FINANCE CONTROL BOARD MEETING, August 5, 2005

Present:  Thomas Trimarco, Chairman Alan LeBovidge, Mayor Charles V. Ryan, City Councilor Tim Rooke, Jake Jacobson, City Clerk Bill Metzger

Alan LeBovidge:  OK.  Good morning.  Sorry for the slight delay.  We have several of the members here came in from vacation to join us today.  I thank them for doing that.  I’ll call the meeting to order. We will have various presentations this morning followed by an executive session after the meeting to discuss labor and legal matters, and we will not be coming back from that session.  I guess the first thing is to have an approval of the minutes from our last meeting which was on June 29.

**  MINUTES APPROVED UNANIMOUSLY.

Jake Jacobson:  I just note that there’s a typo in the fourth paragraph where the words “to approve” are doubled there, hardly material.

AL:  Wow, you’re good.  OK.  I’m going to turn the agenda over to Phil Puccia so he can kind of take us through the various presentations, most of which deal with real estate in one form or another.

Springfield Preparatory High School

Phil Puccia:  Thank you, sir.  We have a full agenda, so I’ll be brief.  I’d like to present Dr. Ira Rubenzahl to present a partnership between the Springfield Technical Community College and the Springfield Public Schools regarding an exam school.  Dr. Rubenzahl will walk us through a brief presentation.

Ira Rubenzahl:  Thank you for the opportunity to address the control board this morning.  I want to recognize Mitzi Beech, special assistant to Dr. Burke, for her efforts [unintelligible].  I also want to thank both Phil Puccia and Mr. Jacobson for conversations about this project when we first got started.  It’s been very helpful and... This [refers to PowerPoint presentation] is the mission of the Springfield Preparatory High School: to motivate, educate and prepare the youth of Springfield to competitive four-year college.  This is a college prep curriculum, a strict college prep curriculum as we envision it, and the goal is to get students into competitive colleges. It’s based on a national model, the so-called Early Middle College High Schools.  There are 46 now within the United States, all partners with four and 2 year colleges.  Some of them are supported by the Gates Foundation and other foundations, and they’re designed to accelerate learning while bridging the gap between high school and college.

I want to talk a little bit about the purposes of the school for Springfield.  [Refers to PowerPoint]  Obviously, to prepare students for college and accelerate their academic, social and emotional development.  To give city youth access to a high school that’s competitive with the best suburban schools thus encouraging families to remain and live in Springfield.  And to create opportunities for dialogue and exchange between our faculty, the college faculty, and Springfield teachers.”

I’m going to talk a little bit about the structure.  It is a 9 through 12 school, no more than 100 students in each grade, for a total of 400 students. (By the way, that’s, again, the national model:  Small schools so that the teachers know their students.)  There is an entrance examination requirement.  It’s not exactly clear what that’s going to be; we’ve been talking about using the MCAS, the 7^th grade MCAS in English and Math, as the requirement.  As I mentioned, it is a rigorous college preparatory curriculum, and as a Middle College High School, students will be able to take some courses at the college beginning in their junior year.  And we anticipate, typically, that a successful student might have as many as 30 credits by the time they graduate.

Our expectations are that 100% of our students will place in the top 25% on the MCAS scores, and therefore be eligible for the John and Abigail Adams Scholarships.  And 100% of our graduates are expected to go to four-year colleges.

This will timeline some of the things we’ve accomplished so far, and just to give you a sense of what we need to do.  February 2005: this project was endorsed by the Springfield School Committee as part of their bigger plan to reform high school education.  On June 17, the college completed an architectural study in terms of facilities by Tessier Architects.  On June 23, our board, my board, approved the MOU [memorandum of understanding] which is in your packet.  On June 30, it was signed by myself and Dr. Burke.  July 1, the position of principal has been posted, not been hired yet by the Springfield Public Schools.  The expectation is that position will be on board, hopefully, nine months or so before the opening of the school.  And the target for opening is September 1, 2006 with a freshman class on temporary space at the college. 

Facilities:  The school will use our gymnasium, our library, our recreational facilities.  The architectural study did find a vacant space on campus, so-called Building 20, 62,000 sq. feet.  It’s the 4^th and 5^th floor of that building.  Asbestos is now being removed by the Commonwealth, and the Commonwealth is not planning to reconstruct that space.  That space would be available, and the architectural study indicates it’s large enough for us.  The estimated cost is $13.6million to do the complete renovation.  That includes the furnishing and equipment, all soft costs as well as the construction costs for the high school.

[Refers to images on screen] That’s what the 5^th floor actually looked like before the destruction began—it’s actually now being torn apart; the ceilings being removed, the tiles, everything’s being removed.  Now that’s our present library to give you a sense of the facilities on campus that the students would be using.  That’s our gymnasium; we have a modern gymnasium.  Those are our athletic fields; we only have soccer, but we do have a beautiful quadrangle, and that’s the campus environment.  I think that’s it, and I leave time for your questions.

AL:  Any questions?

Mayor Ryan:  Well, first of all, I want to congratulate you, Dr. Rubenzahl. I’ve known of this coming down the pike now for six or seven months, and, you know, you’re new to the position at STCC, but I think that the community is very, very fortunate to have you as it’s leader, and you’ve taken the initiative on this project, and this is a tremendous step forward for the young people of Springfield.  And it does, as you indicated before, the purpose, it’s multi-faceted, including the fact that it makes this city more attractive to many parents who have to make decisions as to where they’re going to live.  So this is just a fantastic thing.  I congratulate you and all of your associates who have brought this project as far as it is right now.  My guess is you’re going to have tremendous cooperation as you go forward, because it’s pretty obvious what a wonderful opportunity this is for the people of Springfield.

IR:  Thank you, Mr. Mayor.

AL:  Could I just ask a nitty-gritty question?  Where does the staff come from?  Are these going to be transfers from other schools?  Are they going to be new hires?  How are they going to be...?  How do you...?

IR:  The school is a city school; they’ll be employees of the city.  And that will be for the city to determine whether they’ll be transfers or new hires.  If you look at the MOU (I did include the MOU), there is some specific language.  We are concerned that the teachers are hired, the teachers who are hired or transferred are dedicated to the mission of the school, and there’s some language in there giving the principal significant authority in terms of hiring and accepting transfer teachers.

AL:  OK. 

Tim Rooke:  Doctor, my name is Time Rooke, and welcome.  And also want to say a mutual friend of ours, Frank Collacino, told me to say hello to you.  But I think it’s a great concept.  I know a few years earlier we tried a similar project up at Sci-Tech, the Science and Technology High School, and I’m glad to see that you’re phasing in the student enrollment each year.  One of the problems that they had with Sci-Tech is it was geared toward academic achievement students, and, as it got closer to the date to open for the academic year, somebody pushed the panic button, so students who were [sic] academic achievers were then allowed in--it just didn’t...the concept didn’t work, but I was happy to see that, and I think it’ll it’s will be a great attraction to a lot of the parents, and it’ll be...I just wish somebody’d thought of it sooner.  So I, I support the entire concept 100%.

IR:  Thank you, Mr. Councilman.  I was with not only Mr. Collacino, but I was with Representative Petrolati today, of the legislature, I want you to know that the legislature has been kept informed, the legislative delegation.  Actually, yesterday, I was down briefing Chancellor Gill who's the chancellor the Board of Higher Education.  They’re very excited about this project, they also think it fits very well with the new governor’s initiative not only for math and science, but you may be aware that the Commonwealth just received a National Governors’ Association grant, and part of the objectives of that grant is to link our public colleges with our K through 12 education.  So they see this potentially a model for the state, actually, in terms of that initiative.

CVR:  I was wondering if we could hear from Mr. Jacobson who really has been the point man on this board with respect to the Springfield Public School system, to get Mr. Jacobson’s reaction to this concept.  Jake?

Jake Jacobson:  Well, I think it’s an excellent idea.  I think that, for too long, many parents in Springfield have been confronted with the difficult choice of at what point do they pull their children out of the Springfield school district, and get them someplace else.  And, obviously, that isn’t healthy for Springfield, and we’re committed to bringing the level of achievement in the Springfield public schools up to the level where parents have to think twice about having their children leave the system because it’s performing so well.  And I think this project is a really excellent step down that road, because you...this has a very real chance of being the best performing high school, academically, in this entire region.  And so, children that have aspirations for, you know, college and then post-undergraduate degrees and things like that really have to think twice about leaving Springfield if it means foregoing the opportunity to get into this school.  So I think it’s a very, it’s a very attractive and excellent project in the overall context of rebuilding, if you will, the social capital of Springfield and making Springfield a higher quality city that people want to stay in, not just commute in to work, but actually want to work here and live here.  So I was kept apprised and allowed to participate in this throughout its design phase, and I really think it’s an excellent notion that’s going to pay a lot of dividends.

