Thursday, April 30, 2009

City Pensions—a couple of quick fixes

City pensions consume $13 million a year. That is a huge piece of our $212 M City budget and almost as much as the city collects in ad valorem (property) taxes. (This doesn’t count the money going for the new employees who are going into FRS.) There are no easy answers, no silver bullet, but there are meaningful measures we can take to curb this growing liability. And we don’t need a consultant to point the way...

Why does the city offer pensions at all?

Pensions offer one tool to attract and retain the best employees we can. And we must be fair. If we are perceived as an organization that doesn’t honor commitments to employees, we will be unable to attract and retain the best talent to serve this city.

But we also have an obligation to the taxpayers—to deliver high quality services at the lowest price.

When our benefits threaten to decrease the quality of city services, we must take action.

What can we do?

I believe we have two options that could improve the pension picture immediately, changes that will both save money for the taxpayers and improve the fairness to city employees.

Five year averaging

The headline-grabbers are the handful of folks on the high end of the salary range who will receive large pensions. But there is a second group of retirees who receive disproportionately high pensions: The end-game over-timers. . .

Currently, the city pension plans calculate an employee's salary based on the best two out of the last five years. Some employees have used this provision as an opportunity to pad their pension-basis through stepped-up overtime during their last two years. Instead of rewarding steadfast service, this provision rewards those creative employees (something we usually encourage) who can game this system in the final innings. And it unfairly penalizes those employees whose jobs do not provide opportunities for overtime.

By switching to a calculation based on the average salary over the last five years, we can get a better picture of an employee’s work history and reward each employee based on his or her work.

The savings? According to our finance director, making this change in all city pension plans could save us $1 million a year.

Spousal benefit

Today most people subscribe to the concept of “equal pay for equal work.” Yet the seemingly antiquated city pension system violates that goal. . .

Today the city pension is paid to an employee until he (or she) or his spouse dies. This system presupposes that 1) people marry within their own age group and 2) that they stay married. And it is based on a by-gone era when the social norm was one bread-winner/pension-earner per family.

But look what happens when a retiree violates the Leave-It-To-Beaver social more:

A Tale of Two Officers
(Not to pick on police—just easier with a pension that is 100% of salary to make this illustration)

For the sake of simplicity, let's make the following assumptions:
  • Both join the force at 20 years old.
  • Both officers serve the city admirably, receive the same base pay for their equal work for 35 years.
  • Both retire at 55 and receive a pension paying 100% of salary.
  • Both officers earned the same, constant amount of $40,000 every year on the force.
  • Everyone (pensioners and their spouses) lives until they are 80 years old.
Let's look at their compensation while on the force:

Officer AOfficer BDifference

Years on Force3535--

Total Salary Payments While on Force$1.4M$1.4M--

So far so fair.

Now let’s say that Officer A is a devoted husband who is married to a woman of his age. Officer B has a midlife crisis at 50 and marries a woman half his age. Let's see happens to their pension compensation:

Officer AOfficer BDifference

Years of Pension Payments255025

Total Pension Payments $1.0M$2.0M$1.0M

As you see, there is a difference of a million dollars between these two employees. Equal pay for equal work? Not.

This inequity not only costs the taxpayers, it violates the fairness principle. A simple change could repair this inequity. The technical name for this change is “life annuity normal form.” In practice it means that upon retirement, the employees must choose whether to receive benefits only until they die or until their spouse dies. If they choose to include their spouse, then the benefit level is adjusted based on the age of the spouse, dividing out the pension expectation of the employee over the life expectancy of the youngest partner.

This is a standard practice with other pension plans and provides equitable payments with respect to different life choices. According to the city finance director, making this change for all city pensions would result in a $1.7 million a year savings.

Action now

By making these two changes for all of our employees, the 5 year average and the spousal consideration, we can create a pension system that treats our employees fairly and equitably. These changes also bring our system more in line with other local governments and the FRS system, our main competitors for top talent.

These changes will should save the city an estimated $2.7 million a year. The city should move forward with these changes now.

Wednesday, April 15, 2009

Natural Playground Update

Several weeks ago I presented the idea of creating a natural playground at Bryant Park, surrounding the new Tryon library, and the City Council wholeheartedly supported a new way of thinking about and designing parks.

Bryant Park in many ways provides a great proving ground in Pensacola for a natural playground. Primarily an empty field prior to the construction of the library, the original design for the park included a walking trail and a standard plastic playground structure. Armed with a new direction, City Parks and Recreations staff began working with the architects and others involved in the park to modify the plan to become a natural playground.

In Pensacola we have no expertise in natural playground (there are none in Florida, as far as I am aware), so staff and the architects enlisted the help of Natural Playgrounds Company to explore this idea. I recently had the pleasure of attending a meeting with the architects overseeing the project, Parks and Rec director David Flaherty, John Ewing (Parks department Project Manager), and Doug Durden, the supervisor of park maintenance. They had asked Ron King and his son, both of Natural Playgrounds Company, to come to town for a site visit. (The visit was held during some of the rainy weather we have been having, which Mr. King thought was a great time, since they could see some of the real conditions the park will experience.)

