Left In Lowell

On tonight’s City Council agenda, under the City Manager’s portion, a proposed ordinance was introduced that asks for amended (read, increase) sewer user charges.

Instead of the perfunctory, “sending it to a public hearing” a full discussion took place and the motion is going to, you guessed it, a joint meeting of the Financial and Economic Sub-Committees. We heard the same refrain: we do not want to increase fees. No one wants to have taxes go up; let’s face it, fees are taxes by another name.

It was three months ago, at the June 24, 2008, that the City Council unanimously voted to approve a loan order to “borrow the amount of $35 million for improvements at the Lowell Wastewater Utility.”

Where did they think the money to repay this loan was coming from? Perhaps we should all watch the replay of the meeting on LTC’s web site so that we can remember how enthusiastically they approved Mark Young’s (Executive Director, Waste Water Utility) presentation. Waste Water is an enterprise fund. It should by definition fund itself. During the discussion at the June 24th meeting, it was evident that the rates would go up.

I do not understand how we can improve the infrastructure of the City, while not raising taxes or fees, not laying-off any City employee, and let’s not forget, pay for every pet project the CC has. I would like the Administration to put a dollar amount next to every motion brought up so we can see how much these constituent-friendly motions that are prompted by a “receipt of one phone call” really cost.

Like it or not, tomorrow night a select group of delegates from the Democratic town and ward committees will choose the Democratic replacement for Buonomo on the November ballot. As Dick reported, our allotment of 28 Lowell delegates appears to be full. (A bus has been commandeered for easier transportation to Waltham tomorrow.)

I am not a delegate, but will be going to observe and cover the event. Should be interesting. If there are any good audio tidbits I’ll be sure my digital recorder has fresh batteries! I’m actually glad not to go as a delegate, as it gives me an opportunity to put on my blogger/citizen reporter hat.

During tonight’s City Council meeting, an historical vote was taken. By unanimous vote, the CC voted to approve the land disposition of the Hamilton Canal District to Trinity Financial.

The 11 acres of land will now be developed by Trinity. As the principal of Trinity stated when he addressed the CC, “we have a great plan,” but it is only a plan; now we need to implement it.

The urban revitalization project will take at least 10 years to complete but it will begin shortly with the construction of the new judicial center. According to CM Bernie Lynch’s letter to the CC:

The completed project will result in the complete transformation of the gateway to Downtown Lowell into a new mixed-used neighborhood. It represents a $700-800 million investment that will yield nearly 2 million square feet of a new development, including up to 425,000 square feet of commercial space, up to 725 new housing units, and 400-1800 new jobs for the City of Lowell. The completed project will result in an estimated $4 million in new annual tax revenue for the City.

I forget how long this plan was in the works; at least 5 years, I think. Current Assistant City Manager and DPD director Adam Baake received much deserve compliments and praise from the City Council for his efforts.

Today was a good day for Lowell.

Quietly, so as not to alarm potential voters, three Republican candidates for state office have been getting thousands of dollars from members of an anti-gay group. This from a press release on a memo put together by the state Senate campaign of Jamie Eldridge. Bold mine.

Dubbed “The New Gang of Three,” Republican Steven Levy of Marlborough, Kurt Hayes of Boxborough, and Arthur Vigeant of Marlborough were revealed to have raised between twenty and forty percent of their itemized contributions for 2008 from a single group of pro-discrimination activists.

One political action committee, the Massachusetts Independent Political Action Committee for Working Families, or “MIPAC,” and its supporters have sent thousands of dollars in contributions to Levy, Hayes, and Vigeant. MIPAC’s singular purpose is to have discriminatory language eroding individual rights and equal protection under the law written into the Massachusetts state Constitution.

Further, The New Gang of Three have been curiously quiet about their political benefactors as this one divisive special interest group silently funds significant portions of their legislative campaigns.

This is rather disgusting to me. Folks, if you can, I really encourage people to donate time or money to Jen Benson, who already has my endorsement, or give to Jamie Eldridge, who I also endorse. Or to take a second look at Danielle Gregoire, Vigeant’s Democratic opponent, if you want to fight such insidious funding. These are races that we can, and must, win, if we are to not only protect equality, but keep what makes Massachusetts work for all people (as opposed to the social and economic right wing). We cannot have a backslide in our principles now, that we have made so much progress.

The actual memo in question is below the flip if you want to read it in detail. (more…)

(cross posted at Bluemassgroup)

Ezra happened upon an essay “…being circulated by Luigi Zingales, the Robert C. McCormack Professor of Entrepreneurship and Finance at the University of Chicago” titled Why Paulson is Wrong. It posits:

When a profitable company is hit by a very large liability, as was the case in 1985 when Texaco lost a $12 billion court case against Pennzoil, the solution is not to have the government buy its assets at inflated prices: the solution is Chapter 11. In Chapter 11, companies with a solid underlying business generally swap debt for equity: the old equity holders are wiped out and the old debt claims are transformed into equity claims in the new entity which continues operating with a new capital structure. Alternatively, the debtholders can agree to cut down the face value of debt, in exchange for some warrants. Even before Chapter 11, these procedures were the solutions adopted to deal with the large railroad bankruptcies at the turn of the twentieth century. So why is this well established approach not used to solve the financial sectors current problems?