AL:  Any other questions?  Doctor, thank you and good luck.

IR:  Thank you very much.

Study of Springfield Parking System

PP:  Sir, I’m going to move as quickly as we can.  As you know, a variety of studies, operational studies, of a variety of different departments have been underway, some are presently under way, some are yet to begin.  Our review of the parking operations, both off-street and on-street, in the city of Springfield has been completed.  We’d like to make a presentation to the board today, and here with us today are Mark Halleman from Infrastructure Management Group and Jerry Giosa from Wile Engineering who are the two lead consultants who have conducted this study.

            We have a probably about a ten to fifteen minute presentation.  I know we’re running a little behind, but I consider this to be a matter of significant import, and I think you will find it interesting. 

Mark Halleman:  I’m Mark Halleman vice president with Infrastructure Management Group and with me is Gerry Giosa with Wile Engineering.  We conducted an assessment of the Springfield parking system.  I think the Springfield parking system consists of a Springfield Parking Authority, which manages the lots and the garages, and the on-street meter parking which is managed by the City of Springfield.  

            IMG is a company that does management and financial advisory services with expertise in infrastructure projects: parking, aviation, surface transportation, utilities.  Wilie Engineers worked with us, and combined, we have about thirty parking system evaluations under our belt, and we performed this analysis over the last six months. 

The purpose of the assessment was to look at the Springfield Parking Authority, the lots and the garages and the on-street parking to find ways that could improve the operation, both financially and from level of service.  But a secondary notion was also that we could find a way to improve the return on those assets to benefit the City’s financials—that was the secondary benefit, secondary objective, and we’ll talk about that today.

Our assessment methodology:  We performed an evaluation, a bit of a physical evaluation, but more of a financial and operational evaluation of the system.  We benchmarked, created some performance metrics, benchmarked against national averages and regional comparable cities to gauge how the city was performing.  We ran through a S.W.O.T. analysis (Strengths, Weaknesses, Opportunities, and Threats) and really did a diagnostic tool, and came up with a set of conclusions and recommendations which I’ll go through. 

Just to give you an idea, the Springfield parking system consists of 5500 spaces, less than 1000, about 950 parking meters.  The rest are lots and garages, and  mainly concentrated in the downtown area.  This [refers to PowerPoint image] is just an overview of the downtown area with the lots and spaces identified. 

Our findings, our evaluation:  First we’ll talk about revenue and management controls:  Parking is a cash business, so you really have to look at how the money flows into the parking system, and what we found is that in the parking lots and garages, with the SPA primarily, the revenue control equipment was out-dated.  A lot of it was non-functional, so you have people parking in the parking system, the attendants at the parking garages writing hand receipts and taking cash, and that’s an issue we think is very significant in modern parking systems.  We also found that, on the lots, of the revenue control equipment when we visited just weren’t working. If you were dishonest, you could park there and leave without paying.  The on-street parking is a bit better. The city has invested quite heavily over the last few years and updated all the meters in the on-street parking, again better than 900 meters, with electronic meters, state-of-the-art, secure systems. 

[Maintenance]  You also look at the systems, you look at the maintenance.  How well is it being maintained?  How are you protecting your assets?

And what we found is that the SPA garages could be in better shape, and I think there’s currently about a $5million capital improvement estimate for repairing the garages, primarily, and the lots. A lot of that money, about $3.8million is really tied to the Civic Center garage; it’s in quite poor shape.  But what we found is that there’s been an under-investment over the years in the SPA garages.  What you see in modern parking systems is about $90/year per space that you put in a renew and replacement fund.  And we looked back over the last four years, and they’re spending about $30/year per space on maintenance, just general maintenance, so you’d want to increase that to over $100/space to keep the system in good working condition.  And, again, the on-street meters are in good shape; they’re brand new, and a pretty good job is being done there.

Organizational Issues:  When you look at the organization, you find that the Springfield Parking Authority has a parking authority with a board. They have a contract that performs most of the functions of the operation.  Then you look at the city, and the city has another business running the parking meters, so we believe that there are a lot of overlaps.  That’s one thing we keyed in on: there’s maintenance overlaps, there are security overlaps, there’s the backroom financial and administrative functions that are overlapping functions that are currently being done in two separate shops.

When you look at the city itself, again, the on-street parking that the city manages, there’s no one leader in the parking system.  There’s a Public Works Department that does maintenance, there’s the Police Department that does enforcement, there’s a Treasury Department that manages the money, and they out-source a lot of those functions to a company called MMA.  The Law Department would handle any legal issues.  There are two contractors: one, Berkshire I believe, takes money out of the meters and MMA is the contractor that does the ticketing and collections, so you have a...it’s not a very well focused organization.

Market Conditions:  There are 32 for fee parking lots and garages in the downtown area.  Nine are owned by the SPA, the majority of those operated by ProPark.  ProPark, the private operator, owns and operates nine lots in downtown, and there are 14 other private lots in the downtown area.  When we did an investigation, what we found is the competitors to the SPA actually do a little better job.  They have better security, the lots seem to be a little cleaner, they have security cameras, they ran it as a business, a true business.  That’s what their primary focus was or is. 

After the evaluation, we go through a measurement process, and we pick apart the financials.  And what we have here [refers to PowerPoint image] is revenue, expenses and net cash flow for the SPA, as a discrete business, the city on-street parking, and then I combine those to see what the magnitude of business in Springfield is.  And what this, what this tells is that the on-street parking generates about $900,000 a year in net cash flow, and it flows back into the general fund.  Again, I was keying in on how we improve that:  How do we get more money out of the parking assets to the city?  And I’ll go into that a bit more as we move through this. 

But you can see it’s a $5million a year business, it’s a big business.  We took a look at that the lots themselves, the parking lots not the garages, the garages seem to work quite well when you apply the typical metrics (the revenue over expenses, the expense per space, the revenue per space), but what we found is there were some what I’ll call “under-performing” lots, parking lots. As you can see there’s four negatives up there on some of these lots, and they’re not large lots, but they’re losses.  “Why run something at a loss?” is my question.  (We’ll come to our recommendation for that.)

 Compared to other Northeast parking systems, to be critical, (that’s our job is to do an assessment, a critical analysis) you have a lower than average revenue to expense ratio.  The metric we like to see is about 2.5 or 3 revenue over expenses.  In Springfield it’s about 1.85, a little bit lower than you’d anticipate, at a little higher annual cost per space, but it really wasn’t a revenue side that I think you.... The expenses weren’t so bad, it was more the revenue wasn’t coming in.  We keyed in on how to improve the revenue, and, if you look at the...another metric is revenue per employee.  You like to see $140,000 of revenue for every employee, just as a rule of thumb.  Here we have about $99,000, so either not enough revenue or too many employees is the a thing we’ve got to look at.

When it comes to enforcement action, again, it’s a business where you’re trying to...

CVR:  Let me stop you right there.  You’re previous chart said (number 2 at the bottom)  “high annual cost  per space,” and yet you said five minutes ago that the amount of money that’s being spent on maintenance, rather than being $90 per space was $30 per space, so even though we’ve fallen behind substantially in that critical area of maintenance, you’re saying that overall we have high annual cost per space?

MH:  You’re still spending money and I think it’s because...

CVR:  Can you draw the dots together on that one?

MH:   Yes, in my recommendations, I will, but right now.  You have two organizations operating the city with a parking function and Springfield [Parking Authority] I lumped them together to draw these conclusions. You have two sets of G and A and overhead.  You have a lot of duplication of effort, some low productivity also on both the metered parking and the parking garages.  Maintenance is one component of it, but it isn’t the biggest component of it.

CVR:  OK.  Thank you.

MH:  When it comes to, again, generating income, if you run it like a business and try to collect as much cash as possible.  This graphic shows that, over the last three years, meter enforcement (the tickets that were written by the parking enforcement officers) you can see a steady decline.  In fact, it’s a decline of over 40% over the last three years.  A city the size of Springfield should be issuing about 70,000 tickets a year, just a benchmark that you can look at the average city.  We’re about 3000 tickets a year.  You’ll notice right in the middle of the graphic “hand held ticketing units in use.” 

In July of 2004, the parking enforcement officers were given these computers, hand-held computers, that you punch in the license plate number—a sophisticated piece of equipment. Even bringing more technology, the ticketing had dropped off, so we have to investigate that.  It’s something that bothered us.  To expand on that investment in technology these hand-held ticket, the old-fashioned way, you hand write tickets.  Now you have this piece of technology. 