We all came out of the meeting energized and excited about this new park. Mr. King described some of his ideas about elements to incorporate in the site. He was very sensitive to the experience of the site, such as views of the park as well as the relationship with the adjoining neighbors. The original plans had a walking trail around the park, and the current plan is for that to stay, with major play elements in the center as well as some scattered around the park. Mr. King was particularly conscious of the fact that this is a park around a library, noting the potential for outdoor activities and the appeal of quiet places for reflection and reading. Among the ideas were:
  • a 10 ft tall hill with built in slides and climbing walls,
  • an amphitheater,
  • a frog bog,
  • a bridge across the shallow retention pond planned for the site.
And there is good news regarding costs. The rough estimates are that the park will come in within budget even considering that this is going to be a change order with the architects. One of the benefits of this natural playground over the traditional structure originally planned is that most of the money that will be spent will be spent on local landscapers and local materials, rather than being paid to a manufacture in another community.

The architects and park staff will work with Mr. King on the design which should be forthcoming in late May or early June. Citizen input is certainly welcome, so send me your ideas. Look for this natural playground to be completed some time this fall. Bring your kids and grandkids. Then let me know what you think.

The Maritime Museum

The Admiral John H. Fetterman Maritime Museum will be the crown jewel of the entire maritime park project. As a mother and a scientist with a passion for education, it is the part of the project that excites me the most. I want an economical viable park that acts as a magnet for drawing people of all types to one of our greatest assets, our downtown waterfront. Some will come for work, others for ballgames, others for a nice walk, but I believe the largest group will be coming to visit the maritime museum. However, I believe that we must consider the museum as part of the whole and think that creating the best park might entail shifting the museum site.

The negotiations regarding the project as a whole. I began considering the museum in the context of the overall site as our negotiations with the Master Developer evolved. (And steady progress is being made in making this project a reality.) Incredible effort has been going into crafting a Master Developer agreement that will provide incentives for retail uses of the private development (as opposed to offices on the ground floors) and other elements that will make this a economically viable, exciting park for all of us to visit.

The park is a three-leg stool: maritime museum, multiuse stadium, and public park. The master developer agreement governs the construction of the multiuse stadium, the public park, and development of the private buildings (along with the environmental cleanup of the site). A separate agreement, between the CMPA and UWF, governs the construction of the maritime museum.

Maritime Museum site. The maritime museum has always been envisioned along Devilliers Wharf. It seems fitting that a maritime museum have some element of water frontage. However, I believe that the activity we all have come to expect, the pretty pictures we were sold on, will not occur if the museum consumes the entire frontage of Devilliers Wharf.

Certainly, the entrance should relate to the waterfront. The entrance of all great museums sets the tone for the experience you will have inside, looking at the museum collections. Still, museums are by nature inward-looking—the curators expect visitors to enjoy the exhibits rather than the views (though occasional nice views can be integrated into the experience). Once a visitor enters the museum, they have left the public realm and do not add vibrancy to the street. And that’s a critical issue.

Activity on Devilliers Wharf limited by single use frontage. Currently, under the CMPA contract with UWF, the museum is proposed to consume the entire stretch of Devilliers Wharf that has buildings (the southern half of Devilliers Wharf will front the park). So the only reason to walk along Devilliers Wharf in this design is to enter the museum (assuming the museum puts the entrance on the wharf—their preliminary sketches have the entrance on the north side, by Devilliers Square). As I understand it, the museum will house the Trader Jon’s collection to add character to the museum restaurant. It would certainly be appropriate to have an exterior entrance to the restaurant, and perhaps they will have the restaurant stay open after museum hours. However, a museum entrance and one (potential) restaurant along Devilliers Wharf will not create the activity that will make this park successful. That is why I suggest some flexibility in siting the museum.

Additional uses on Devilliers Wharf. There are, I believe, changes that could be made that will improve the overall park design and success. Key to the park will be an active waterfront with a variety of attractions: restaurants, shopping, the museum. Perhaps we could create a narrower entrance for the museum on Devilliers Wharf with private development (restaurants/retail) on the first floor on either side and museum on the second floor. Perhaps shift the museum complex to the north to allow private restaurants/retail on the south side. I am not a planner nor a developer, so I don’t know what changes exactly would be most viable—I just feel that the plan as it is does not contribute to the level of activity needed for this project to meet the expectations of the community.

Collaborative Effort. This park has a number of participants, all necessary for its success. In all of the other agreements that the CMPA is entering (the Studer MOU, the Pelicans lease, the master developer agreement) there is wording that acknowledges that this is a multi-faceted agreement and that all parties will work together to create the best possible park. These agreements include wording like “a site selected by the mutual agreement of Studer Ownership Group and CMPA” and “in the general location at the Park.” The CMPA will have final oversight of all building placements on the park. Unfortunately, as I read the CMPA/UWF agreement, there is not the flexibility that would allow UWF and CMPA to work together and make adjustments to create the park we want.

