Part 3: Council’s Big Adventure

– And we’re back, with a second round of public comment. Only there’s no public comment. Finance Chair Peduto is calling for a quorum, but there are only two Councillors in the room. Guess everybody’s still getting their stories straight!

– Dowd motions to hold for two weeks a bill that would authorize the purchase / refinancing / escrow defeasance of some bonds. “At this moment we have no understanding of how we are going to solve our pension problem, and settle on a budget within our means.” These are the Build America Bonds the administration wished to seize upon with the $45 Somewhat Irrevocable Reserve Fund for reducing the city’s debt burden. Peduto agrees with Dowd, talking about the possibility of using that money to ameliorate the pension problem instead. Burgess invites administration Finance Director Kunka to the table.

– Burgess / Kunka settle between them that the ICA approved of this use of these funds, and further “that the budget is balanced as of today.” Kunka says “this is the last opportunity we have” for the Build America program which will expire at the end of the year, and will not be reauthorized by Congress. “These funds are set aside for debt reduction and only debt reduction by the ICA.” Burgess asks his colleagues, so what else do you have in mind then, and Peduto reiterates it might be better spent on pensions and besides, the director of the ICA has not approved it yet.

– Shields: trying to drill down exactly into what this use of these bonds will do, especially for the debt drop off in 2017, and incidentally calls the $45 million “jump ball money.” Kunka says this will enable the capital budget to continue. Shields says he still has some confusion but gets the idea.

– Burgess calls Council’s own budget director Urbanic to the table and asks him what he thinks of this use of those funds. Urbanic likes it a lot actually, but acknowledges “an extreme need” to address pensions now and the desire of some Councillors to use this money in that respect instead. His recommendation is to go ahead and start approving it, but maybe pass it finally only at the last possible moment just in case. Burgess is basically like c’mon guys, don’t hold this up.

– Harris: “Now we have a dilemma” with the budget “that is not balanced for the second time now.” “I know we got a good deal from President Obama” on these bonds, but feels too uncertain about circumstances now. Also wishes we took advantage of even better rates in September.

– Kraus is like, if we put a two week hold on taking preliminary action on this, it’s going to drag it out until the middle of December, so it’d be practically dead right? Kunka agrees. Kraus acknowledges pension and budget “limbo” but he’s going to roll with Urbanic and move forward with preliminary approval. (Kraus also said, “We’re in limbo with this lease — I mean no, we’re not in limbo with the lease but…”)

– Shields said the only problem is this is contingent on a lack of clear consensus on the pensions issue. Council passed a plan (Council-Controller) but Mayor didn’t accept it. “This isn’t about these bonds, this is about the parking deal.” Shields is basically like if the Mayor doesn’t come around to Council’s plan and drives the city into the state takeover we will need this money. “The people of the city of Pittsburgh can not be ignored in their desire not to lease the assets.” “Maybe they don’t have all the numbers to break down but instinctively… they’re more than willing to see us issue some debt.”

– Shields says the Mayor should declare victory, embrace Council’s plan and move on. As it is everyone’s stuck. The Comet is confused because it sounded a whole awful lot like Council this morning voted down something related to the Council-Controller plan, yet they’re still talking about it as though it’s all been previously authorized. Now Shields and Kunka are arguing about how independent / relevant is the Parking Authority board in its own rejection of Council-Controller.

– Peduto: “I can’t think of a time in American history when the Congress passed a plan and the President wouldn’t do it. No. Can’t do it. Can’t make me!” (He’s never vetoed anything?) We’d be able to do this if the Mayor would go along with Council’s plan. “The only way government funds long term operations, for a hundred years, has been the issuance of debt. We’re gonna have to do it, if not this year then next year.”

– Dowd: “Together we can find a way on how to make that (Council-Controller) plan work”. Dowd is painting the Buy America Bonds as not making sense within the wider structure of everything. “Let’s say for the sake of argument that [the C-C plan] won’t get us to the right number. But what if it were just $37 million short? Wouldn’t we then need this money?

– And this is rich: Councilman Dowd now asserts it would be dreadfully irresponsible to hold even a preliminary vote on something of this magnitude until all the attendant and clarifying information comes in from the state. (Flashback to “This dead lease is dead! Let’s yank it off the table prematurely today and vote it out of existence tomorrow, before PMRS informs us of our total pensions shortfall and projected MMO’s next week!”)

– Kunka compliments Dowd’s “chutzpah in mischaracterizing all the comments that I’ve said”.

– Kraus reiterates that despite the legitimacy of the hesitation, it makes more sense to vote for this preliminarily, because it’s the only way to keep the option functionally alive.

– Scott Kunka warns he will be unavailable on Sunday and Monday because he’s getting maaaaarried!

– Burgess says Dowd just admitted that the Council-Controller plan is “speculating and hypothesizing.” Burgess invites Kunka to explain about if the legal hurdles to C-C can be overcome, then there are debt covenants that might be exceeded — and to testify that they never received details on the C-C plan in a “documentable, verifiable way.” And they’ve yet to use funds at their disposal to hire any experts of their own.