When you punch in the numbers, state of Massachusetts law says that if you have five parking violations on your car, the city has a right to impound your vehicle or immobilize it—put a boot on it, tow it away, put it in the impound yard, and then collect the fine money that you owe.  What we found in the last 12 months was that 624 times, the numbers were keyed in, the screen pops up says “over five violations on this car,” yet the vehicle was not towed or immobilized.  It was allowed just to generate another ticket.  Those 624 parking tickets, 624 vehicles that had over five violations, represent over 7000 tickets or $262,000 of revenue, ticket fine revenue, that was not collected, so we’re saying we have to do a better job on the enforcement portion of the on-street parking.

TR:  Mark, on that point there, is it that they log in the plate number, and it’s a violator with five or more violations.  The meter maids weren’t police officers, but work for the Police Department.  What would they do then?  They would radio for the availability of a car to come down?

MH:  Yes.  Typically, what you would do is you would first call up the—I’m not sure in Springfield, but usually the tax collection office, and say “Have they paid their fines?”  In other words, maybe they walked in that morning and paid all their fines, and my meter is four hours out of date.  And if they have not, if they still have these outstanding tickets, and fines have not been paid, then you go through a process, possibly with the Police Department or your towing company or whatever your procedure is here, that tow the thing away, clamp a boot on it, but immobilize that vehicle, and you hold the vehicle. Usually if you put a boot on it, it stays there for a day or two, and if no one picks it up, you tow it away and put it in the impound yard, but you get your money before you give the car back.

TR:  And I think that, in Springfield, what they do is they’ll call for a police cruiser to come down to immobilize the vehicle to hold it there until a tow truck can come.

MH:  OK.

TR:  So the, I guess I just want to be careful of the point: it’s not that the meter maids aren’t doing their job.  It might be that there may not be a police cruiser available to immobilize the vehicle, and I don’t know if that point is made in the report.  I didn’t see it, but I, I  and I wouldn’t expect you to have that answer, but I just want to make that point.

MH:  The system’s failing is what I’m saying.  We have to improve the system.  Possibly the parking enforcement officer are making the phone call and there is no action, but I’m saying for the Springfield parking system, you’re losing revenue because the system’s not working here.

CVR:  On a separate part of your prior chart, indicating a 40% falling off of writing tickets over the last year, did you try and ascertain what caused that?

MH:  I did a bit of research.  The company, MMA, who does your ticketing collection has a good data base, and what we believe is the productivity of the parking enforcement officers has dropped off.  They’re not writing tickets, the time span that they’re writing tickets during the day has decreased so there’s...we need to increase that productivity of the...

CVR:  Who did you talk with on this particular issue? 

MH:  I spoke with MMA, Mike Monroe, the owner of the company.  He’s the guy who does your ticketing, so he has that data base with all the...

CVR:  I mean within the police area or the meter maid area.

MH:  We spoke with them about their procedures....

CVR:  What was their reason for this significant drop off?  Or excuse?

MH:  I did not question them on why...I did not question them on that excuse.  I got the impression that there was a bit of a slow-down...

CVR:  You’ve told us there’s a problem, but you haven’t told us the rest of the story which is why there’s a problem.

MH:  When I spoke with the parking enforcement officer, I got the impression there was a bit of a slow-down, work slow down, in that activity.  That was a casual conversation that I had.  I have not...

CVR:  You say that’s an impression. Were you specifically told that or is that what you...?

MH:  I get the impression that there were supposed to be six parking enforcement officers.  Typically, three or four work, and their hours of operation, instead of being from 9:00[am] to 6:00[pm] are more like 9:00[am] to 4:00[pm], and we’re not getting the productivity out of the parking enforcement officers.

CVR:  Based on your experience in the field, should the fact that a year or so ago the city for the first time employed the technology of hand-held units, is that consistent in other communities with a significant drop-off in the number of tickets?

MH:  It should not drop off, it should increase.  What...sometimes, there’s a difficulty in adapting technology.

CVR:  Yeah, but I...there’s a learning period, but...

MH:  A small learning period...

CVR:  ...but once you get.... What would you say would be a normal learning period to master that technology? 

?Speaker:  Three or four months?

CVR:  Three or four months?  OK, but you’ve got a consistent line down, right?  So the three or four months ended eight or nine months ago, and it still keeps going down.

MH:  Correct.

CVR:   And so my question is: assuming you learned the technology, is there any equation between what’s happened here and other communities that have gone to technology.  Does that necessarily mean that if you go to technology, you’re going to end up writing less tickets?  Or should there be no relationship between those two?

?Speaker:  You would expect a return to at least the previous level....

CVR:  OK, fine.  All right.  I take it then that you were surprised at this graph.

MH:  Yes.

CVR:  Yeah, you would anticipate that at least the prior level of tickets would have been maintained.

MH:   Absolutely.  The rest of the story also is that there are...

CVR:  OK.

MH:  ...are, there is $5.8million of outstanding fine violations uncollected.

CVR:  Right.

MH:  The technology aids you in writing tickets, but it also aids you in collecting that money, especially in light of this five violation law, and the technology should have brought more fine revenue.  And there’s a lot of outstanding fine revenue.

CVR:  And that technology that you say that gives you right on your pad the fact that a given car has more than five, tow it away.  If the 624 cars had been towed away, we probably would have realized that $272,000 that are represented just in those cars alone.

MH:  Or you’d have 624 cars.

CVR:  OK, fine.  Thank you.

MH:  So, we’ve discussed that.  It’s our recommendation: that it really comes down to What do you do?  I’d like to look at these with our experience and say this system,

What would I do?  And our recommendation is: there’s three things: you do nothing, you fix what you have, or you potentially sell or lease the asset, and that’s my option in this industry.

My recommendation is to fix what you have today. And how do you fix it?  I would say you go through some re-engineering and some out-sourcing, out-sourcing the operation.  There are a lot of professional parking companies that would like to manage a system of this size, and they can do it with a high degree of service and saving money and also increasing the revenue for you.

And I’ll go through those options.  And I’ve categorized these as near-term, short-term, and long-term.  Near-term is “Let’s do this tomorrow.”  I’ve actually numbered them sequentially in the order in which I would recommend making changes.  On the fine receivables: I mentioned that there are $5.8million of outstanding receivables.  That’s a lot of money.  In fact, since I made this recommendation in my draft report, I believe this company, MMA, is under contract now to collect this money.

CVR:  That’s right.  It was signed yesterday.

MH:  Fantastic.  The next thing I would do is increase your meter fee from $.25 a half-hour to $.50 a half hour.  I would increase meter rates.  I think that’s something that would go well, and I’m not sure it would hurt your downtown business.

CVR:  Mmm hmm. 

MH: Extend the hours of meter operation.   Right now, it’s 9:00[am] to 6:00[pm].  I think extend it to 9:00[pm].  We’ve found that you could increase your revenue here from benchmarks we’ve gotten from other communities.  And then also extend the hours of meter patrols.  Again, I do kind of see a problem that the meter patrols kind of end around 3:30, 4:00.  You don’t see a lot of tickets, and we have the date base.  The tickets don’t...there aren’t a lot of tickets written after 4:00 which we believe you should extend the operation a little bit longer.  Sell the under-performing SPA lots.  If you have a lot that’s not desired by the public, and you’re keeping it, you’re running it at a loss, and you security issue, it’s a liability, and I would say get rid of those lots.  We estimate the real estate value at $15.00 a square foot.  Sell them to another parking company or to a developer.  If you can, put those lots on the market, and get out of that business where business is not being done at a profit.

Sell the Winter/Worthington lot.  That’s a city-owned lot.  It’s a parking lot that the city owns that the SPA manages for you.  Again, same thing: it’s an under-performing lot.  Why be in that business?  Civic Center garage: this is interesting.  Although the Civic Center by all the performance metrics looks like it’s a pretty well-performing--it’s right in the heart of downtown, it works quite well--we understood that there was an opportunity to have a buyer to buy this lot.  We looked at the Civic Center as kind of a liability.  It generates a lot of income, but there’s $3.8million—an estimate of $3.8million of capital improvements--needed to bring it up to standard.  It’s in pretty poor shape (the harsh winters, the salt on the decks) and needs a lot of work, and you’re going to have to put money back into it.  We’ve looked at this from the viewpoint that generate more money, get money back in the city, and not make a lot of investment if you don’t have to.  If you have a willing buyer for this lot, then I would suggest that you seriously entertain an offer.

CVR:  Could I ask you a question?  You have a column on the far right of costs.  What does that mean in connection with each one of those?

MH:  We estimated the cost...I tried to do a cost/benefit analysis and estimate the cost of implementing each one of these strategies.  I’ll go back...

CVR:  Well, the cost of selling, you’re saying is $50,000?  How could we spend $50,000 to sell something?

