to support it via tax revenues. Yet, with the state
breathing down Pittsburgh’s neck, this demographic
reality, combined with a youthful Mayor, may have
created the perfect confluence of need and boldness.
By Kip McDaniel
Pittsburgh Mayor Luke Ravenstahl sits in his beige- hued office, one hour forty-three minutes before
he will open the final bids for the privatization of the
city’s parking system. This controversial plan has been
a centerpiece of his recent work to save a dying pension
system; The proceeds from the proposed 50-year lease
will be used to top up the city’s retirement plan—and
just in time, for, if the deal isn’t executed by January
1, 2011, Pittsburgh’s $239 million in pension capital
will be transferred into state control.
“We need $220 million by the end of the year,” he
says, sinking into a green leather chair. “If we fail,
the state takes the assets. They would manage the
fund, and they will send a bill every year, saying
our minimal municipal obligation (MMO) is X. We
calculate that at being $30 million more than the
$45 million we pay right now. That comes from
the taxpayers.” If he succeeds, however, and the
nine-member City Council approves the bid to be
unveiled in less than two hours, the plan will not be
consumed by the state of Pennsylvania. “Essentially,
we could keep our MMO at $45 million,” he says.
“However, we need an additional $15 million—still
less than what the state would charge us—if we
want to do more than tread water and instead fund
the plan within 20 years or so.”
“Clearly, it will solve this year’s pension problem”—
the total estimate for the pension top-up plus paying
off the parking system’s debt is $320 million—“plus
provide additional revenue to put into the pension
or something else,” the Mayor adds.
Maybe it is because of his boldness—or, more likely,
his youth and electoral politics—that Ravenstahl has
encountered opposition. Becoming Mayor in your
mid- 20’s through tragedy (the previous Mayor died
of a brain tumor while in office, leaving City Council
President Ravenstahl with the top job) is a recipe for
jealousy and resentment, and it is suggested by those
around the Mayor that such animosity is the root
of opposition to the parking sale plan. While other
proposals have been floated, including streamlining
the parking system to increase revenue and pension
bonds, Ravenstahl has answers to all of them.
“Pension bonds: That provides the up-front capital, but
it increases our debt servicing by large amounts, and
passes it on to the next generation,” he says, well aware
that the next generation is, indeed, his generation.
The streamlining approach, he also notes, may rely a
little too heavily on a faith in government’s ability to
run like a for-profit corporation. Regardless of merit,
however, Council members are holding the cards
close to their chest, knowing full well that they have
more power than Ravenstahl would like. The about-to-be-revealed bid will have to win five of nine votes
by November 1. Even the confident Mayor refuses to
make a prediction about how the vote will go.
At 30 years of age, Ravenstahl’s narrative is comically
perfect. Mayor at age 26 of a prominent, if faltering,
town, he is attempting to do what many before have
tried and failed—or, more likely, simply ignored.
Pensions are by definition an old man’s game,
but the last half-century of American history has
shown most old men unwilling to pay for their own
retirement. When you’re a Mayor who won’t retire for
upward of 35 years, however, the problem is almost
by definition your problem.
The problem is exacerbated in a place such as this.
Once the thriving steel town depicted in classic
Americana, Pittsburgh’s population has shrunk
from a once robust 680,000 to a more moderate
300,000. Likely due to the tendency of bureaucracies
to perpetuate themselves past their point of necessity,
this exodus has created a large public pension liability
without an equal growth in the citizenry needed
One hour and forty-three minutes later, Ravenstahl, flanked by various members of City Council, City attorneys and
administrators, three news cameras, one radio reporter,
and a splattering of print journalists, reads out the
winning bid. It is a good one. Due to the first round
of bidding being so close, the City asked two groups
to resubmit their proposals; in doing so, the winning
bid—$451,680,000, by a JP Morgan-led consortium—
was increased by upward of $40 million from the first
round of offers. There are smiles everywhere.
Art by Ellen Weinstein / ellenweinstein.com
7 | ai-CIO.com | October 2010