Stimulating Conditions

Let me make a simple prediction: After all is said and done and we have spent a trillion dollars authorized by the federal American Recovery and Reinvestment Act (ARRA), also known as stimulus money, we will not know whether it recovered our economy. What we will know is that our public debt will be one of the highest in our history and remain with us for decades to come. (Let's just hope China remains a willing investor, economic partner, and political ally).

Let's take a look closer at how stimulus spending affects our city government. A case in point is the latest recommendations by the Community Development Block Grant (CDBG) committee to fund local projects (legislative file 15482) with federal stimulus money. Unlike past requests for proposals (RFP) from CDBG, this time for-profit companies were eligible to apply based on the written guidelines issued by the federal department of Housing and Urban Development (HUD).

As a result the City received one application from a for-profit company, the Higher Ground Urban Farm, Inc. (HGUF). Its mission is to grow food sustainably in a protected greenhouse environment on Madison's Northside utilizing renewable energy resources.

HGUF is a newly created company with apparently no active operations, employees, or physical location yet. While it has a tentative agreement with a local property owner, I learned that the exact location on the proposed premise will not happen until the end of August, 2009. Furthermore, the company plans to hire three to four local minorities and train them in greenhouse agriculture.

Yet, according to their financial projections that I received as a City Council member on July 9, 2009, their projected gross sales for November 2009 is $17,500 and for December $28,000. Are we to conclude that within three months this business will sign a lease, build a green house, hire and train staff, set up all the typical business operations, line up customers, and sell agricultural goods in excess of $17,000 per month?

All this during economic times when small businesses are defaulting in higher numbers in Madison and across the country according to an article in the Wisconsin State Journal on July 27, 2009.

At the last Board of Estimates meeting several Council members had concerns about this application and decided to send it back to the CDBG committee. I trust they will share their concerns at the upcoming Council meeting where the CDBG recommendations for funding will be on the agenda.

Though I have written many business proformas and worked with investors and banks to secure private financing, I do not have the knowledge to evaluate the feasibility of this particular business without more market research. At the same I feel compelled to raise the question whether this project is ripe, or in Council's language, soup to receive a $53,000 grant and a $53,000 loan at zero percent interest. HGUF is, after all, a start-up company with no track record.

Therefore, I went to the last CDBG meeting with the hope committee members would consider adding a job creation claw-back clause. My thinking is that since job creation is one of the primary reasons for stimulus money, perhaps we could impose a condition that HGUF should retain three full-time employees for two years for receiving $106,000 taxpayer money. I recommended that if HGUF does, they would receive the $53k grant and $53k loan as recommended by CDBG in a previous meeting. If they wouldn't, the $53k grant would become a loan and we could leverage the loan repayments for other projects in the future. In either scenario the taxpayer would be protected while providing an opportunity for a local entrepreneur to start a new business. Sort of a win-win situation. Right?

Was I ever so wrong to assume that committee members would find the two-year job condition to be reasonable in light of the concerns with this particular application. They, including alders who typically advocate for job creation claw-backs in other city policy areas (such as Tax Incremental Financing), decided against any additional conditions. Instead I got the impression that the CDBG committee was eager to award money to a for-profit company to counter long-standing criticism that CDBG money goes only to not-for-profits.

Incidentally, I also learned that HUD counts job creation as of the date employees are hired regardless of how long these jobs exist. Isn't this classical bean counting to meet politically-driven quotas? HUD officials can report to Congress and the White House that stimulus money has created x-amount of jobs regardless of whether they are sustainable after taxpayer money has been spent. Mission Accomplished, right?

Public decisions to spend money in the private sector are common. But stimulus spending may be somewhat of a different animal. At the national level political careers depend on producing results to claim a quick victory. At the local level, staff and committee members, who experience the constraints of inadequate resources frequently, may feel a sudden delight in spending other people's money (OPM) to help our communities. And, according to the Wall Street Journal, there is considerable pressure to release stimulus money as quickly as possible. When these dynamics converge chic trend-du-jour projects or well-written but perhaps overpromising applications could easily get stimulus money.

In instances where there are serious questions about sustainable outcomes and unsubstantiated claims, let's not gamble with taxpayer money. Let's be certain we get what we pay for. Because CDBG committee members and local officials come and go, their decisions are easily forgotten. And since most citizens do not have the time and resources to track the outcomes of the many promises made, accountability is minimal.

Multiply these decisions taking place by the thousands, if not millions in local communities all across the country and a disturbing picture emerges. Could we be creating a "Great Corporate Welfare Society" in the process? Yet, in a few years the public will hear the many accolades of how great the stimulus effect has been on our economy. While there may be some truth in them, remember the Feds are not shy to base results on sanitized data derived from meaningless bean counting. If we are going to incur great public debt, we owe it to ourselves to get the greatest value for the public good.

