No more procrastinating: new mayors must be prepared to make tough decisions for municipal fiscal health

Mayor Riley Rogers walked into something of a mess in the city of Dolton, Illinois located south east of Chicago. After being in office for less than a month, he faces the unpleasant prospect of not being able to meet staff payroll – roughly $500,000 – along with insurance payments due today.

This story, posted in Chicago Tribune, is disappointing – primarily because it seems to be happening almost every week now. According to Rogers, all of the village’s bank accounts are empty. On top of this grim fact, earlier this week, village trustees voted unanimously to approve a loan from a tax increment financing (TIF) account. TIF dollars are designated for economic development projects. Because of Dolton’s financial circumstances, the village is drawing from TIF dollars to keep the village solvent instead of using them on projects that could potentially enhance the quality of life for Dolton residents. I suppose having a solvent village comes first.

The budget shorftall is blamed on years of overspending, including bad development projects that failed to generate revenue, and overtime pay for public safety officials. And of course, the usual culprit of lack of oversight weighs heavily on current circumstances. Treasurer Mike Willis said the village hasn’t had a balanced budget since at least 2009 and that since 2010 the village has faced deficits of about $11 million.

What is troubling about Dolton’s situation is that it represents a trend in municipal governments around the country, to kick the can of responsibility down the road. Cities have become startling reactive to just about everything – lagging behind in making the tough policy decisions that will undoubtedly impact both the city administration and the city’s residents down the line. Rogers served as a village trustee for two years before becoming mayor, and both saw and approved the village budget during that time. The onus rests in the hands of those who have been aware of the village’s financial situation, to speak up and advocate for either austerity measures to be put in place, or a complete restructuring of the city’s role. If collecting taxes has been a weak point, the city must initiate new ways of collecting debts owed to the city. Likewise, the city must be prepared to prioritize services so as to avoid overspending on non-essential projects and initiatives. And of course, municipalities must devise criterion for approving projects to ensure that they do generate revenue. This means perhaps passing over projects that sound exciting or trendy – especially when the revenue generating prospects for the city are shaky at best.

Instead, municipal leaders do the easiest thing to make a quick buck: increase city stickers, fees and fines. In other words, instead of thinking proactively and creatively about how to adjust the city’s function so that it can serve the public as well as remain solvent, cities are quick to pass on extra costs to residents, making life more difficult and in some cases, giving residents a reason to re-locate. Municipal leaders have to understand that increasing fees and fines is only a short-term solution to a long-term problem. In fact, it really isn’t a solution as all it does is contribute prolong the inevitable – making tough decisions in order to keep the city afloat.

Tough economic times means – not a scramble to figure out how to raise money – but an existential questioning of the role of government. In short, if municipal government is unable to stay solvent given its current function, then maybe its function must change. Unfortunately for many cities, they attempt to restructure and reorganize only after filing for bankruptcy (see Harrisburg, Pennsylvania and Stockton, California for example).

Hopefully Rogers is prepared for the rocky road that lies ahead. He and several other new mayors sworn in weeks ago, must commit to running their cities differently if they want to avoid taking office with no money in the city’s accounts, or leaving office with no money in the city’s accounts.

If you think poverty is just an urban problem, you’re wrong. Suburbia: poverty’s new frontier

Photo by David McNew/Getty Images

It’s time policy-makers let go of the stereotype of poverty as an “inner city” issue. The 2000s marked a tipping point in America. After decades in which suburbs added poor residents at a faster pace than cities, suburbia is now home to the largest and fastest growing poor population in the country and more than half of the metropolitan poor.  Between 2000 and 2011, the number of people living in poverty in the U.S. grew from 33.9 million to a record 46.2 million. Today, one in three poor Americans – about 16.4 million people – lives in the suburbs.

Unfortunately, the anti-poverty infrastructure assembled largely during the 1960s and the War on Poverty, is simply unable to address the unique challenges presented by suburban poverty. Even more troubling, municipal leaders and policy makers have been slow to adjust to the shifting reality of poverty’s geography.

Suburban communities with growing poverty are often more geographically isolated from jobs, and lack the transit connections that can help link residents to employment opportunities. Social services are often less prevalent due to a lack of local public, nonprofit, and philanthropic capacity. Their schools may confront a host of challenges associated with providing the academic and wrap-around supports necessary to help low-income children succeed. Despite these challenges, the majority of government, nonprofit, and philanthropic dollars devoted to anti-poverty efforts have been traditionally focused on cities. As a result, the suburbs are home to thin and patchy safety nets of job training, foreclosure counseling, food assistance, and other services to help low-income people.

Confronting Suburban Poverty in America by Elizabeth Kneebone and Alan Berube

This issue is explored in a new book by Elizabeth Kneebone and Alan Berube called Confronting Suburban Poverty in America.  They examine the driving factors that led to the increase in suburban poverty as well as practical recommendations for policy-makers to ensure that sufficient interventions and institutions are established to meet the needs of suburban poor.

In coming posts, we’ll explore case studies from Chicago to California and how some areas are coping with this reality. But for now, here’s a list of facts on suburban poverty that may surprise you (taken from the Brookings Institution Metropolitan Policy Program study):

1. For decades, the poor population in America’s suburbs has grown faster than anywhere else in the country. During the 2000s, the number of poor people living in the suburbs grew by 64 percent – more than twice the growth rate in cities (29 percent).