– Burgess reminds people that Controller Lamb has said at this table that the Council-Controller plan is no longer feasible.

– Harris says she’ll be abstaining today but “just in case something goes right”. Peduto also. Dowd also

So Smith and Burgess vote aye, and there are 6 abstentions — that’s good enough for an affirmative recommendation of the Build America Bond thing.

NEXT UP: The “present valuation” plan. Rudiak makes a motion to hold for one week, Dowd seconds, and so say they all.

NEXT UP: Council is trying to finally hire themselves a dedicated attorney and have it operate out of the City Clerk’s office — but now there’s going to be an Executive Session about something perhaps related to funding it out of the budget of the Law Department. Meanwhile the maneuver receives an affirmative recommendation. Burgess, who was out of the room, jumps back in and begs to ask if the contract was “competitively bid”. Shields tries to say, “Yes, it was advertised and there were interviews,” but it gets complicated and being a personnel matter we’ll talk about it in Executive Session.

Burgess asserts that now that the idea has morphed from hiring an individual to work out of the Law Dept., to hiring a law firm to work through the Clerk’s Office, he has “grave concerns” about the need to start all over again with a new RFP, and not just grant it to “the former head of the city Democratic Party” whose firm didn’t participate in the original RFP process. Shields and Harris say we’ve already voted on this preliminary and we’ll discuss it in executive session. Dowd also arrives late to register an abstention to this, and to play some old music about “defining the services” this attorney / firm will render.

NEXT UP: Now we’re watching city Sustainability Coordinator Lindsay Baxter talk about … lights … or … something. Kraus forwards along suggestions which he received from police officers that the lights directly over the East Carson corridor could stand to be amped up significantly for public safety reasons.

Seems pretty mundane from here, if all heck breaks loose I’ll fire up a Round 4. You have until 5:00 to enter the contest for the gift card.

*-UPDATE: Somehow I missed this approval: LINK.

27 thoughts on “Part 3: Council’s Big Adventure

  1. Anonymous

    Nice to see a blog entry that wasn't written by Burgess or one of his flunkies.

    Welcome back from wherever you were.

  2. Bram Reichbaum

    TED – maybe you can answer these – what was the deal with voting down the measure to authorize the Mayor to begin negotiating with the Parking Authority about an assets transfer? Was that not a rebuff of the Council-Controller plan, or did Smith's original legislation get amended into what was pretty much a joke to begin with?

    And what was up with Burgess saying the Controller is no longer behind the Council-Controller plan? If there was no truth to it I thought I'd have heard some pushback.

  3. TED

    what was the deal with voting down the measure to authorize the Mayor to begin negotiating with the Parking Authority about an assets transfer? Was that not a rebuff of the Council-Controller plan, or did Smith's original legislation get amended into what was pretty much a joke to begin with?

    That was the amended Smith legislation.

    And what was up with Burgess saying the Controller is no longer behind the Council-Controller plan? If there was no truth to it I thought I'd have heard some pushback.

    I think most of council has tuned him out at this point.

  4. Anonymous

    As if I needed any more confirmation that Bill Peduto is Pittsburgh's coffee shop Sarah Palin, his asinine statement about the President and Congress has now become Exhibit A. As my favorite leporidist philosopher might say, “what a maroon.” And to think he's supposed to represent the enlightened technocratic younger progressive generation in the 412. I think Bill should take a couple of months during the winter, curl up in a booth at Kelly's with a laptop, and read some Ezra Klein and Matt Yglesias and Paul Krugman. It'll help clarify where he really stands.

    /Rudiak's no better

  5. Anonymous

    Incheon Korea.

    Microcosm of CCB 5th

    Time to institute Draft, females and gays mandatory service.

    “Gender/sexual preference is no longer reason not to serve.”

    War, is coming home, again…

  6. Rex

    Monk (and I know that 3:09) was you…

    I believe the Marines, under the command of MacArthur surprised the NKPA at Inchon with an amphibious attack, recaptured Seoul, only to subsequently be overrun by 100,000 Chinese soldiers when Chairman Mao decided to demonstrate the strength of his Army. I also believe the 10th Marine Corps was destroyed in that engagement as well.

    So I hope you're not suggesting that we're headed into a situation where total disaster is just ahead as soon as we get too close to its' border.

  7. Anonymous

    What cannot be achieved by reason, is taken by force…

    Chairman Mao decided to demonstrate the strength of his Army. 100,000 strong and on the skeletons of Countryman in the millions.

    It is not formula for victory, but humility…

    Hitler invaded Russia thinking Napoleon, was stooge…

    The Nazis froze in summer uniforms..

    The United States recently lost a F-22 over Utah (?)

    G-forces were such that black-out of pilot was taken into consideration. Aircraft fail-safe based on human dimension…

    Pre-Drone Fighter…

    It will be Geeks that end world…

  8. Rex


    Everybody who wages war with Russia by heading East in June loses.