The answer is mainly time. Chapter 11 takes too long. But if the restructuring of debt is more palatable than the tax funded purchase of toxic waste at inflated prices, is there a way to do it?

Since we do not have time for a Chapter 11 and we do not want to bail out all the creditors, the lesser evil is to do what judges do in contentious and overextended bankruptcy processes: to cram down a restructuring plan on creditors, where part of the debt is forgiven in exchange for some equity or some warrants. And there is a precedent for such a bold move. During the Great Depression, many debt contracts were indexed to gold. So when the dollar convertibility into gold was suspended, the value of that debt soared, threatening the survival of many institutions. The Roosevelt Administration declared the clause invalid, de facto forcing debt forgiveness. Furthermore, the Supreme Court maintained this decision. My colleague and current Fed Governor Randall Koszner studied this episode and showed that not only stock prices, but bond prices as well, soared after the Supreme Court upheld the decision. How is that possible? As corporate finance experts have been saying for the last thirty years, there are real costs from having too much debt and too little equity in the capital structure, and a reduction in the face value of debt can benefit not only the equityholders, but also the debtholders.

As during the Great Depression and in many debt restructurings, it makes sense in the current contingency to mandate a partial debt forgiveness or a debt-for-equity swap in the financial sector. It has the benefit of being a well-tested strategy in the private sector and it leaves the taxpayers out of the picture. But if it is so simple, why no expert has mentioned it?

The major players in the financial sector do not like it. It is much more appealing for the financial industry to be bailed out at taxpayers’ expense than to bear their share of pain. …

As Ezra points out:

It would’ve been one thing if Paulson had come to Congress and begged them to approve an emergency plan that erred on the side of protecting taxpayers. To come to Congress and err on the side of protecting his former colleagues from losses takes rather a lot of gall, but that’s exactly what Paulson is trying to sneak in beneath the cover of emergency. By offering such a lopsided bailout proposal, it is Paulson, not his critics and not the Congress, who has put the speed of the response at risk.

This Sunday’s Lowell Sun Column asked, in their typical sarcastic fashion, if Middlesex County voters were “paying attention.” John Buonomo, the Register of Probate for the County, received “tens of thousands of votes” in last week’s primary election and the paper correctly asks if the voters know what is going on.

Probably not. First of all, very few people know what this job is all about. I agree with Lynne comments in a previous post…the job should be an appointed position.

Secondly, when you go into a voting booth in Massachusetts, your choices are usually limited to voting for the only name running for a particular office, write-in a name or leave it blank. On principle, if someone is running unopposed I usually never give him/her a vote; unless I want to give that public official an endorsement. I have on many occasion wrote-in a name.

Back to the Buonomo votes…the election process was difficult to understand for the average voter and what did the paper who laughed at the voters do to help us understand this process, very little. I learned about the process through sco’s post that was featured on this site.

Granted voters have the responsibility and duty to be informed and knowledgeable but institutions, such the mainstream media (newspaper) and the new media (blogs) have their own responsibilities. We should all do our job a little bit better to have motivated and informed voters; 9% voter turnout in Lowell is far from democracy in action

In view of the economic meltdown, a dog story does not have the same impact but life goes on.

As we had mentioned a number of times, Lowell has become a dog-friendly City; not only because of the newly-built dog park but there are dogs being walked everywhere; especially downtown and around the larger condo developments. (more…)

Ray-gun’s voodoo trickle-down economics of deregulation sure has proven not to work as a solid long term policy, but you-know-what definitely trickles downhill. That is, when the economy’s in jeopardy, the people facing the budget cuts end up being us.

That’s the news on the state budget, anyway - which will result in local aid being affected. I spoke briefly last night at the Lowell caucus with Senator Pangiotakos, chair of the Ways and Means, and he was quite sober. He cited what the news stories are saying - the state took in $200 million less in revenues in the first two weeks of September than this same time last year. The culprit is capital gains taxes, which fall in a declining market, and the fact that a large part of our greater Boston economy is the finance sector, which is particularly in trouble.

Right now, the legislature is denying Governor Patrick the same power to make budget cuts mid-year that they gave Mitt Romney, but it could be forthcoming if the news doesn’t get better. This is starting to look like 2003 all over again. And what happened in 2003 was very harsh…we still haven’t recovered from that. This time, in my opinion, there’s no fat, or even flash to cut. We’re going to have to cut structural bone.