2. Today, more poor people live in the suburbs than in America’s big cities or rural areas. Suburbia is home to almost 16.4 million poor people, compared to 13.4 million in big cities and 7.3 million in rural areas.

3. Throughout the 2000s, the suburban poor population grew significantly in 85 of the nation’s 95 largest metropolitan areas. Rising poverty has touched all kinds of suburbs – even places that once seemed immune to these challenges.

4. By the end of the 2000s, one-third of the suburban poor lived in distressed neighborhoods, where at least one in five residents was poor.

5. The urban and suburban poor have similar characteristics. Similar shares of suburban and urban poor residents live in deep poverty (with incomes below half the federal poverty line); are working age; work; have a disability; finished college; or are foreign-born.

6. As jobs moved into suburbs—particularly lower-paying jobs in sectors like retail and hospitality—poverty did, too. And job losses triggered by the Great Recession in industries like construction, manufacturing, and retail hit hardest in suburban communities and contributed to rising suburban unemployment and poverty.

7. Immigration accounted for only a fraction of the growth of poverty in suburbs. Although foreign-born residents accounted for 30 percent of the overall population growth in suburban areas, they contributed just 17 percent to the increase in overall suburban poor during the 2000s.

8. The changing location of affordable housing contributed to suburban poverty throughout the 2000s. By the end of 2010, roughly half of residents in voucher households lived in suburbs. In addition, three-quarters of foreclosures occurred in suburbia.

9. There is no good place to be poor but being poor in the suburbs means facing a unique set of challenges. Poor suburban residents have fewer transit options available that can affect their ability to get to work. In the nation’s largest metropolitan areas, 700,000 households—nearly all of which are in the suburbs—do not have a vehicle and are not served by public transit of any kind.

10. The federal government spends $82 billion dollars a year across more than 80 programs to address poverty in place. But the spread-out nature of suburban poverty, and the lack of expert public and non-profit service providers in suburbs, mean that most of those dollars remain focused on urban communities.

D-Day for Chicago Schools: why policy makers on both sides should share responsibility for the closure crisis

Photo from the 2012 teachers strike. Photo courtesy of Progress Illinois http://www.progressillinois.com

If there’s anything the school-closure controversy in Chicago has demonstrated, it’s this fact: public schools are largely a reflection of the communities in which they reside – and not the other way around. Today, the Chicago school board will make the gut-wrenching decision to close dozens of schools. Protestors have been out in full force engaged in civil disobedience (some getting arrested) holding rallies, marches, meetings and press conferences over the last few weeks in an effort to, at the very least, reduce the number of schools on the “death” list. Out of 54 schools, their efforts have saved 3.

What’s largely been missing from the heated debate on both sides is a concerted focus on the underlying policy issues that have led to the current school and community crisis. Much of the focus has centered on the actual schools themselves – the fact that many of them are “underutilized” (however CPS has decided to define that term). CPS argues that it is inefficient to pour funding into half-empty schools when that funding could be diverted to the remaining schools and contribute to providing kids in those remaining schools with a higher quality education. On the other hand, parents have described schools in which the girls’ bathroom did not have doors on the stalls or toilet paper. Exposed ceilings presented health and safety hazards for students. Malfunctioning air conditioning units made summer school, literally feel like hell, for attendees. They believe the schools have not served students well and are using “funny” numbers to justify closings that they had intended to do far before last year.

All of these factors notwithstanding, the real issue behind the school closures is a matter of municipal policy – and specifically, economic policy for a city that is now realizing t00 late, that it has not upheld its side of the bargain as it relates to ensuring strong communities. 

Brach’s Candy factory. Courtesy of americanurbex.com

A look at the most recent demographic data for the city of Chicago evidences an undeniable fact. Chicago is shrinking. Between 2000 and 2010, the city lost roughly 200,000 residents – most of the population loss occurred, not surprisingly, on the the city’s south and west sides. It doesn’t take a whole lot of analysis to understand why. Drive down the major corridors of Lake Street, Chicago Avenue, and Division heading west and you’ll get a taste of what Chicago once was, when the area actually had a robust economy. Vacant lots and abandoned buildings are relics of unharnessed and lost potential. The ghosts of manufacturing companies past still loom in empty warehouses (the most glaring of which stands the old behemoth Brach’s Candy facility looming right along the Green Line corridor at the corner of Lake Street and Cicero Ave).

Schools are underutilized because communities (and in particular, the residents) are glaringly underserved.  Focus, for a minute, on the parents of the children that are attending these soon-to-be-closed schools. Where do many of them work (if at all)? In what industries? What access do they have to affordable public transportation?  Communities are thinning out because, frankly, there are few incentives to pay ever increasing property taxes to live in a community where unemployment stays above 20 percent, crime is on the rise, public transportation costs are skyrocketing, and city services somehow always seem to skip over street cleaning, graffiti removal and streetlight repairs that are so sorely needed.