    Did it ever occur to these guys to leave in February? Or bring the winter uniforms with them? Or for Hitler to let General Pawlus retreat before the Soviets tied the knot on the 6th Panzer Army with a pincer move of its own?

    Or perhaps not to split that massive Army he sent so he could simultaneously take Stalingrad AND the oilfields in the Caucusus?

    I guess, in the end, we had better be thankful for both the avarice and the hubris of man. Had Hitler been more sensible, the West could have lost the war.

  9. Anonymous

    Hitler was advised against taking of Russia by own Generals. Your Info is 4.0…

    It's all about unchecked ego…

    North Korea, take heed.

    “Cap and Ball Revolver” is no comparasion to 'Cartridge'.

    There is reason for Obama Afgan War End-date…

    Chineese, South Korea and Russia, with US support…will liquidate North Korean Assets.

    “It's the economy, stupid”!

  10. Rex

    North Korea can't feed its' people, BUT if they stick a shovel in the ground, out comes uranium.

    THAT is our problem with North Korea.

  11. Anonymous

    North Korea, will reap what it sows…

    Stick shovel in ground, bones of past, bump…

    Mao, lived it…

    Read Book by: Jung Chang. Titled Mao…

    In that book, it was written that one of Mao's wifes said:

    'I knew the world was a horrible place by the age of eight…'

    She said so in poetry. Perhaps the most beautiful words ever spoken…

    North Korea and it's many wives know the truth…

    I fear not Korea, but our response to self evident truths…

    As I said earlier “What cannot be achieved by reason, is taken by force…”


  12. Bram Reichbaum

    For those of you still following this thread, I asked Controller Lamb for clarification / context as to those second hand remarks about the Council-Controller plan. Will discuss this later but here is his response:

    What I said was that I believed it was unlikely that a bond deal could be completed by January 1. That does not necessarily kill the proposal. Scott Kunka has stated that so long as an agreement is reached whether it be a bond deal or a lease deal or some other arrangement, bridge financing would be available to assist in avoiding the state take-over.

    I still believe the council controller plan works and should be the basis for any potential solution. I also believe that it could work without the bond deal. There is probably a way for the Parking Authority to develop a revenue sharing plan with a private operator that they would contract with to operate the system. Rather than lease the meters and Mellon Garage they could maintain control over rates but have an operating agreement to help them become more entrepreneurial. That agreement could involve a significant up-front payment.

    I’m sure there are a number of options that could get council’s support but any of them require communication.

    Two points:

    1) The interest on “bridge financing” would be another tidy sum to tack on to everything else in C-C, though he is suggesting that any lease might now be subject to the need for bridge financing as well (color me just a titch skeptic of that).

    2) I'm not sure how much of the known political universe he is upbraiding over “communication”, but probably everyone, huh?

  13. C. Briem

    The interest on “bridge financing” would be another tidy sum to tack on to everything else

    Even commerical short term interest rates are virtually zero these days.. and that is for annual rates, for a month you really are talking something well past a decimal point.. but other practical issues are probably much bigger things to deal with.

  14. Bram Reichbaum

    Thanks for pointing that out. So I guess we're talking only around an extra $1 to $2 million, though due in the short- or bridge-term.

    What big and practical things are you sensing that aren't very widely discussed?

  15. C. Briem

    a lot less than that I would think. Commercial paper for short term is what?? Annual rates of 0.2%??? let's say 0.5% for sake of argument on the high side. So for 4-5 weeks you would pay a tenth of that even. Not sure what $$ amount is being talked about being borrowed given there is money in the pseudo-trust which is in the mix and nets out what would need to be borrowed I imagine. So I bet the entirely notional bridge loan in question would not need to be for more than 100 mil.

    I think it is too late for any of this. Seems clear anything with LAZ would be a modification of the deal which makes me wonder if it would have to be rfp'd again lest one of the other bidders take issue and litigate.

  16. Bram Reichbaum

    I have heard it suggested that since LAZ is offering *more* money (once you include the revenue sharing), it wouldn't need to be re-bid. Essentially they're outbidding their own high bid.

  17. Anonymous

    If South Korea or Northern Neighbor should wage war upon one another..

    Then Economics of war shall prevail upon the land…

    South Korean Auto-Maker “Kia” will no longer exist. You think Toyota recall was bad….10year/100,000 mile warranty offered by South Korean Auto-Maker.: War-Recall!

    It is economics, Market declared as such, on this day.

    We quibble about Pensions, as world quakes….

    Toss pension money in ill-formed hands, State Mandated Toilet Paper…

    Keep money local…Build Kia Plant! Locally…

  18. MH

    How about Lamb invades Russia, Rex and Ted share a meal at Sonoma, Monk buys a used Kia, and Pittsburgh gets $1 billion from the Feds by stealing North Korean artillery and threatening to flatten Fox Chapel?


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