperate thinking with no real plan in place.

How is it being accountable to citizens when you build mega-schools with Cesar Pelli, give raises after asking for concessions from unions, and generally treat the city & the BOA as your own personal rubber stamp?

It’s not. Time to put our money where our mouth is (Oh wait, the Mayor is doing that for us!) and take this one to the polls.

I just think a different mayor who wasn’t so focused on his own personal legacy would have the ability to make the hard decisions and face the consequence of unchecked spending that this mayor seems unable to come to terms with.

I love schools & I love that we’re giving the youth of New Haven great places to learn, but I still can’t believe the hubris involved in hiring world famous architects and paying 3 times as much for some of our schools.

posted by: Kumbaya on March 23, 2010  1:50pm

So far as I can tell, what this amounts to is a $50 million mortgage, with the parking meter money as collateral.  I didn’t work it out in lots of detail (and it depends on whether you assume monthly or yearly payments etc) but given the the total payment of $120 million, the effective rate of interest here is around 9.3%.

That seems like an awfully high “cost of money” for what is effectively a secured loan?? The only real advantage (if you can call it that) is that it won’t appear on the books as a loan.

posted by: Dorothy Holdman on March 23, 2010  2:51pm

I think this is a very dangerous proposal. I believe Mayor DeStefano’s hap hazard deal is going to leave a huge debt for the next mayor which I am hoping will happen next election (a new mayor that is). These aldermen better wake up and smell the coffee, if they don’t they need to be gone also. Things are completely out of control in this city. This mayor should just leave…go live in mexico or somewhere else. He is probably pretty unemployable at this point in the state! Help us taxpayers and any hard working city employees with having this leadership at the helm!

posted by: Kumbaya on March 23, 2010  3:04pm

Just realized I worked that out for 130 million in payments, not 120 million.  Should be a shade less than 8.5%—which is a lot more than the 7% quoted by Rusconi.

So either that is too low, or the $120 million is too high.

posted by: Richard Heinberg on March 23, 2010  3:50pm

“While many commentators believe the jury is still out on Peak Oil, the list of petroleum analysts who say world oil production has already peaked, or will do so in the next five years, lengthens almost daily, and includes CEOs and other well-placed leaders within the oil industry.

The argument that oil production could theoretically continue to grow past 2015 is mainly put forward by organizations such as Cambridge Energy Research Associates and Saudi Aramco, which explain away evidence of dwindling discoveries, depleting oilfields and stagnating total production by claiming that it is demand for oil that has peaked, not supply — a claim that hinges on the observation that oil prices are high enough to discourage potential buyers. But high prices for a commodity usually signify scarcity, so the “peak demand” argument doesn’t hold water.

Peak Oil has significant implications for our economy. In response to the 2008 price spike, the global airline industry nose-dived and auto companies suffered. Worldwide shipping slowed drastically and hasn’t recovered. Demand for oil plummeted in late 2008, and so did the price — temporarily. But today’s price is again high, almost to the point of nipping economic recovery.

What should we do about Peak Oil? Start with what the U.K. Industry Task Force on Peak Oil (which included Sir Richard Branson of Virgin Airlines) has done: Acknowledge the reality of supply limits. Then study the vulnerabilities of Canada’s transport and food systems to high and volatile oil prices, and start making those systems more resilient and less oil-dependent.

But do it fast. Adaptation will take decades, and we are starting very late.”

http://www.energybulletin.net/node/52053

posted by: abg on March 23, 2010  4:22pm

Will the ticket kiosks accept credit cards?

posted by: Edgehood on March 23, 2010  8:33pm

Is New Haven really so desperate for funds that we need these kinds of deals…??

New technology offers so many other ways of exploiting the city infra-structure for revenue that such ‘creative financing’ deals are hardly necessary.

Let’s look past the parking meters to the street lamps, for example…the city could install new-style street lamps that power themselves and feed energy back into the grid. It would not only eliminate a huge electric bill, but has the potential to actually make money (especially if you figure in possible advertising deals and government incentives).

Solar/wind powered street lights…
http://www.duxlite.com/combinestreet.htm

posted by: Pedro on March 23, 2010  9:50pm

The thing that infuriates me about this deal is that it gives us a $50 Million shot to cover 5 $10 million holes in the next 5 years, while at the same time opening TWENTY annual $4.8 million holes over the next two decades.

This administration is essentially borrowing from the next ten administrations to pay for this and the next.

What if we were strapped with this deal if Mayor Daniels had made it in 1990?  We’d be looking at $4.8 in lease payments this year, and for the next 5 years.

In fact, if this deal had gone into effect when Mayor Destefano first took office, he would have had to have paid $86 MILLION to gates over his mayoralty, or one quarter of the city’s share of it’s school construction program.

We need to make structural changes, some which might be painful, to this city to avoid this long term millstone. I would even take a larger increase in taxes over something like this, which will simply make it more difficult to manage the city over the next two decades.

posted by: Taxpayer on March 24, 2010  6:50am

With a 10-15% increase coming this July on our tax bills and with the desperate act of trying to raise 50 million I can only think this city is on the verge of a state financial oversight board. That could be a good thing and allow a third party to make the right hard choices. Remember the state will not bail us out just oversee our decisions. Doing away with this revenue stream is stupid and short sighted

posted by: rsmith on March 24, 2010  7:54am

Ticket kiosks have never doubled revenue anywhere and to say it will in New Haven is being far short of truthful.  Kiosks will make it easier to collect money becuase much of it will be processed electronically (minus the fees to the banks), and you’ll cut down on meter maintenance.  This is a bad idea no matter how well the Mayor tres to dress it up! He is fixing his immediate problem and handing a mess to the city residents in coming years when he’ll be gone and won’t give a damn.  Vote against this scam.

posted by: A loan by any other name on March 25, 2010  9:53am

This is a terrible idea. What the city is proposing is essentially taking out a loan to balance its budget, a loan with a lousy interest rate no less.

It looks like the mayor is trying to pull one over on the taxpayers by calling this a lease, or privatization,etc. If we’re going to take out loans to pay our bills, then let’s call it what it is and look for loan’s with a better interest rate.

Of course taking out loans to balance to budget is a bad idea plain and simple, just ask California. And leasing your parking meters to a company with a dubious track record is a sure fire way to get stiffed out of money, just ask the city of Chicago.

I hope that there are enough principled Alderman out there to see this for what it is, a scheme to grab a quick buck, put off the tough decisions for a future administration, and line the pockets of a private company.