CPS CEO Barbara Byrd Bennett

An unfortunate fact is that some alderman who have marched and protested with residents to fight school closures are part of the problem. It doesn’t help to have several in the electorate who have limited understanding of what economic development actually is. Economic development is not getting the new Wal-Mart built in your ward (where your constituents will still be at or below the poverty line even if they worked 40 hours per week). Economic development is not the new liquor store or convenience store that was allowed to open (despite the saturation of such stores in these communities already). Perhaps if more local elected officials truly understood what it takes to create thriving communities – attracting companies from high value-add sectors such as manufacturing and health care (with requisite workforce development programs for residents to match) – they’d be able to more effectively advocate for the types of initiative that provide long-term, sustained community growth – which in turn attracts individuals and families, which results in more children in community schools. See the line of logic?

So what happens? Over time, those who can, run, and those who can’t, hunker down and try to weather the storm. Unfortunately, the storm has been raging for 30+ years and the warriors are growing battle weary. All the foreclosure crisis did was speed up a process already in place. Individuals and whole families migrated out of the city to surrounding suburbs like Maywood, Harvey, and even as far south as Kankakee and Danville. And yes, they took their children with them. So is it any surprise that most of the schools targeted for closure are located in the city’s most economically challenged neighborhoods? It shouldn’t be.

And if the aforementioned isn’t enough, do a quick search of other school districts in crisis such as Michigan’s Buena Vista school district. The district fired every teacher and closed every school for two weeks, declaring a financial emergency. The district suffered from declining enrollment, which, in turn, has led to a loss of $3 million in state funding since 2010. They aren’t alone. As populations decline, the tax revenue also declines, thus putting more strain on fewer resources to serve the public.

So a decision will be made official today. And once it’s made, 50+ schools will be off the rosters for CPS and parents and families will be left to pick up the pieces and move on. Both sides will walk away bruised, battered, and not necessarily better, especially if the underlying policy issues are not addressed. For some, this may be the last straw, the last affront as a Chicago resident. And they will seek better opportunities for themselves and their families elsewhere, and the cycle will continue. It’s time for municipal leadership to address the core of the education issue. It’s about more than the schools themselves. The sooner we realize this, the sooner comprehensive and effective solutions can be implemented.

What are your thoughts? Comment below or send an email to municipalmaven@gmail.com

Mud, mayhem and money: Is this small town tough enough?

English: SNOW VALLEY, Calif. (May 28, 2011) Mass Communication Specialist 3rd Class Sebastian McCormack, assigned to Fleet Combat Camera Group, Pacific, crawls through the mud on his way through the third obstacle of the Tough Mudder competition. Tough Mudder is a 10-mile obstacle course designed by British special forces to challenge a competitor’s strength and endurance. (U.S. Navy photo by Mass Communication Specialist 1st Class Matthew D. Leistikow/Released) (Photo credit: Wikipedia)

Seneca, Illinois, located about an hour and fifteen minutes south west of Chicago, grew from a population of about 2300, to 20,000 – overnight. How is that possible you may ask? Well, this sleepy hamlet served as the host for what’s been labeled “probably the toughest event on the planet” – Tough Mudder – a  grueling, 10-12 mile obstacle course designed by British Special Forces with obstacles bearing such frightening names as “electroshock therapy”, “arctic enema”, and “firewalker”.

As a matter of full disclosure, I, your Municipal Maven, participated in the grueling event – all 11+ miles of narcissistic fun. Of course, even as I slogged through miles of mud, leaped off of 15+ feet platforms into abysmal freezing depths, and scaled 12 foot high walls, I couldn’t help but ponder how such an awesomely punishing few hours of fun would impact the small town of Seneca.  What kind of impact do large-scale special events have on small municipalities? I was especially interested in this question because this is the first time Tough Mudder has been held in Illinois and a few logistical challenges made this evident.

Downtown Seneca, IL

For example, I would have loved to meander through the small streets and alleyways that made up the downtown Seneca area. The scenic Illinois river winds through the town center with ma and pa shops enticing locals for brunch and browsing, among other things. Unfortunately, we, the participants, had little opportunity to experience the quaint town, save for views from the bus ride in from the official parking area located at the Joliet, IL Speedway – a 40 minute drive on the expressway.

Michael Ellis serves as a member of the Seneca Development Organization, helps organize Seneca’s farmers’ market, and serves as a member of the Seneca Historical Guild. He also runs the local ACE Hardware, Rental and Radio Shack, which happens to be the oldest continually family-owned hardware store in Illinois, founded in 1872. The hardware store is the hub of the town and the village sent Tough Mudder organizers to him to figure out the parking logistics for thousands of vehicles.

Insufficient lead time made finding the 50 acres of land Tough Mudder needed for parking, very difficult. With only about a month’s notice, Ellis said he was unable to secure a space at the nearby auction house that could have accommodated hundreds of vehicles. Additionally, the local high school and grade schools had graduation that same weekend so parking at the school was not an option either. The lack of on-site parking lessened the positive economic impact of the event on local businesses.

“The way it ended up working, they had difficulty with the original parking space so they bussed the majority of [participants] from about 40 minutes away. Had they been able to park here, then we would have seen more people wander into a shop or bar or something like that. I think that the bussing issue made it not as economically big as it could have been.” Other businesses, like the local trailer store, reported that business was a bit slow on Saturday – the first day of the event. Ellis believes some patrons may have been deterred by traffic. “It may have hindered people coming down because they were trying to avoid traffic,” he said.