MR:  Well, there’s a certain amount of...I’m unfamiliar with the legal aspects. You would have to hire an attorney, figure out how the market ...

CVR:  Well, we have an attorney here.  We have a city solicitor. 

MH:  Then that cost would go away.  I’m just estimating the cost....

CVR:  That’s what I was wondering what you meant by “costs.”

MH:  The cost of...“transaction costs”

CVR:  OK, transaction costs.  OK, fine.

MH:  Again, these were estimates, we didn’t put a fine...show you the magnitude of return on investment [unintelligible]

CVR:  OK, fine.  Thank you.

MH:  Back on the parking garage itself.  (That graphic didn’t work right.)  The estimated value based on the estimated cash value about $4.8million for the parking garage, the land is $1.5million, $1.6million, has a value of about $6.4million.  You net out the capital improvements needed, that’s how we arrived and the figure of $2.6million, if you’re interested. 

            This short-term is really an investment.  We think that, we believe that to continue to be in the parking business, you need to invest more in the facilities, especially the garages, with this $90/space for maintenance. That’d be a cost, an additional cost, not a cost reduction.  And we’d also strongly suggest to improve upgrade all the revenue control equipment.  Again, you have revenue control equipment with the lots and garages that just aren’t working.  You’re signing receipts by hand, the lots have equipment that sometimes malfunctions, that sometimes doesn’t work, and you’re losing revenue every step of the way.

CVR:  And you feel that the benefit of better equipment almost comes close to paying for itself in one year.

MH:  Twenty percent increase in revenue.

CVR:  Mmmm?

MH:  A 20% increase in revenue.

CVR:  Wow.

MH:  That’s what our...

AL:  It’s a one-year pay-back, you’re saying.

MH:  Yeah.  It’s a no-brainer.  It’s something that....

CVR:  It’s a major point.

MH:  That’s what we’ve seen in other places where they’ve up-graded their equipment gone from a cash cigar box-type system to a...

CVR:  OK.

MH:  So, again, continuing, this gets a little more innovative.  We would, we would suggest that you have again, one organization, one parking manager, for all things  parking in Springfield, and I’d make that the SPA.  And what I would suggest is that the SPA would assume the on-street meter function, the enforcement function.  At the same time, I would have an out-sourcing, a new out-sourcing contract for the SPA.  In other words, I would have an SPA with a management team, a very small management team, and I would out-source everything else to a private operator, and there are people...I’m running another [unintelligible] right now in Waterbury, and there are seven or eight firms lined up to do that.  And they’re interested in running the garages, the lots, reading the meters, and collecting the revenue.

AL:  So, they take over everything.

MH:  They take over everything.  And they do it under... the current contract you have is a pass-through contract; you have a management fee that represents, roughly, I think 10% of the revenue stream, and then all the other costs: the labor, the lights, the maintenance: everything’s a pass-through cost.

AL:  To the city.

MH:  To the city.  A contract that is rather common in the industry.  We believe that a contract that had a fixed-fee performance-based model which gets you much better value would have the innovation from the private sector brought to Springfield to make investments to do things differently, to market the authority and to increase the revenue and reduce costs.

CVR:   Could I just call your attention to item #8, about enhanced security.  I’m not sure I understand what you’re saying there a benefit of $440,000, a cost of $183,000.  My own feeling is that we need better security in our parking facilities, and I’m not sure what you’re proposing.

MH:  OK, what I’m proposing is--and this is in light of the backdrop of the—I guess you had an evaluation of your police and fire department, I believe.  I would...one of my beliefs is that there may be excess police staff in the police department as a result of that. I’m suggesting that the SPA today spends $287,000 on a security firm.  (I think it’s Arrow Security. I guess they’re doing a fine job—I’m not sure.)  I’m saying the SPA contract with the Police Department, pay a police officer to patrol those lots, increase security downtown, generate more income for the Police Department and have the SPA pay the city for that function.  And I increased the number to $440,000 from $287,000 so it’s $183,000.

CVR:  You’d be spending another $183,000 a year.

MH:    For parking...for licensed police officers.

CVR:  So what is the benefit of $440,000?

MH:  That is the benefit that actually would flow to the city.  The SPA would pay the city police department...

CVR:  Well, it’s really paying, essentially, the officers.  The city doesn’t make money on extra duty assignments.

MH:  I understand that, yes, but it’s, but it’s...

JJ:  But they wouldn’t need to be extra duty assignments, would they?

CVR:  Well, that’s what I thought he was talking about.

MH:  We would have to get into the fine details of how you do that.  But it would be money flowing to the city, as a benefit to the city, a new revenue stream flowing to the police department.

CVR:  All right, but you do recognize a need for increased security.

MH:  Absolutely, absolutely. By having Springfield police officers patrol the garages, it would enhance the security of downtown. 

CVR:  OK, fine.

MH:  And there’s as way to pay for it through the SPA. And the last one is implement a pilot payment in lieu of taxes. Once you fix the SPA, and when you say “fix” I mean you start really generating some income.  Right now it’s generating about $400,000 a year.  As it begins to generate income and fixes...makes its investment in the assets, there’s an opportunity for the city—and we’d have to investigate this more—to implement a pilot, in other words to have the city charge the SPA, usually 5% to 10% is something you see in a lot of communities.  This number’s [on the screen] is 5% of revenue.  So its a way for the city to gain some benefit from the SPA parking, and the pilot’s one way to do it.

CVR:  OK.

MH:  Organizationally, I think I touched on this already, I think that the SPA would be the right vehicle to run all things parking. That way, if a meter got ran [sic] over or if a garage revenue equipment wasn’t working, or if there was graffiti on a wall, you’d have one phone number to call, and you’d have a solution to it rather than trying to figure out who’s responsible for the meter and the lot.  And, again, out-sourcing, I described this already, out-source the entire operations under a real competitive out-sourcing agreement where you have a performance-based contract, and you encourage the private sector to bring its best ideas to the table.  It improves the level of service, it reduces costs, increases revenue.  And, lastly, I would say the SPA has a little bit larger staff.  I would think you could reduce the staff down to probably a general manager and an administrator.  Their responsibilities would be to manage the contract, to oversee the capital program. (You’d hire engineers to do that, of course, like you do now.)  And to handle some of the more softer issues that the city requires the SPA to do, the public relations type stuff. 

            That’s [image on the screen] the current organizational chart.  If you start with the middle of the graphic with the treasurer’s office to the left, that’s the on-street parking, all the functions, and then on the right, is the SPA, and we built this chart to find out who’s doing what and how much overlap there was.  We would advocate to have a new org chart.  You’d have the SPA probably have probably the left-hand side,---security would be the police if you adopted that suggestion.  And the facilities management and the meter patrols: they could be two contracts or one contract, but you categorize these two activities into the...group this, but you can see the organization chart is more streamlined, and you have one point of contact.  Overall, it improves the level of service, reduces costs, increases revenue.

            Long-term--and I don’t want to focus too much on this--but I did have some interest in talking to parking companies that are leasing the assets or buying them.  It’s something that’s done a bit, not that much, but companies are interested, and there’s a way to sell the assets. I wouldn’t advocate that right now, because they really price them based on the free cash flow.  I would say, fix it.  Develop a system that really does generate some income, and then if it has some value, if you wanted to sell it, get a lump sum payment.

            This is what your cash flow looks like after you implement all these recommendations, and I’ll tell you, these are conservative numbers.  I would expect to achieve this.  And what you see is that you’ve increased your revenue by 22% to over $1million a year. You’ve reduced your expenses by about 8%.  Most importantly, the net income improves by 107%. You fix that revenue to expense ratio.  You also improve the integrity of the overall operations.  You know, you’re utilizing your assets better.  The underperforming ones you’re getting rid of.  (Why have the expense?  Sell them.)  Increasing the maintenance is very important, and security.  (Mayor, I agree with you on that.  Having police officers downtown, more police officers, would be good.)  You bring your performance levels up to what you’d expect for the New England parking systems.  Again it’s a...I’m reiterating...the benefit, again to the city itself, I think we can increase the revenue.  Some of that revenue was police officers that you out-sourced, but also, I think, through the PILOT and some other functions, you could allow more, as the SPA gets healthier, flow to the city.  And you probably could see about $1million dollar’s worth of net income cash flow to he city by implementing these strategies.

PP:  Excuse me, Mark, on the...if we were at meaningful production level on the tickets is that based, is that in that $1.5million?

MH:  No.

PP:  So that would be additional take?

MH:  [Nods.]  A small piece, that is, I’m sorry, a small piece.

AL:  But a big piece of this increase relates to the Civic Center, the convention center parking garage?

MH:  Actually, no.  There’s a one-time benefit that that $5million at the bottom.

AL:  So that would be above and beyond.

