“If you were going to put something in a population to keep them down for generations to come, it would be lead.”

February 1, 2016. Share on Twitter

Flint’s Future. “If you were going to put something in a population to keep them down for generations to come, it would be lead,” Dr. Mona Hanna-Attisha, MD, MPH program director for the pediatric residency at the Hurley Children’s Hospital at the Hurley Medical Center in Flint, Michigan warned, as the complex fiscal and human challenge confronting the city’s future—and the relative responsibilities of the federal and state governments are being debated. Dr. Hanna-Attisha is developing a new database of children under 6 who may have been exposed to lead in Flint’s water, a group she said she believed could number 8,000—in effect the guts of a tale about the failure of Michigan and the federal government to promptly address the crisis after it began nearly two years ago—a fateful delay, because of the threat that the youngest children in this city may have suffered irreversible damage to their developing brains and nervous systems from exposure to lead in their drinking water. According to the U.S. Public Health Service, 26 water samples, out of nearly 4,000 collected, contained lead at levels higher than 150 parts per billion—ten times higher than federally recommended limits.

A report four years ago by the Centers for Disease Control (“Low Level Lead Exposure Harms Children: A Renewed Call for Primary Prevention Report of the Advisory Committee on Childhood Lead Poisoning Prevention”) found that exposure to even low levels of lead can profoundly affect children’s growth, behavior, and intelligence over time: combined state, local, and federal failures might well now have so tainted and imperiled the city’s fiscal and human future, because studies have linked elevated lead levels in blood to learning disabilities, problems with attention and fine motor coordination, and even violent behavior—with younger children and fetuses the most vulnerable. To date, Gov. Rick Snyder and the Michigan legislature have appropriated $28 million in emergency appropriations for the city—funds to provide initial services, such as health assessments and home visits from nurses.

State testing of four water samples from three Flint schools last year found lead levels significantly exceeding federal drinking water safety standards in what should have been a federal-state wake-up call: Flint Community Schools Superintendent Bilal Tawwab notes that no one can accurately report how many of the city’s children have been affected at this point, but he notes: “we can’t write off a generation of kids.” If anything, children in Flint are likely more dependent on the city’s schools for water and public health than most cities: more than 80 percent of Flint’s school children qualify for free or reduced meals.

Re-Balancing Motor City Taxes. Detroit Mayor Mike Duggan is set this afternoon to announce details of the city’s annual proposed property assessment changes: the good news for most owners is that most can anticipate a reduction in assessments for nearly all city residential property owners. In addition, joined by Detroit’s CFO John Hill, chief assessor Gary Evanko and a Detroit City Council representative, Mayor Duggan will also discuss how property owners can challenge her or his proposed assessments. Today’s announcement will mark the second consecutive year Mayor Duggan has proposed reducing property assessments—reductions which, in total, are projected to save Detroit’s property owners some $10-$15 million—and begin to address a gap we had noted in our MacArthur report with regard to the significant discrepancies between assessments and actual property values—over assessments by an average of 65 percent, according to a review of state tax appeals—so high that the administrative court reduced Detroit property values at a far higher rate than neighboring communities and nearly 50 percent more than the surrounding Wayne County average. The Mayor’s proposal is consistent with recommendations from a report last year by the Lincoln Institute of Land Policy which had recommended reductions in the city’s property tax rates–the highest of any major U.S. city and more than double the average rate for neighboring cities (the home-owners rate is 69 mills, or $69 for every $1,000 of assessed value).

San Bernardino Election Day. You might be glued on elections tonight in Iowa, but there is an important election tomorrow in the bankrupt city of San Bernardino, where two seats on the City Council—that is enough seats to change the balance of political power in a municipal government in bankruptcy—at a time when critical political decisions will have to be made if the city is to finalize its plan of debt adjustment and obtain U.S. Bankruptcy Judge Meredith Jury’s green light to exit bankruptcy. The election comes because no candidate received more than the requisite 50 percent threshold in the race for the 6th Ward or 7th Wards last November—effectively leading to tomorrow’s Ground Hog Day runoff, where, to fill a vacancy in the 6th Ward, Bessine Littlefield Richard is running against Roxanne Williams. Ms. Littlefield Richard is a supervisor at San Bernardino County’s Workforce Development Department at the America’s Job Center training facility; Ms. Williams works in the central office of the San Bernardino Unified School District. In the 7th Ward, representing parts of the northern and central portions of the city, incumbent Councilman Jim Mulvihill will be challenged by businessman Scott Beard. Councilman Mulvihill is an urban planning professor at Cal State San Bernardino who was first elected in the 2013 recall election—a recall largely financed by Mr. Beard, the president of Rialto-based Gerald W. Beard Realty Inc.

Ms. Williams, who would be a newcomer to elected office, frames the race as her experience and specificity against what she has described as Ms. Littlefield Richard’s less-formed plans, noting that she has—on her website—a plan for the first 100 days and beyond, a plan which she unsurprisingly notes begins with public safety—especially in the wake of the events last December: she is proposing an increase in police and police patrols—and body cameras. For her part, challenger Littlefield Richard has also stressed public safety in her campaign—a campaign in which she has been endorsed by the unions representing police and firefighters, as well as by her predecessor and the two candidates she and Ms. Williams trounced in the November primary. Ms. Littlefield Richard has repeatedly emphasized her lifelong residence on the Westside and contrasted that with Ms. Williams, who moved to the 6th Ward shortly before the election—after running for the 3rd Ward City Council seat in 2013. Despite running to serve in the city now in municipal bankruptcy longer than any other city, neither runoff candidate appears to have devoted much time or focus on the city’s fiscal future.

Restructuring Puerto Rico’s Debts. The Puerto Rico government moved at the end of last week to try to restructure some $70 billion of public bonds: the U.S. territory offered a voluntary debt exchange to bondholders last Friday in a meeting in New York City, following up on what Government Development Bank President Melba Acosta Febo had said in December when he committed that Puerto Rico would propose a restructuring of its debt to its creditors before the end of January—leading to Puerto Rico Gov. Alejandro García Padilla’s confirmation last Thursday night that his government would propose a debt exchange on Friday to its creditors in a closed door meeting. The Wall Street Journal reported that Puerto Rico was seeking to exchange its debt for two new types of securities: one in which all interest and principal payments would be suspended for five years, at the end of which interest would rev up to 5% in 2021; in the other, payments would commence in 2021, but would be dependent on government revenues doing better than current projections. In the second security type, the island’s bondholders would receive up to 25% annually of revenues that exceed current projections. All municipal bondholders would receive both forms of bonds, with the value of the second type equal to the amount of impairment on the first type, and, according to local press reports, haircuts for Puerto Rico’s municipal bondholders would depend on what type of bond they held: those with general obligation bonds would experience smaller haircuts than those holding other sorts of municipal bonds: their bonds would be less impaired. The payments would come from a wide variety of revenue sources pooled together to enable payments of about $3 billion a year in interest and principal starting in 2018, according to El Vocero. The proposal, however, has yet to weather Puerto Rico’s legislature, according to the island’s House of Representatives President or the Chair of the Treasury and Finance Committee Rafael “Tatito” Hernández Montañez: Chair Montañez wryly noted: “The devil is in the details,” adding he was unfamiliar with the proposal Puerto Rico made to creditors in New York City.


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