Ellis also said additional planning time would have allowed the town’s businesses to do additional marketing to lure visitors. Even on such short notice, some proprietors were able to create signs and  leaderboards that were placed along the interstate and local roads welcoming visitors. Some bars even created drink specials to entice participants to stop in.

Even with the limited advance notice, some local businesses still fared well.

“In a nutshell, if you were a gas station or a convenience store, the weekend of, it was good for them.” Gas stations and convenience stores reported very large increases in sales the week leading up to the event, in part because event organizers arrived early to set up and build the course. He also said a few of the restaurants catered food for the organizers. “Overall, the business community was happy”.

The local ACE Hardware – the town hub and oldest continually family-owned hardware store in Illinois.

Nuances and differences in cities matter when trying to determine the impact a large-scale event will have. Small towns are much more likely to realize significant local impact simply because of the drastic increase in the number of potential patrons to local businesses. With effective traffic management and solid logistics, large scale events can be key economic drivers for small town economies.

Besides the annual Shipyard Days Festival (hearkening back to Seneca’s history as a shipyard building hub during World War II), and local farmers’ markets, Seneca has never seen the numbers of visitors that arrived in town over the course of the 2-day event.  “Everyone – even the towns people were excited because you know, it’s a small town and to have almost 20,000 people come through in one weekend is a really big deal,” Ellis said.

Ellis believes Seneca, Illinois is indeed tough enough to host the major event again next year. He says they would  have an opportunity to do more advance planning such as putting together a special guidebook for visitors, doing additional marketing with local restaurants and bars, and of course, ensuring sufficient parking for event participants. This would help make the town of Seneca itself a destination – which could create much larger economic gains for local businesses and enhance the town’s profile. The Municipal Maven will definitely be visiting Seneca again in the near future – this time, instead of crawling through mud tunnels and leaping over flaming bricks, I’ll be exploring the I & M Canal and the Hogan Grain elevator (the oldest remaining grain elevator in town), and discovering other gems the town has to offer.

Check out the new page: Small Town Spotlight for more features on small municipalities!

Mayors Misbehaving: Toronto mayor on video allegedly smoking crack

Toronto Mayor Rob Ford leaves his home on Friday, May 17, 2013, after published reports said a video appears to show Ford smoking crack cocaine. A report published Thursday night said the video is being shopped around by a group of men allegedly involved in the drug trade. The Toronto Star said, however, it had no way to verify the video. Ford called the allegations ridiculous. (AP Photo/The Canadian Press, Chris Young)

Canadians are happy to have an extended weekend in celebration of Victoria Day (May 24th) – with the exception of Toronto Mayor Rob Ford. He’ll have a long weekend for other reasons. On Thursday, May 16, allegations surfaced that he was caught on video inhaling from what appeared to be a glass pipe typically used to smoke crack cocaine.

Reporters for the Toronto Star and Gawker Media said they had seen a video that appears to show Ford smoking crack. The Toronto Star reporters said they were shown the video on a smartphone on May 3rd after meeting an anonymous tipster in a car park. The newspaper said the footage showed Mayor Ford “sitting in a  chair, wearing a white shirt, top buttons open, inhaling from what appears to be a glass crack pipe.”

Ford’s lawyer Dennis Morris told the Toronto Star that in any video, it is impossible to tell what a person was doing. “How can you indicate what the person is actually doing or smoking?” he said. However, Gawker Media’s Editor in Chief  John Cook actually flew to Toronto to view the video in person. He doesn’t agree with Morris.

According to his account, the only person in the frame in the video is Mayor Ford. Cook said the room was…”very well lit and very clear. It’s Rob Ford sitting in a room that appears to be a house or an apartment, it’s a residence, and there’s a voice off-camera.” Cook further described the pipe that appeared to be in Ford’s hand. “… it’s the kind that has a globe with two glass cylinders sticking out, one for inhaling, the other one that holds the drugs, and he’s got a lighter in the other hand. Throughout the course of the video, which lasted from my recollection roughly 35 seconds, he’s laughing at what this voice off camera is saying. And then he leans in and lights the pipe and inhales.”

According to the Star reporters, Ford is incoherent, trading jibes with an off-camera speaker who goads the clearly impaired mayor by raising topics including Liberal Leader Justin Trudeau and the Don Bosco high school football team Ford coaches.

“I’m f—ing right-wing,” Ford appears to mutter at one point. “Everyone expects me to be right-wing. I’m just supposed to be this great.…” and his voice trails off. At another point he is heard calling Trudeau a “fag.” Later in the 90-second video he is asked about the football team and he appears to say (though he is mumbling), “they are just f—ing minorities.”

Judging from Ford’s offensive comments, he seems to be lamenting about the fact that he’s in fact, not what people expect him to be – hence the alleged crack pipe in hand. It’s probably not too difficult to tell the difference between a cigarette (or possibly a joint), and a glass pipe – especially if the video was taken on a high quality smart phone. If he’s smoking anything from a glass pipe, it’s not farfetched to assume that he’s using said pipe to smoke crack – which is standard in the narcotics industry.