MH:  That would be the one-time benefit of selling the garage and the other lots.

AL:  So this is a low-hanging fruit effectively.  If we could do this independent of the convention center garage, we could have this million dollar increase.

MH:  Yes.

AL:  OK.

MH:  But if you keep the garage...the problem with keeping the civic center, it’s a—Gerry could speak to this--it’s an old-fashioned design. You’d want a better designed parking deck for next to your convention center, most likely.  And also it’s going to take an investment.  You’re going to have to come up with $3.5million or $3.8million to fix that garage, and you’re going to need to do it soon.  I mean next to your convention center, you’re not going to want to have a garage in this condition.  So you’re going to have to make an investment.  That’s why I was...

CVR: Your $3.5million proposed investment or is that analysis....Would that mean the top deck would be available for parking or is that without?

Gerry Giosa:  That estimate is just based on what...we were provided with a report by a company called Analytical Engineering who did a structural evaluation of that facility.  There were no financials attached to their recommendations [unintelligible] major structural rehab.  I was hoping to get more assistance from Analytical, but  they were never [unintelligible]...so $3.8million is just a ballpark rough estimate.  You’re going to need to get detailed estimates.  I would imagine that the estimate could increase higher.

CVR:  Well, that facility is well over 30 years old with a minimum of maintenance throughout its whole life.  Not a good bet.  OK, go ahead.

MH:  Well, that was the end of my presentation.

CVR:  You mentioned earlier the fact that ProPark manages nine units for the Parking Authority and also is in competition with nine areas that it either owns or leases on its own.  Did you come to any conclusion or recommendation about what conceivably could be considered a conflict of interest?

MH:  I went past the current situation.  It would suggest I would not have a contract of the type of contract you currently have.  Whether it be ProPark or anybody, I’d have a fixed fee performance based contract.  I don’t want to draw a conclusion on what one of your operators or other people are doing....

AL:  It’s more the structure of the contract than who’s doing it.

MH:  Exactly.  You could, you could think about...there may be conflicts, but we didn’t get there.  We said, “This contract in its substance is not right.”  There’s a better way to do business, and a way that actually the parking companies are interested in doing, because they like to leverage their expertise.

AL:  Well, what you’re saying is it’s a win-win.  They’re going to make more money for themselves, and we’re going to make more money, because they’re going to run it like a business, and they’ll take a piece of that profit.

MH:  Yes, sir.

CVR:  Did you see any potential difficulties because of the fact that the SPA is a parking authority, created by the legislature as an autonomous agency, and the fact that the, that the city is here [gestures to one side].  And you’re talking of bringing both together so you have...it’s not that the city really runs both of them right now: it’s the authority running part and the city running part.  Does that pose a significant problem in your opinion?

MH:  No, I, I, we thought about it and didn’t do exhaustive and legal research on this, obviously,  but you’re essentially contracting, the city’s essentially contracting with the SPA to manage the parking assets, and you can fix that fee however you want to do this.  We estimated that the city would still incur the same expenses they are now just move that expense over to the SPA , but it’s, it’s essentially out-sourcing the meter operation to the city.  Interesting enough, out-sourcing the security to the city, so that everybody’s doing what they’re really good at.

CVR:  OK. 

AL:  OK.  Any other questions or...?

TR:  Mark, I just had a question, and more of a concern, on the...when you look at the reduction on the tickets that were issued, I know just from being here and that one advantage that I might have is some of the knowledge...the meter maid staff was reduced to half, and then there was an unexpected lay-off of the meter maids for I think a six or eight month period by the prior chief.  So that might contribute to some of the statistics that you’re looking at, but I know there’s a parking fund that was created by the legislature which the meter maids when they go out and ticket vehicles, that money, those revenues, come back to the city, to the...and it’s been a while since I looked, but I think it’s about $2million.  So the pay, take the salaries out for the...I think there’s four meter maids now, but also the DPW was accessing that fund for the repair, maintenance of the meters, painting of the parking lines, and so on and so forth.  Would we, my concern would be: if we entered into an agreement, do we forfeit that $2million that comes into our general fund now is one question.  And a follow-up with that is the way the meter maids are structured now those four employees wear Springfield Police Department uniforms.  They have radios that have access to the other officers who are patrolling so it’s another level of security, whether real or not, for the people who work downtown (they see off-...they see the patrolman’s uniform and so on and so forth) so I, although I agree it should be streamlined, I, I’m not sure if maybe there’s a way to work something where the meter maids could remain where they are in their uniforms and, you know, selfishly for the city, that we could keep that money for ourselves what goes into the general fund.

MH:  I think you’d still have access to that money, and I’m not sure exactly if there’s something tricky here that I’m not aware of, but what we see in other places: the SPA’d be simply contracting the labor of reading the meters.  The ticket fines would still go to the city, and the money flow back into the city if you contracted to a private firm.  And a lot of firms have, a lot of cities have contracts with private operators to run enforcement operations, and a very well-stated concern.  They’re worry about the loss of a uniform walking around the city, and where we’ve seen...places where they’ve done this, it’s not been an issue.  It’s always been a concern, but once it happens, it’s not an issue.  What you have is a professional meter...parking enforcement officer staff walking around.  You can wear whatever uniform you want.  I don’t believe that monies flowing back into the city would be effected—I’m basing it on a premise that it is not—and on the parking enforcement officers: the statistic...in a downtown area like Springfield, you have 600, 620 meters, say, in the downtown area.  The average parking enforcement officer should be able to read 200-250 meters per day.  So you’re looking at 2 ½ or 3 FTEs (full-time equivalents) for meter reading, so I.... Although the staff has been reduced, I mean, you need about 2 ½ or 3 to do the level of work you’re doing today, and that’s what you’d expect, what we would expect to see.

AL:  Any other questions?  OK.  Mark, thank you very much.  Geri, thank you much for your presentation.

CVR:  Thank you.  Very good.  (aside to Tim Rooke: “There’s a lot of meat there.”)

AL:  OK, Phil, what’s next?

New Tax Collection Ordinance

PP:  Mr. Panagore is going to make a brief presentation to the board on a recommendation for tax collection and a tax ordinance, actually, and I, I...David will brief you.  It’s in your packets and the other, as you see on your packet, the collection and foreclosure up-date we will just submit to you in writing in part of your package in the interest of time, but the real meat of the subject is the tax ordinance, so, Mr. Panagore?

David Panagore:  Thank you.  Mr. Chairman, board members, you can see on the screen, that’s a brief up-date on where we are now in our foreclosure process.  But what I bring before you this morning: working with JER Services, who’s our outside collection agency, since March we’ve been working on a variety of collection measures.  And in April, we asked them for a recommendation regarding extended debt tax repayment programs. It’s been a matter of interest to the board, to the public, to many people currently.  Under state law, you’re required to, if you’re a delinquent tax payer and your property is in tax title, you...the only tax payment program we can enter into is one where it’s divided in four installments over four months.  The state law allows, as does the control board statute, but the state laws allows passed last November, Chapter 60, Section 62A allows an extended payment program. 

And we asked JER Services to provide a recommendation on which, what we should do, whether we should propose a program.  JER came back and uniformly said yes we should.  They said that tax repayment programs are excellent, and that it is roughly 98% of the individuals who enter into a tax repayment program do pay.  So once you’ve gotten them on a payment schedule, they will pay, and that’s the most important thing to do.  In addition, Chapter 60, Section 62A allows for the waiver of interest on the account up to 50%, and so what we bring before you today is a proposed ordinance for your consideration.  The ordinance would provide for a tax repayment agreements, and under the state law, you can create classes of agreements, classes of tax payers. 

Working with a[n] interdepartmental team, of the assessment department, the real estate program under the housing department, the planning department, even, the tax collector, the treasurer’s office working with a wide body, the law department, a wide body of departments, we crafted an ordinance for your consideration.  The state law, Chapter 60, Section 2A, provides that, by ordinance, the municipality may enact an ordinance which allows for repayments under a program. 

And ours would be this: residential and commercial, two classes.  For residential, only for those people in tax title, meaning you haven’t paid, and a tax lien has already been filed on your property.  For residences, residences [sic] of the city could come in and enter into agreement which would allow for a payment over three years, over three years, and you’d have to put 25% down.  Then there would also allow for residential hardships.  If a resident can show a hardship (and the hardships are defined by the proposed ordinance as: a senior citizen, recently unemployed, recently deceased spouse or partner, and a permanent or short-term disability or illness and any taxpayer on active military status), the tax collector would be able to enter into agreement to waive up to 50% of the interest, and allow one more year, meaning four years , for that individual to repay.  That’s the program for residents that we’re proposing.

