No one ever said it would be easy. Or that life is fair. And, to be sure, there were some unhappy people last week when, on the same day, city police and firefighter pension reforms received final approval and the city purchased the former Harriet Tubman housing site for industrial development.
But methodical and studied persistence paid off for Chattanooga Mayor Andy Berke — and, he believes, for the city — in both cases.
Pension reform is expected to immediately save the city $5 million and improve its unfunded liability status — but keep its defined-benefit plan for first responders. The 36-acre housing site purchase was made with an eye toward jobs in the short run from demolition work and in the long run from construction and from whatever employer or employers land there.
Berke wasted little time after taking office last year in appointing a task force to study the city’s growing — and unsustainable — pension spending. Its health was among the state’s worst, and it wasn’t going to get better with inaction.
The benefits were promised — probably too optimistically since a recent study showed Chattanooga’s plan was among the richest among 15 other Southeast cities such as Nashville, Knoxville and Charlotte, N.C. — in better times, but the Great Recession reduced investment returns, and longer lifespans for retirees swelled the amount that would be needed.
Indeed, one pension board member said the city contributed 10 percent of the fire and police payroll — about $5 million — to pensions in 1999 but 36 percent — about $14 million — in 2013. Meanwhile, the pension, he said, went from being 100 percent funded to 51 percent funded.
Berke was correct to face the issue head on, knowing whatever was decided would make some people mad but understanding the importance to right the city’s financial ship.
“I’ve been through a lot of negotiations,” he said last month. “I’ve heard people threaten to walk out a million times. That’s part of the process. It’s frustrating, it’s difficult, it’s personal. I understand that. I never once told anyone that they shouldn’t be upset.”
The 18-person task force brought members of all parties together for tough talks in which all sides saw each other’s cards. Eventually, real reform was hammered out, with all sides giving a little.
“Lots of cities are facing these issues,” Berke said, “and it’s a rare city that’s actually been able to accomplish what we did. We put the fund on the right track, we’re able to look retirees in the eye and tell them they’re going to get the benefits they expect, and we did so while saving Chattanooga taxpayers $227 million [over 26 years].”
On the Tubman deal, in which the city agreed to pay $2.6 million in cash to the Chattanooga Housing Authority, the mayor could have washed his hands of the situation after his initial bid of $1 million and the 20-acre Maurice Poss Homes site (valued at $1.87 million) was rejected in favor of a bid from Chicago-based Lakewood Realty Group.
But when Lakewood failed three times to complete its deal, the site was bid again, and Berke, seeing the possibility of more employment in the underemployed neighborhood and armed with the knowledge the site would become the second largest plot of city-owned land available for development, changed the city’s offer.
“The way to raise this neighborhood is by bringing jobs here,” the mayor said at a news conference last week. “That benefits East Chattanooga and helps the entire city.”
CHA board members accepted the city’s bid unanimously, choosing it over three other bidders, including Lakewood again, and stating it offered the best opportunity for the area.
Some other bidders had designs on rebuilding or renovating the aging housing site to offer low-income housing, which is certainly needed, but renovation would amount to a money pit and rebuilding wouldn’t solve the problems that caused the housing complex’s abandonment in the first place.
Going forward, Berke should think carefully about signing any community benefits agreement to ensure area residents are hired at livable wages to work on the site, as Chattanooga Organized for Action President Perrin Lance suggested. The fact the mayor was persistent in bidding on the land, with the ultimate desire for jobs, indicates his real interest in the area.
Of course, he wants jobs for area residents. Of course, he wants livable wages paid. But anything more sounds a little like blackmail.
Taken together, the pension and the housing site issues indicate Berke’s willingness to see through the obfuscation that can surround such issues and do what’s best for the city.