The video is allegedly being shopped around for $100,000 by individuals said to be involved in the drug trade. Ford’s lawyer, Dennis Morris, is denying all allegations and the mayor himself called the accusations “ridiculous”. Whether Ford actually smoked crack in the video or not is actually secondary to the fact that this is simply the latest in a series of distractions that have plagued Ford’s tenure as Toronto mayor. No doubt, Toronto’s reputation as a world class city will suffer regardless of whether the accusations are true.

image courtesy of http://www.wivb.com

Ford has had a somewhat tumultuous start after winning his seat with 47 percent of the vote  in 2010. Earlier this year, he faced accusations of sexual harassment by former mayoral candidate Sarah Thomson.  Two weeks prior to the Thomson incident, the Toronto Star reported that Paul Ainslie, a member of the Toronto City Council executive committee, had asked Ford to leave a function due to Ford being intoxicated. He’s also been accused of skipping city council meetings to coach high-school football. He was briefly ordered out of office in 2012 after he was found guilty of conflict of interest during his campaign, but won an appeal and was allowed to finish his four-year term. Prior to his role as mayor, he was arrested in Miami for driving under the influence and marijuana possession – both infractions he admitted.

Undoubtedly, public officials are expected to sacrifice some of the elements of anonymity that the general public enjoys. Some may argue that what Mayor Ford does in his personal time should be of little concern to the public as long as it has no bearing on his ability to make decisions and effectively lead the city of Toronto. However, the fact that Ford has repeatedly demonstrated lapses in judgment calls into question not only his decision-making ability, but his credibility as a leader and even more so, the city of Toronto’s credibility. This is unfair to the citizens of Toronto.

For the record, this isn’t the first account of drug use (specifically crack) that’s rocked a city hall. Marion Barry anyone? Barry was elected to DC City Council and then re-elected as mayor after his crack scandal.  I doubt this will be the last case we see of mayors entangled in nefarious activities. Regardless of whether the video turns out to be true, it’s time for  Ford to reassess his role as Toronto’s public face and leader. I would suggest he take this long weekend to think about how to get his personal affairs in order and do the right thing, which in this case, includes addressing these allegations head on and honestly, so that the city of Toronto can move forward.

Related articles

• Crack cocaine allegations levelled against Mayor Rob Ford (cbc.ca)
• Toronto Mayor faces drug video claim (bbc.co.uk)

Who steals millions of dollars of city funds to buy horses? Rita Crundwell, that’s who – lessons in municipal mismanagement

Rita Crundwell after her 2012 hearing.

$53 million dollars. That’s how much money former Dixon, IL Comptroller Rita Crundwell embezzled from city coffers over a span of about 22 years. Crundwell served as the city’s comptroller and finance officer from 1983 until she was arrested in 2012.

A few days ago I posted on the topic of municipal finance and why cities go broke. Although I will continue to write on such issues as municipal bonds and how cities raise capital, challenges with pension and health care costs, etc., I want to also give some attention to one of the most glaring reasons why a city may find itself staring bankruptcy in the face – mismanagement and ethical lapses. In other words, fraud. Let’s take a look at how Crundwell did it.

Dixon, Illinois is a small city in Lee County. As of the 2010 census, Dixon’s population stands at 15,733. It has some interesting historical sites including the Lincoln Monument State Memorial which marks the spot where Abraham Lincoln joined the Illinois militia at Fort Dixon in 1832 during the Black Hawk War. It’s also the boyhood home of former U.S. President Ronald Reagan.

Crundwell grew up in Dixon and the current mayor, James Burke, had known her since she was a teenager. In fact, she got started in city hall at the age of 17 in a work program for high school students. (Personally, I think it’s fantastic she got her start early as I’m a big proponent of encouraging the next generation of municipal leaders. Too bad she used her experience and the expertise she developed for the dark side).

So just how did Crundwell filch $53 million from the city of Dixon? Crundwell opened a bank account in the name of the City of Dixon and RSCDA, known as the RSCDA account, in December 1990. She had sole control of that account. Between December 1990 and April 2012, Crundwell transferred funds from the city’s money market account to various other city bank accounts, including the RSCDA account. She created fictitious invoices from the State of Illinois to convince city auditors that the money in the RSCDA account was for legitimate city expenses. She used the RSCDA account money to pay for her personal and private business expenses which included purchasing quarter horses (some as much as $259,000 per piece) and funding the expansion of her horse ranch, horse transportation equipment, and other accoutrements in the equine business. She personally picked up the city’s mail, including bank statements and when she was away, she asked relatives or other city employees to pick up the mail and separate any of her mail, including statements for the RSCDA account, from the rest of the city’s mail.

This November 2011 file photo, provided by The American Quarter Horse Journal shows Rita Crundwell, of Dixon, Ill., posing with her horse, Pizzazzy Lady, at the 2011 American Quarter Horse Association World Championship Show in Oklahoma City.