Then there would be a program for commercial and industrial and institutional users, and that program would allow for a quicker repayment since these would be predominantly businesses.  It would allow for repayment within two years if you’re tax delinquent.  And then, for a program for we’re proposing that for commercial users, that if they’re willing to invest twice as much as the tax that was owed. (And, as you can see, even by that example up there by the top [of the screen] “commercial properties that owe taxes, $6million” predominantly, it is the principal, not the interest.)  So we are talking about substantial amounts of money, but not extensive, but that we would waive up to 50% of the interest if the commercial use or industrial user would invest twice as much as the tax that was owed.  So, if you owe $600,000 in tax and you invest $1.2million into your property, we’d waive up to 50% of the interest.  And that would also be on a two-year cycle.  We view this as a community re-investment program which would raise the property values in the city, which raise the look of the city, improve the look of the city, and help people spend their money in the city as opposed to on the tax repayment on the interest.  That’s the program we put before you for your consideration.  It has the endorsement of all the department heads, the law department, and JER Services, and  staff.

AL:  Any questions?

CVR:  Well, I’d like to comment that in the real world, many of these problems have come to our office already, and there’s no doubt in my mind that if this ordinance is passed, if it’s enacted, it’s going to be a very, very beneficial tool in the redevelopment of the city.  First of all, there are...this is not a waiver of the tax that...the delinquent tax.  It is merely giving people some relief with respect to the interest which compounds at 16% a year, so it very quickly becomes a very, very important figure.  And whether you’re talking a residents or whether your talking of businesses or anything institutional users, I think we’ve seen ten or fifteen specific cases already where this will be utilized in a very, very beneficial way.  I think also it’s very persuasive that JER, who is our contractor working in this, with enormous experience, is highly recommending this.  So I think it’s a very, very important tool, and hopefully, the board will enact it as we move forward in the redevelopment of Springfield.

AL:  Any other questions?

TR:  I would agree with the Mayor, Alan and other board members.  I mean, I think immediately what comes to mind is the boutique hotel across the street at Court Square where they would, in fact, fall into the categories that you just outlined, David, where they would receive a waiver on some of the interest, but they’d be investing twice as much money, so if that encourages economic development, I think that’s what we need not only to get the financial situation straightened out in the city, but to encourage development, so I think it’s a great solution.

CVR:  And we have a very real problem when—I think you’re absolutely right, Tim--but we have a very real problem with citizens on a residential point of view.  David talked about the hardship area, and there are, there are some very real specific, brutal hardships out there, and this gives us the legal authority to move forward and deal with these in, not only a compassionate way, but an intelligent way.

Thomas Trimarco:  Is there experience that this 50% reduction in the back interest charges works?  I mean, people come to the table with that kind of reduction?

DP:  Oh, yes. Absolutely, and in JER’s experience also, they are the back tax collection agency for the city of New York, and this is the sort of program they run there, and they believe that this is going to be a very big boon for the city.

AL:  Any other questions?  I guess we need a motion then to adopt this ordinance.  Oh, I’m sorry.

City Clerk Bill Metzger:  If I might clarify for the board, this would just be a first reading from the legal requirements [unintelligible] advertisement.

CVR:  Then you’d need a second reading at our next meeting, is that it?

BM:  We have to advertise this for ten days before you can final [unintelligible].

CVR:  Should this be a roll call vote?

BM:  No, Mr. Mayor, it’s not required.

CVR:  It does not need to be? OK fine.

AL:  I’d like to have a motion.

CVR:  Motion to approve first step.

AL:  All in favor?  OK There’s your first reading.  Thank you.

**MOTION PASSES UNANIMOUSLY.

Blight Demolition Activities

PP:  Mr. Chairman, what is your pleasure: to hear in a similar subject an update on the city’s blight demolition activities or to move with other business?

AL:  No, I’d like to hear what’s going on.

PP:  I’d like to present Kathleen Lingenberg who is the head of the city’s Housing and Community Development [sic] Office who will give us a presentation.  Kathleen will give us a presentation to kind of define for you what is one of our principal challenges here.  And these are all coordinated with the tax ordinance that you’ve just  approved and much of the other activities to try to not only improve the appearance but also public safety and to generate development activity.  So, having said that, Kathleen?

Kathleen Lingenberg:  Good afternoon gentlemen.  My name is Kathleen Lingenberg, and I’m the director of Housing and Neighborhoods for the city of Springfield.  I have to say my luck continues:  I’ve never actually done a PowerPoint presentation where the technology has worked.  [laughter]  I’ve been asked to give today a presentation on abandoned and blighted property.  My goal of the presentation would be to provide the board with an overview of the problem, to detail the approach the city is aggressively pursuing, provide you with an up-date on the accomplishments, the strategies, and our short and long-term goals. 

            While Jason [Jason Mann, planning department computer whiz who fiddles with computer keyboard] tries to get us on track, I’ll say that issue of abandoned and vacant properties has rely been a national issue for the past five to ten years as many of the urban communities have seen the disinvestment from the private sector.  The issue has reached such proportion that I the last...in 2003, three major national entities began a campaign on vacant properties.  Some of their preliminary research on best practices and models across the nation are currently available to us.  And I was pleased to note as I began our research that many of Springfield’s approaches actually mirror those best practices which include finding and documenting the problem, developing an interdepartmental response team, and enlisting support to maximize the resources. 

            We have to define the problem, and I’ll say, beyond getting us on line for our presentation Jason keeps track of, through the gis [global information system] system, the abandoned properties, and debris overgrowth sites.  Currently, Springfield has 238 abandoned structures.  These are primarily small residential buildings.  They’re predominantly concentrated within a few neighborhoods.  The data for this number is based upon windshield surveys conducted interdepartmentally between the building department, the fire department, and the code enforcement department.  Springfield has 589 sites that have been identified as sites of illegal dumping, debris, and overgrowth.

AL:  Could you just do me a favor. Define an abandoned structure.

KL:  “Abandoned” to us would be a boarded, vacant property that is in, that has some blighting influence on the surroundings.

AL:  So it has nothing to do with tax liens or anything like that. This is just....

KL:  Not at all. It does not have the factor of ownership or tax issues.  It’s simply what the structure’s appearance and current use is.  The data for the debris and overgrowth site is complaint driven, so that...it’s just different sources of data. 

            We’ve mapped both the boarded up buildings as well as the overgrown parcels. The boarded up buildings in red, you can see, are predominantly concentrated in within the Mason Square and the North End neighborhoods.  I’ll make note that both of those neighborhoods are the focus of the Commonwealth’s Office of Commonwealth Development initiative.

            To an overview of the blighted properties:  The structures are predominantly small residential; 212 of them contain less than four units.  Eight of them are larger multi-families of eight units of more.  And there are 18 commercial sites; those sites are predominantly old automotive uses.  The structures are primarily privately owned.  Only 31 of them are owned by the city; 207 of them are privately held.  The pie chart [on the screen] breaks down for you whose with or without tax issues, so you can see that the single, on the smaller one to four families, the majority do not have any outstanding tax issue.  We find the converse for the large multi and commercial, where those properties almost exclusively do have past tax issues.

            The dumping and overgrowth sites are another blighting influence.  Of the 541 identified sites, 147 of them are tax delinquent.  As we began to analyze the data, one of the interesting factors that arose was that the dumping and overgrowth tend to be an on-gong and recurring problem, so when you look at the code records, you find that the sites we’re cleaning this year are the sites are the sites we cleaned last year and are the sites we cleaned the year before. 70% of the sites have a multiple year history of dumping.

            [People seated in] the first row [of the audience] are all members of the interdepartmental team.  I will say for most of us, we have been working on this issue for the last five or six years, so we started with a good base of communication and information-sharing.  We have with us today Steve Desilets from the Building Department; Juan Gerena, the commissioner for Community Development; Sal couldn’t make it, but Pete Sygnator is here from Finance; Jen Kearney who is my senior program person who coordinates this initiative is here; Fred Rodriguez from the Fire Department could not make it; attorney Mel Altman is here; and Al Chwalek from Public Works.  I’ve detailed for you what each of the departments has as its responsibility in resolving this problem.

            The resolution strategies that we’re currently aggressively pursuing are both to  remediate the violations, but also to explore the redevelopment potential.  The remediation is really a short-term response.  It involves code enforcement, the court-ordered activities of boarding and securing, cleaning the lots, demolition, utilization of the anti-blight ordinance to force owners to maintain their properties, and the fines and ticketing.  The redevelopment activities tend to be a longer term and long-term strategy.  Those include the acquisition via tax-taking and administrative foreclosures, the subsequent disposition of those to the private sector and the inclusion of incentives for the private sector to be involved in....

AL:  Could I ask you a question?  When you spend money on remediation, does that become something that is now owed by the owner of the property?