What I would like to see. The UWF/CMPA agreement does not include any provisions for adjusting the site of the museum to create the best park for the community. In my conversations with many involved in the project and museum, there is a general understanding that the museum placement might be adjusted to conform to the overall plans. However, from what I know about contracts, if it is not written in the contract, it is not part of the agreement. I propose amending the museum contract to include language that allows flexibility in siting the structure. This would be consistent with the contracts governing the other pieces of the project. In addition, any considerations necessary for a move should be included—-the museum should have waterfront access/views, reimbursement for architectural charges paid by the museum in developing plans for a prior site, proximity to park, etc—-so that all of the parties know what the expectations are.

Am I undermining the project? I don’t believe so. By adding some flexibility, I believe the proposal helps strengthen the project as a whole. It can enhance the economic viability of the project by opening additional waterfront to commercial, revenue-producing, tax-generating activity. And it could increase the number of people enjoying the waterfront, bringing essential vibrancy to this wonderful community asset.

Tuesday, April 7, 2009

Opening our Bayfront to Pedestrians, Cyclists, and family Activities on Weekends

The Case for Waterfront Access. Pensacola’s greatest natural asset is our beautiful waterfront, particularly our downtown waterfront. We need to capitalize on this asset to improve our quality of life for those who live here and to help recruit new jobs to our city.

Unfortunately, many of us have limited opportunities to be close to our waterfront. Indeed Bayfront Parkway, which affords passing motorists vistas of our bay, also acts as an effective barrier to access. Therefore, I propose that we create a program that will close Bayfront Parkway to cars on the weekends to open our waterfront for the enjoyment of all.

Other models. Many cities around the country have similar programs. In Cambridge, MA, they have closed Memorial Drive, one of the most major thoroughfares right along Boston’s Charles River, on Sundays from April to November since 1975. This is an extremely popular event, bringing almost 6000 people on a good day to a 1.5 mile stretch.

In Cambridge, they use simple metal gates like those used for parades to block access to the roads and in some places just orange cones. Typically one will see ice cream vendors, roller blade rentals, and other related businesses set up. Many people come out for a jog or bike ride with the family (little kids do great on their bikes on a wide roadway). Additionally, fitness centers like the YMCA have programs in adjacent parks, people picnic, and even belly dancers have been seen practicing.

An event like this could prove to attract a range of people to downtown on the weekend and would help make Pensacola recreation-friendly.

How to move toward a family friendly bayfront. When Bayfront Parkway was closed in the aftermath of Ivan, there was a constant parade of people using this scenic route for recreation. I would like for the City Council to request that staff do further research on my proposal to close Bayfront Parkway on weekends for bicycling, rollerblading, jogging and walking.

We could close either all of Bayfront—say from Chase to Palafox—or close the south lanes of Bayfront from Chase to Alcaniz. I believe the latter proposal would get less resistance, especially from downtown businesses and restaurants. Indeed, if done right, this would help bring customers to their businesses.

The role of the City. The CRA has been advocating “enlivening public spaces” downtown, and I think that is an important part of revitalizing our downtown. However, we need to be clear on the role of the government versus the private sector. The city has control over certain tools, like road closure. The city should work closely with private groups to see how the city can use its tools to facilitate events. However, the city should not be in the role of providing entertainment.

The costs. I understand that there will be costs. The FDOT has regulations for closing roads, and I am optimistic that we can work with them to create a program that is safe and affordable. Roads are closed all the time for construction without huge barriers or being manned, even for extended periods. And Bayfront Parkway is frequently closed for special events in the historic Seville area.

Funding. While closing off a portion of Bayfront Parkway would entail some costs, it should be relatively small. Still we should scrutinize any new programs and costs and look for funding sources other than tax dollars. To fund this road closure, I propose that we shift money from some of the existing CRA programs which, if they are deemed beneficial by the private sector, could be taken over by private sector groups (*see below). These funds would cover the costs of the proposed road closure on Bayfront Parkway.

In addition we should seek private sector support (perhaps banners of sponsors on the light posts) for this program. These banners could be used to enliven the Bayfront just as we use those on Palafox to promote community events.

What's next. I presented a version of this information to council at our committee meeting this week. I let them know that I would like to bring it up at our next meeting, and Sam Hall has asked for it to be on the agenda for the Neighborhood Services committee. I would appreciate hearing your comments about this between now and then (and after) so we can work together to make this the vibrant city we all want it to be.

*The city should play either a supporting role (road closures, etc) or a catalytic role in enlivening our downtown. Last New Year's Eve the city successfully created the Pelican Drop. The success of that program should lead the private sector to sponsor the activity again next New Year's Eve, though the city will continue in a support role (closing Palafox, etc).
We need to review all of our programs to determine the city's role. For instance, the private Evenings in Olde Seville program has been going on for many years. While it is wildly popular, each year they struggle to raise sufficient funding for this summer music program. When the city sponsors a similar music program on the same night, it undermines the efforts of the private group. Why would a donor use their limited funds to pay for something the city is already doing? The city should carefully review the music program to see if it was successful, and, if so, we should step back to a supporting role, allowing the private sector to vote with their dollars if the program improves the quality of life downtown.