A U.S. Department of Justice press release describes how in one instance, Crundwell funneled $350,000 to the RSCDA account and created a bogus invoice showing the payment was made to the State of Illinois for a city sewer project the state had completed. That same day, Crundwell wrote a check on that account for $225,000 which she put into a personal account to cover the purchase by her company of a quarter horse named Pizzazzy. For a glimpse into just how lavishly Crundwell lived, the U.S. Department of Justice report states that Crundwell owned her horse breeding and training company, RC Quarter Horses, LLC, had two ranches – one in Dixon and the other in Beloit, Wisconsin, as well as various trainers across the country. She had, in addition to her Dixon home, a home in Englewood, Florida, 80 acres of vacant land in Lee County, a 2009 luxury motor home, and more than a dozen trucks, trailers and other motorized farm vehicles. She also owned a 2005 Ford Thunderbird convertible, a 1967 Chevrolet Corvette roadster, a pontoon boat, thousands of dollars of jewelry, and approximately $224,898 cash from two bank accounts.

If this is how municipal government officials live, we’d have no problems getting people civically involved! Alas, Crundwell epitomizes the worst in municipal government – primarily because of the trust she breached in a small town where everyone knew everyone, or thought they did. Crundwell was able to get away with her massive theft mainly because she was familiar, and brilliant, and in small municipalities, intimate knowledge of the city and its residents coupled with smarts laid the foundation of trust that allowed her to skate by with her grand theft scheme for decades.

Recently, Dixon State Representative Tom Demmer introduced new legislation that’s designed to prevent theft like Rita Crundwell’s from ever happening again. The new plan includes harsher penalties and more government oversight. One bill allows for forgery charges to be brought if an invoice or a receipt is counterfeited. The second establishes higher penalties for theft or misapplication of public funds and the third creates safeguards by making all counties and municipalities create a finance and audit committee which includes members of the government and the public.

All three are important to send a strong message to municipal officials. Misappropriation of funds will not be tolerated. However, the deeper issue is – especially for small towns – how do you create an environment of professionalism and transparency when so much hinges on trust? Accountability is the key. Municipal governments must have in place processes and procedures that are standardized – not based on the individual holding the position. It means that process must trump relationships. Unfortunately, it also means that small municipalities may have to trade in some of the collegiality and trust for the sake of protecting the city’s integrity and stability.

It shouldn’t have to be this way, but unfortunately, every city cannot always protect itself from those who simply lack morals and ethical values. Sometimes, the wolves are indeed among us. Let Rita Crundwell and the story of Dixon, IL  serve as a cautionary tale.

 

Related articles

• Crundwell Moved To Chicago Jail Before Prison Assignment (chicago.cbslocal.com)
• Dixon targets bank over Crundwell theft (qctimes.com)

Bikers unite! Why bike-sharing is “in” with major cities

Velib bike share program in Paris. Photo courtesy of The Guardian newspaper

I used a bike-share program for the first time a few years ago in two different European cities and one Asian city – Paris, France, Sevilla, Spain and Guangzhou, China. As an avid cyclist, I adored the systems that allowed me to check out a bike, ride it across town, and drop it off at or near my destination. It allowed me an opportunity to really experience these cities live and in-color as opposed to whizzing by on a bus or in a taxi. Most recently, I enjoyed Montreal’s hugely popular bike share program and, cruising along Montreal’s abundant bike lanes, I remember thinking how nice it would be  if Chicago had such a system (for the record, Chicago did have such a system called “B-cycle” back in 2010 but it went defunct). Bike sharing is more than simply being able to take in the sights and sounds of a city. If you’re like me and have multiple meetings at different locations downtown on a daily basis, bike sharing is about efficiency. I know the number of times I’ve reluctantly parked at a garage and because of back-to-back meetings, had to take a taxi from one location to the next to save time. Or if I have one meeting downtown, I’ve paid $34 for the garage so I hang around and go window shopping or sit in a cafe for a few more hours just to get my money’s worth.

The United Nations Department of Economic and Global Affairs released a study on bike-sharing in urban areas. The study found that from the initial bike-sharing programs launched in Denmark, France, Germany, Italy and Portugal (a total fleet of 4,000 bikes), today there are an estimated 375 bike-sharing schemes operating in 33 countries in almost every region of the world using around 236,000 bikes. The study also asserts that the rate of growth in bike-sharing schemes has been rapid since 2008 and has probably outstripped growth in every other form of urban transport.

This is why I was excited to learn that Chicago will be launching a large-scale bike share program in the coming weeks. The Chicago program is called “Divvy” and  it’s all set and ready to go in June, after a year-long delay. Chicago will initially install 75 bike stations in the most dense parts of the city such as the Loop and River North area. Installation will then continue every few weeks with the goal of having 3,000 bikes in 300 stations by the end of the summer, and 4,000 bikes in 400 stations by early 2014.  The Chicago Tribune reports that the system cost the city of Chicago about $19.5 million, but the city was able to secure about $18 million of federal grants. The city will pay $7.8 million in operating expenses the first year. Membership and usage fees are expected to cover that cost.

Bike sharing programs have become popular across the country. About 20 cities operate their own bike share programs with various levels of success (the gold standard being Washington DC’s “Capital Bikeshare” program). Transportation policy experts argue that bike sharing will reduce automobile traffic and air pollution, while encouraging healthier lifestyles. Another key value that bikes can fill is that distance that’s considered “too far to walk” between home and public transport or between public transport and the workplace.