KL:  We do lien the properties.  I think from a financial perspective, most of them...the likelihood of recovering that money is rather limited, because of the tax liens and the current value of the property.

AL:  OK.

KL:  On the resolution strategies, one of the most aggressive initiatives we’re currently undertaking is the demolition.  The property there [on the screen] is queued up for the most recent round of demolitions, and what I’ve done is shown you that, on the demolitions, we’re looking for structurally unsound properties where the owner has not responded to any previous notices, and we’re looking for those that don’t have environmental issues or significant historical considerations.  I’ve created for you a time line from the identification of the property through to the actual demolition and clearance.  The arrow [on the graphic displayed on the screen] denotes a sort of a break-point in the system where, if an owner makes representations of their ability to solve the problem, it sort of stops the process at that break point.

            So we go through a building department assessment that the property is indeed structurally unsound which leads to condemnation, the notice to owner of condemnation, the owner giving a deadline to cure, the meeting of an independent three-person structural survey board, followed immediately by the environmental testing for lead and asbestos, the document that gets included within the bid, awarding to a private contractor who does notifications and, subsequently, demolishes the structure.

            For the redevelopment through acquisition and disposition, the time line there is much longer, but I’ve started you at the initial land court filing and taking you all the way through the redevelopment.  The property there at 76 Bay Street is currently out to requests for proposals....

AL:  So you’re saying, that once you get to the Land Court which takes forever, it’s two years before you can redevelop.  610 days, is that what you’re saying?

KL:  Yes.

AL:  And how long would you add on to get to the Land Court filing stage?

KL:  Well, that includes the...well, there is a significant back-log of properties that are eligible to be filed in Land Court, and I believe that David Panagore has been doing a significant amount of work with the Land Court in getting our projects prioritized. 

            Accomplishments to date: we’ve been very aggressively pursuing the inspectional services and legal enforcement, court orders, fines and tickets and demolition.  On the demolition front, 25 properties have been passed through structural survey board and are approved for demolition.  The bid for the first 12, environmental testing for the first 12 have been completed, and the bid release is scheduled for next week.  The Building Department has completed its assessment of 100 of the properties that were identified as abandoned.  And lot cleanings: we’ve had initial inspections on 593, the reinspections on nearly 400, the court filings for non-compliance of 110, court orders for 60 and the cleaning completed for 29 of those properties.

AL:  At the end of all this, you end up with a clean, empty lot.

KL:  Correct.

AL:  OK, so that’s good. So six-months from now it will be a, back to being a dumping site.  OK, so once you clean it, what’s the deal to get something really good on it, so that people don’t go back and use it again as a dumping site?

KL:  My recommendation is that we need to pursue Land Court and acquisition of those properties so that we can effect redevelopment.  The remediation of the lot does not get you site control that enables you to effect redevelopment.

AL:  OK.

CVR:  Would you, while you’re there, mention near the bottom a couple of court filings, court orders.  Would you just comment briefly, Kathleen, on the significant progress that we’ve made in our relationships with the Housing Court and the presentation of our cases to the Housing Court?

KL:  Absolutely.  The Court has been very pleased with the number of policy changes that the city has made. One is that we are not allowing continuances within the Court.  If we’re in there seeking an order to clean, we want the order to clean.  We have added an additional attorney as well as three legal interns to process the orders to the Court, so we’re going in much more timely and much better prepared when we’re seeking them in the Court.  The Court has offered to hold special sessions for the City of Springfield so that, in this season, we can get these liens, the court-ordered liens, through and the lots cleaned, so all of that has been very powerful progress.

AL:  Yeah, I think if you can get “block time,” and be ready to go, that’ll, that’ll...

KL:  What we’ve suggested to the Court is within the next 30 days, we would like a day set aside where we will be before them with 100 orders.

AL:  OK.

KL:  For the redevelopment activities, we have new Land Court filings, the legal actions on existing cases, and dispositions.  We have filed 24 new filings within the last 30 days.  We’ve received 13 judgments, so the city has taken 13 more properties.  And we have begun the disposition on two phases of city-owned properties:  Phase One is 14 residential structures (which was released on July 16 and has a return date of August 30). 

The second RFP, Phase Two, is 29 lots, buildable and abutters (which was released on August 10 with a return date of the beginning of October).

            I will say that one of the things that we’ve been very vigilant in is encouraging as much private sector participation, so we’ve been doing some extensive marketing of our portfolio and the opportunities to be part of the redevelopment of Springfield.  We’ve also developed a technical assistance workshop for folks who may not be experienced in it, but have the willingness to do, and the two technical assistance workshops that I’ve conducted in the last 20 days have had over 50 people at each one.  The requests for proposals in Phase One, that packet has been pulled by over 125 individuals, and Phase Two is similarly being met with....

AL:  So you think there’s a demand there, and if we can just get things moving, that the private sector will step in and...

KL:  I think there’s a demand.  I think, initially, because there’s such a concentration of these blighting properties, that there may be the need for some level of public subsidy.  I’m hopeful that as we minimize those blighting influences, that, ultimately, the private sector marketplace will just take over.

AL:  Yeah, well, I can understand the role of government is to kick-start a program and then, hopefully, the private sector comes in and, you know, makes money on it.  It’s fine with me.

KL:  Absolutely.

JJ:  Kathleen, is the request for proposal on the 29 vacant lots, is it really like a request for bids?  I mean, what are you physically doing there?

KL:  The request for proposals solicits information on their development plan, their track record and capacity, their financing and their readiness to proceed.  So all proposals are scored along those four criteria with price only being one of the considerations. I think what we feel strongly about is attempting to get, to the best of our ability, getting folks who have the ability and are ready to go.

CVR:  With price being one factor, but not the exclusive factor.

PP:  I think, if I could just add one point to Ms. Lingenberg’ s comment, is I think one of the things that we will have, that we need to be open-minded about is, in this particular part of the process, is to have a set of risk assumptions that we’re prepared to make, because I do think in order for us to bring additional new investment dollars, and maybe I should say, new people into this part of the business, we’re going to have to, I think, increase our risk profile from what is certainly, normally just a straight up and down selection process.  And I just ask the board to consider that or should they wish to comment on it.

JJ:  Would you explain what you mean by that?

PP:  I mean it’s when you get back an RFP and you can check all the boxes and the person has done this many developments and has an extraordinary track record, that’s great.  But we, I think, will receive some bids from people who are what you would call the “urban pioneers” that’s risk takers who might not have necessarily that kind of track record, and I don’t want to dismiss them out of hand, because they are willing to take a level of risk, and this pattern is repeated after urban redevelopment after urban redevelopment where people come in and might not have, necessarily, a blue ribbon background do redevelopment just put a lot of sweat equity into a piece of property.  And  I just think that that’s something that we need to consider as we go through this redevelopment process.

AL:  That’s a different risk if they’re doing one lot vs. selling you 200 lots and re-do the whole city.

CVR:  We have value judgments we have to make al the time.  Habitat, which is a national effort and a wonderful effort has done some great things in Springfield, and yet Habitat’s ordinary way of operating is that they are not really in a position when they do their numbering to be competitive on just a market price point of view, and yet the energy and the excitement and the enormous number of positive benefits with a Habitat set of projects is incalculable, and so that may be just an example of a situation where, when we have the RFP, that Habitat may not be competitive on a given property with regard to respect to price, but they bring so much more to the table.  I was at 10:00 this morning up near Mercy Hospital where one very fine local developer has given a prime lot to a corporation who, in turn, is going to build a house for Habitat.  Now that’s just something, that’s in the private sector, the donor, the donee, they’re going to build a house.  We’re going to have a three bedroom house on a busy thoroughfare, and I just think that’s so important to the make-up of this community as we go forward.  So there’s a lot of elements that are going to be considered, and I think Kathleen has done a fine job of illustrating that there are four prime factors, and, as long as we do it objectively and fairly (which I know we will), I think that we’ll have some very, very fine results.

The other thing is these figures [indicates screen] are daunting.  You know, 589 lots and so on and so forth, but, as we move forward, we’ve got money in the bank, we’ve got the $1.8million that came out of the pension transaction, we’ve got other opportunities, I think...  As we begin to move forward and we show we’re for real, I think it’s going to change the mind-set of an awful lot of people in this community very, very quickly.  These are dramatic steps forward.

JJ:  I think, though, that you’re making a good point.  There are a lot of properties here, and then relating that to Phil’s comment that we’re going to have to take some risks on people that, you know, look like their reasonable prospects for getting a home built or whatever and an area even if they aren’t necessarily gold plated, just because of the number that we have.  And, if somebody is really willing to invest the energy and time, and, in the considered opinion of the people that are making the decision, they have at least a reasonable shot at it, I think we just go with candidates like that, and we all have to be mindful that there’ll be some breakage.  Some of those won’t work, because we’re sacrificing to get more homes built and more property developed.  Every now and then, there’s going to be a bust-out, and so that’s fine.

