Ravenstahl Tells City Council Its Pension Plan Will Fail

Pittsburgh's major told the City Council that its plan will not succeed in rescuing the city's struggling pension funds.

(October 26, 2010) — Pittsburgh Mayor Luke Ravenstahl has told the City Council that its plan for the city’s parking assets will be a failure, claiming that the Council-Controller strategy to save the city’s pension fund from a state takeover is faulty with numbers that don’t add up.

“We had 19 public meetings and discussion of a bond concept was at each single public meeting,” Councilwoman Natalia Rudiak said, according to KDKA, a Pittsburgh CBS affiliate. “We had a discussion of the bond concept as well as the state’s takeover using the numbers that we had scraped together.”

City Councilman Patrick Dowd explained that the transition proposed by the council makes sense to the Parking Authority. “We’re not dictating, we’re not demanding, we’re not manipulating, we’re asking them because we have confidence,” he said, as reported by KDKA. “We have total confidence and I’ve asked why the mayor doesn’t have confidence. Why is he afraid? What’s he afraid of the independent analysis?”

Despite the confidence of council members over their plan — crafted by some members with city Controller Michael Lamb — Ravanstahl has remained adamant that the strategy will result in layoffs and higher taxes, burdening the city with between $600 million and $800 million of debt. Previously, the major championed a plan in which the city would lease garages and metered spaces for 50 years for $451.7 million to a private investment group formed by J.P. Morgan and Connecticut-based LAZ Parking. The mayor had hoped to use some of the money created by his plan to pay off the parking authority’s debt and pump more than $200 million into the city’s pension fund to avoid a state takeover by January 1.

The Council rejected the mayor’s plan and instead proposed it would sell Mellon Square garage, five parking lots and nearly 7,000 metered spaces to the Parking Authority to raise the $220 million the pension funds need, the Pittsburgh Tribune-Review reported.

To contact the <em>aiCIO</em> editor of this story: Paula Vasan at <a href='mailto:pvasan@assetinternational.com'>pvasan@assetinternational.com</a>; 646-308-2742