The Chicago system is designed for short point-to-point trips up to 30 minutes each; after the ride, bikes can be returned to any other station near their destination.  Users can purchase a day pass for $7 or a yearly membership for $75. Once fully scaled, the program would cover Devon Ave. on the North to 63rd street on the South Side and from California Ave. to the Lake. However, I would like to view the city’s plan for the areas that fall outside the bike-sharing zone. Particularly for residents that live in the far west and far south sides, this program could be valuable in getting to bus and/or train stops in those areas where public transportation access is more scarce.

I generally support policies that enhance quality of life for individuals and communities as a whole. If it encourages a healthier lifestyle, that’s an added bonus. With sky-high rates at downtown parking garages and parking meter rates crippling commuters, the bike share program is a welcome addition to the transportation infrastructure. My hope is that it remains affordable so that all residents can truly take advantage of the benefits.

Related articles

• Chicago to launch ‘Divvy’ bike sharing program (wgntv.com)
• Massive Bike-Sharing Program Ready To Roll Out In Chicago (progressillinois.com)
• Bike share programs are all the rage in 2013 (smartsign.com)

 

How do cities go broke? A closer look at municipal finance

This is the first in an ongoing series examining  challenges in municipal finance. The series will explore a number of factors such as pension and health care liability, issues of management (or mis-management), challenges in revenue generation, necessary shifts in municipal government roles and responsibilities, innovative strategies for creating efficiencies, and more. 

This first post in the ongoing municipal finance series will explore pension and health care liability and the impact on municipal budgets.

“Broke” seems to be the term du jour. Given the long-term economic stress nationwide, it’s no surprise that everyone from individuals to corporations to municipal, state and federal government are feeling the squeeze. Most of my conversations with municipal leadership around Illinois and nationally start off with “We don’t have any money…” followed by a laundry list of things the municipality needs to accomplish – which require large amounts of money.

Jefferson County, Alabama is the state’s most populous county, with its county seat located in Birmingham. The county is involved in a landmark $4.2 billion bankruptcy case – the largest local government in the United States to have ever filed for bankruptcy. Across the country, the city of Stockton, California filed for bankruptcy in June 2012 declaring that the city was fiscally insolvent and needed to seek Chapter 9 protection. Stockton is the the largest US city to file for bankruptcy with the mayor, Mary Ann Johnston, stating that she saw “no other solution.” Also include in that list Harrisburg, Pennsylvania, San Bernardino County,California, Central Falls, Rhode Island, and Boise County, Idaho. Indeed, according to Governing magazine, there were 28 public bankruptcies in 2011 and 2012.

Though many factors contribute to municipal insolvency, pension and health care liability stand as two of the most pressing issues. Municipal governments are struggling to pay pensions and health care costs in a time of dwindling revenues and an aging population trend. In short, more people are drawing from their pension and fewer people are paying into it. This means municipal governments are left with millions of dollars that must be paid to employees on top of the standard costs of government operations.

This presents a huge challenge to municipalities – especially in circumstances where, instead of addressing the looming pension crisis years, and even decades ago, many municipalities simply put off making the tough decisions about how to reform the pension system or were caught unaware. Now, employees who’ve earned their pension are staring at a reduction in payments from those pensions in order to help keep  municipalities fiscally solvent.

For example, Cook County has more than 23,000 employees and 15,000 retirees receiving retirement benefits from the County. Since 2000, the funding ratio for the county’s pension system has fallen from 90 percent to just 57 percent in the latest estimates. Health care costs for Cook County government are nearly $14,000 per employee. This is about 40 percent higher than the U.S. private-sector average.

In a panel discussing pension liability last year, Cook County Commissioner Bridget Gainer described the difficult decisions municipal leaders will make as “…choosing which hill you want to die on.” Very grim. Last month, representatives from California and two other states introduced a bill in Congress that would strip states and cities of their right to issue tax-exempt bonds unless they first disclosed the true cost of their pension plans and whether they could pay it. This is a clear attempt to avoid repeats of what happened in Stockton, California, where the city has defaulted on hundreds of millions of dollars’ worth of municipal bonds but continues to pay hundreds of millions of dollars more in pension costs.

Bill sponsor Devin Nunes, a Republican representative whose district includes many areas struggling to recover from the housing bust, said the costs of public pension funds are driving an increasing number of states and municipalities toward insolvency.  Unfortunately, the question of pension reform can no longer be kicked down the road for future administrations. It’s going to take a lot more than budget cuts and increases in taxes to address existing budget shortfalls. Municipalities large and small must take the reigns of the pension beast and grapple with it now, understanding that on both sides, difficult concessions will need to be made. Preemptive and collective burden sharing is probably the best bet moving forward.

The next post will explore municipal bonds and how cities raise capital.

The public actually having a say in how public funds are spent? What a novel concept…

Image by Josh Lerner, Co- Director of the Participatory Budgeting Project and technical assistance lead for PBC New York City

Budgets are the tangible manifestation of policy. The phrase, “Put your money where your mouth is”, could not be any truer of the way in which budgetary decisions drive policies that directly impact the lives of residents/constituents/communities. Municipal leadership must take note – in an age of democratization of technology and information, democratization of decision-making should be the inevitable next step . One of the hallmarks of serving as an elected official is the notion that that individual is operating for the sole purpose of serving the needs of his or her constituents. And yet, it seems that so much of the cynicism that has developed around political leadership centers on the notion of back-room deals, political and personal connections, and complete lack of transparency in the decisions that directly impact the lives of residents.