PP:  Thank you.

AL:  And the more private development, I mean it’d be great.  That’s what we want to push.

CVR:  Yeah.

KL:  And I think Commissioner Gerena and I have had some preliminary discussions on how both community development and my office could be sources and tools for folks who might not have the current capacity or experience, but who may just need some hand-holding along the way. 

            So, clearly, these abandoned properties do create some opportunities.  I think that, you know, there is a significant opportunity to improve the quality of life within the neighborhoods that are a considerable concentration. The increase to property values the reduction to real costs to the city to safety, fire hazards and the continued legal enforcement.  And I think it is absolutely an opportunity to encourage the private sector investment in our urban neighborhoods.  The challenges, the absolute sheer volume that we’re facing, the resources that are needed to do it, and just continuing to do the coordination of multiple entities and multiple initiatives.

            Short-term and long-term goals: Short-term to complete the Land Court filings on an additional 65 of these properties, complete the demolition of the 50 properties, commence administrative foreclosure, clean and lien, and concentrated enforcement and targeted resources.  Those are all anticipated to be done before the end of the calendar year.  Long-term, we continue to seek solutions to develop pro-active initiatives to prevent the blight, to reduce the cost to the city to inspect, police, clean and secure, and improve and preserve the existing housing stock.

            Thank you, and I or any member of the team would be available for questions.

AL:  Any questions?

JJ:  I just had one question about the selection of...I mean, as you point out, there’s a lot of properties, it is a target-rich environment, so are we selecting properties in a geographically concentrated way so that we’re not trying to get a home over here built and a home over there, and, I mean, this is a...redevelopment is a process whereby you, it’s like a network phenomenon—you get extra bang if you can have multiple things going on in one area.  So is that a factor that’s been considered in the selection of the various groupings you’ve talked about?

KL:  Absolutely.  We’re looking to concentrate and the work that we’re doing with the Commonwealth’s Office of Commonwealth Development also has prioritized the three neighborhoods and some geographic concentrations.

CVR:  I would just like to comment that what we’re hearing here today is really a tremendous pay-back on a decision that was made several months ago in the whole mode of reorganization and to ask Kathleen to take on these additional and challenging duties on top of everything else she does.  And then to pull together this team--David Panagore has played a very, very strong role in this also.  And I think for the first time in so many years it’s not even funny, there’s a team on the field here in Springfield that knows where it’s going, that’s very well committed:  Mr. Chwalek, Mr. Sygnator, Mr. Altman, Mr. Desilets, and Mr. Gerena are integral parts of that team, and they really should be congratulated.  This is a big, big move for the city of Springfield.

AL:  Very good.  Just do it faster. [Laughter]

KL:  I’d love to.  Thank you.

AL:  OK.  It’s 12:30, so...

Purchase of St. Matthew’s School

PP:  Well, I’m not asking any questions.  I have a couple of questions for the board’s consideration.  One is the purchase of St. Matthew’s School by the city of Springfield from the Springfield Diocese for $1.625million.  The school would be used for the Springfield Academy which serves a student population of 120 to 140 special needs students with severe emotional and behavioral disabilities.  I do have Assistant Superintendent Warwick here should you have any particular questions, but we believe this is a sound business decision for the school and the city.  We will save money in the long term on our lease payments to the other facilities where we currently make lease payments.  And our own costs to build a facility for this purpose and of this size would probably be in the magnitude of $8million to $10million, so this is a pretty good bargain.

AL:  Is this in move-in condition?  I mean, is this a building you could open up tomorrow and use?

CVR:  It’s a great building.

PP:  I believe that it is, but let me ask...  Sean or Mr. Warwick?  We could move into this building by September 6 of this year?

Distant voice:  Correct.

AL:  Well,

PP:  And I’m recommending that you authorize us to enter into the transaction and pay for it with money from the $52million loan fund.

CVR:  So moved.

TR:  Second. And another, if I could just add a note.  I look at the $1.6million that’s being spent on the school, and I see school committeeman Mike Rogers who’s here today, by coincidence I think, and from his efforts by renegotiating some of the leases that have been issued and have come up for renewal and the service contracts, I think up to date, he’s saved close to about $800,000 by renegotiating, getting rid of some of these.  So I mean that’s...along with Dan Warwick...so that’s, that is great work on his part I just thought I’d mention that as well.

TT:  This is not eligible for any capital loan program?  We have to use from the loan proceeds?

PP:  Yeah.  We don’t have...we have the access to the funds that can be used for any purpose, either a capital expense or operating expense out of the loan fund.  What we’re trying to do is to close this transaction in a speedy fashion to have it available for the start of school.  What we are still trying to work out is the specific operational relationship between the school department and the city for these expenses.  For example, we, the school department currently pays lease payments to MCDI, a couple of different churches and the like.  And we would hope to replicate that sort of arrangement, at least on a temporary basis for this purchase, but we’re trying, we’re attempting to act with dispatch to make the purchase as soon as possible.

TT:  I understand.

AL:  We have a motion.

** MOTION PASSES UNANIMOUSLY.

Remediation Redevelopment of Memorial Industrial ParkII

PP:   Mr. Panagore, would you please give the board an explanation of 8005...?

DP:  Mr. Chairman, board members.  The second executive order a new executive order expediting the remediation development of Memorial Industrial ParkII, the memorial Industrial Park, property owned by the Springfield Redevelopment Authority is our prime industrial site in the city, 85 acres overall, about 60 of it is useable.  There’s a lot of costs that had to go in at the front end to make this property work.  There are still more costs that have to go in in the future, but in order to purchase the property, the city got a...the city loaned to the SRA, for the purchase money, a HUD 108 loan.  Those are federal loans for projects secured by the property.  It was a $2million loan.  In addition, to remediate the site, it got what’s called a BEDI (Brownfields Economic Development Initiative) loan from the federal government.  We spent that money on remediating the site.  The site that is now remediated.  That money, though, the federal BEDI, can be reprogrammed for other purposes, and as I said, there are many more expenses (utilities, road work, etc.) that need to be put into the site.  The Mass Development has agreed to make a $900,000 loan, one of their brownfields loans, to the city through the SRA for this property.  That $900,000 loan will be used for the purposes of the far more immediate aspects of the remediation and also to reimburse, to free-up, to repay the BEDI so that that money can be re-programmed. This $900,000 is extremely important as part of the deal to make that development work. 

And the Mass Development has requested (and this is common; HUD 108 loans are usually in second or third place)...has requested that we subordinate the $2million HUD loan to the $900,000 Mass Development loan.  All of our pro formas on the property are designed around repayment of all of these loans, and that’s the way we will make the deals work, and that’s an important priority.  So I come before you today on behalf of the SRA and the economic development staff and Mass Development to ask that the board which is required under the Chapter 169 as a loan, which it is, on behalf of the city, which requires the board approval, that indeed the board vote to take second position, subordinate the HUD 108 loan to the Mass Development for the purposes of security in payment.

AL:  Any questions?

CVR:  So moved.

**MOTION PASSES UNANIMOUSLY.

AL:  Doesn’t cost us any cash today, so... OK.  All right.

Second Reading of Ordinance Reorganizing the Police Commission

PP:  Just one housekeeping item, and we’re required under the law to have what is essentially a second approval, a second reading of  if you recall at our last meeting on June 29, this board reorganized the police commission under City Ordinance Section 2.58, and we ask you to affirm your, that vote again today.

AL:  Is it working?

PP:  So far.

TR:  Just a, just a quick question.  I, I...and I brought this up the last time...is there a residency requirement?  Does it need to be included in the ordinance or is that going to be in the contract?  Or should it be in both?

PP:  A residency requirement...

TR:  Whoever the police commissioner is going to be, he or she is going to be they be a resident of the city or come into the city....

DP:  Yes.  At the last meeting the question was asked, and we were intending to place it into the contract as a contract term if that’s...

PP:   But we did not include it in the ordinance.

DP:  It is not, if I may, and I don’t want to speak on behalf of the law department, but this is an ordinance as in every other ordinance, and so the city’s residency requirements would otherwise apply.  I don’t know that in any other ordinance creating any other department, there is a specific provision that the department head to create a residency.  I think the residency requirement applies overall.  This is a second reading as required by law of municipal ordinances, and I think City Clerk Billy Metzger can attest to it

WM:  I would suggest that the vote be to enact this ordinance.

AL:  OK.  Do I have a motion to...

Board adjourns to executive session to discuss collective bargaining matters and legal matters.