Participatory budgeting has become a hot topic as of late – focusing attention on how individuals can ensure their voice is part of the decision-making process particularly around how public funds are spent. The process was first developed for the municipal budget in the city of Porto Alegre, Brazil in 1989. As many as 50,000 people have participated each year, to decide as much as 20% of the city budget. Since 1989 there are now over 1,500 participatory budgets around the world. The process is fairly simple (though it varies depending on where it’s implemented):

* Residents brainstorm spending ideas

* Volunteer budget delegates develop proposals based on these ideas

* Residents vote on proposals

* Government  implements the top projects

Illustration of participatory budgeting process – courtesy of http://www.participatorybudgeting.org

Participatory budgeting is one way municipal leaders can demonstrate good faith in truly catering to the needs of the “ordinary people” that live in the communities they serve. Moreover, it certainly should not be construed as a tool only for large cities. It can be equally effective in small towns, townships, and counties who are looking for ways to more effectively engage residents in civic life. Indeed, I argue this tool should exist particularly in smaller and rural municipalities where it may be more difficult to connect with residents.

In Chicago, 49th Ward Alderman Joe Moore spearheaded the process in 2009. It’s now been implemented in 4 wards. Last week, Chicago also hosted the 2nd international Participatory Budgeting Conference where they discussed this emerging tool and its potential expansion.

A note for small or cash-strapped municipalities:

Participatory budgeting can still be an effective tool even if your municipality does not have a significant budget. It doesn’t require a new pot of money, just a change to how existing budget funds are decided. Most projects to date have dealt with as little as 1% to as much as %15 of a municipality’s overall budget. It’s also possible to mix in various other types of funding from other entities such as foundations and corporations. Ultimately, how much money needed depends on what the money will be used for.

Check out this article for a helpful guide on how to start participatory budgeting in your municipality.

After all I’ve just described, the participatory budgeting process may seem like a magic bullet – however, it’s not without its flaws, or its critics. In some areas, critics have pointed out the lack of adequate community engagement or the fact that the process favors only those individuals from certain racial or socioeconomic groups.

In later posts, I will explore the ins and outs of the participatory budget process and how it unfolds. I’ll explore some of the challenges and weaknesses that I’ve observed in the way it’s been implemented so far and I’ll also engage several municipalities on the possibilities for implementation. For now, I can say that I’m excited about the proliferation of this tool! Democratization of decision-making is the way forward!

Chicago Police Data: Crime Associated with Vacant Properties Has Increased Drastically

• In 2012, a total of 2,618 crimes occurred in abandoned buildings or vacant lots
• 7 crimes a day were reported on average
• 3 reported criminal sexual assaults and 4 weapons violations per month were reported, on average

These numbers, from a new report issued by the Lawyer’s Committee for Better Housing (LBCH) a few days ago, should concern residents – renters and homeowners alike. Vacant properties are magnets for crime and create public safety hazards. In 2011, Chicago had 15,000 properties registered as vacant – and that’s only those buildings that are actually registered. Check out the distribution of reported crimes and compare with the addresses of vacant properties:

 

Many municipalities – including Chicago – are still languishing in the throes of the housing slump. Unfortunately, Chicago has had a particularly slow recovery – if at all. Chicago witnessed the greatest increase in foreclosure actions since the beginning of the foreclosure crises and the LCBH’s report states that 90% of those foreclosure actions resulted in bank-owned properties. In case you aren’t familiar with the foreclosure process,  it takes months and even a year or more for the process to take place. Meanwhile, once the homeowner has been evicted the property sits vacant – often without the consistent maintenance that can prevent the property from becoming a magnet for squatters and criminals.

One has to wonder whether it’s better public policy for homeowners to stay in their homes throughout the process or for banks to take the responsibility for maintaining a property once the owner has been evicted. A new ordinance proposed by City Council proposes that remedy. Unfortunately, the “Keep Chicago Renting Ordinance” initially sponsored by 44 members of city council , is stuck in committee after a hearing that took place May 1st. The ordinance calls for foreclosed properties to be registered with the city and that tenants of foreclosed properties be notified. It would then maintain the leases those tenants live under, with a maximum 2 percent increase year to year, and with $12,000 allotted to tenants forced to move before the property is resold.

Meanwhile, many Alderman and residents have recounted horror stories of homes being boarded up while they were still in them, thieves entering vacant properties next door to steal copper wires, appliances and other fixtures, and dog fights taking place in vacant yards. These are just a few examples of the hazards.

Opponents of the new ordinance state that the ordinance could be bad for the housing market and bad for tax revenues. Others argued that the ordinance could hurt investment in Chicago. My challenge for opponents is to drive through some of the communities hit hardest by vacant properties and the foreclosure crisis. Stalling until June to make a decision on the ordinance may seem like a short time to wait. But for residents who have to pass by vacant buildings on a daily basis, worry about the safety and decreasing property values, that’s one month too long.