I recommend we impose reasonable conditions on all projects whenever necessary to guarantee the outcomes that are stated in the business proposals. In my first term I requested conditions on the proposed Mallards project to prevent the City and taxpayers from future financial liability. Given the downturn in the economy, the Mallards ended up having difficult times obtaining financing. On a broader level, it seems we need to review our funding criteria more carefully and create guidelines or policies for city committees that are involved in disbursing public money.

The role of a Council member is to advocate for and protect the public's interest. I will certainly be scrutinizing RFPs, funding recommendations, and decisions by CDBG more closely now that stimulus money (OPM) is hitting the local scene. I hope the public will, too. Otherwise my prediction may come true in Madison!

I would be remiss if I didn't mention that the owner of Higher Ground Urban Farming is a constituent of mine. She owns a successful business and volunteers in our community. She has all the indications of a caring entrepreneur with a social conscience. My comments should not be construed as a criticism of her and her dreams, of urban agriculture, or the local food movement. I wish the owner of HGUF all the best in achieving her business goals.

We Shall Overcome Some Day

Madison has evolved into a "strong mayor - weak Council" model. Therefore, when Paul Soglin states that "Madison, like most Wisconsin cities has a weak mayor, strong council form of government," I take into account that he is a former mayor who experienced most of public life as the "chief executive."

The deliberate as well as unconscious bias for strong, executive leadership is part of our culture. In my years of executive coaching and organization development, I haven't come across a single executive who started off by saying "I have too much power, I want less, please help." Rather I see executives struggle with their desire to enhance their powers and use them more effectively. After all, we look towards such executives for charismatic, visionary leadership to get the job done. It doesn't come natural to us to share or give up power.

That is why leadership structures in public life, unlike in most corporate settings, place so much deliberate emphasis on checks and balances and separation of power.

Let's look at a some facts. The 2003 adopted budgets for the Council office was $82,767 and for the mayor's office $619,804. Since these numbers don't include the salaries of alders, let's take the mayor's $102,631 annual salary for 2003 out of the equation to compare the two budgets more accurately. Now we are talking about $82,767 for the Council office compared to $517,173 for the mayor's office.

By 2009, the adopted budget for the Council office increased to $97,439 and the mayor's office to $802,708 (with his salary it was $915,589). Percentage wise this is a 15% increase for the Council and a 35.5% increase in the mayor's office. During the same time the mayor's staff grew from 10 to 12 positions whereas the Council staff remained at two serving 20 alders. Incidentally, the salaries for all 20 alders combined were $138,433 in 2003 and $145,950 in 2009, representing a 5.15% increase.

Another fact is that the mayor hires and supervises all department heads. He or she has the authority to direct staff to implement policies and conduct research. Alders neither have such authority nor access to research. For the most part we rely on our own resources, labor, and wits. Alders may ask for information from staff, and depending on their personal relationships and longevity in office, do receive assistance from staff and the mayor's office. But for insiders it's common knowledge that a mayor can quietly block or delay such requests. It's not unheard of that mayors have had standing orders to stall informational requests from alders. Thus the only formal, legal requests that alders have at their disposal is to pass a resolution to initiate staff reports or use FOIA (Freedom of Information Act) requests like any citizen would.

To be fair, Council staff do assist alders with their legislative duties. But when you do the math (two full-time staff equals 80 hours of staff time per week divided by twenty alders) each alder receives about 4 hours of staff support per week at best.

The mayor also develops the operating and capital budgets with prior input from department heads, boards, and alders of his or her choosing. There is no legal obligation to involve Council until it reaches the Board of Estimates and the full Council. By then many decisions are foregone conclusions.

Put all this all together and what do you see? A strong-mayor governance model! So you might say "what's wrong with this?" Well, for starters, there is a growing body of research identifying "legislative leadership" (diffused, shared, collaborative, etc.) as being more apt to handle complexity. Another reason is that a "strong-mayor" model creates a dependency on one individual thus amplifying his or her strengths and weaknesses. Therefore, perhaps it is time for the Council to become a stronger partner by assuming, for example, the authority to appoint alders to city committees.

Paul Soglin is right when he concludes that the "strutural components of governemnt are inter-related. When changing one, the others need examinaztion [sic]." The Council appointing alders to city committees is just one of many changes that should be evaluated. In a previous blog entry I mentioned that hiring a City Administrator is another structural improvement. I also advocate for Council leadership to exercise its newly adopted authority to set-up Council committees where alders serve as peers. Such a venue allows alders to collaboratively shape City policy. It is also an opportunity for alders to develop relationships (the social fabric) that overcome or mitigate ideological divides.

Finally, Council participation in appointing citizens to city committees needs to be reconsidered as well. For example, the Council and the mayor could have equal number of citizen appointments on each city committee. Or, as a transitional solution, the mayor retains the right to appoint citizens during the first ninety days of a vacancy but relinquishes such authority to the Council should no appointment occur during that time window. I am sure there are more iterations.

The point is that with greater authority comes greater responsibility and accountability. The Council, as a group of twenty individuals, would begin to develop a stronger identity. I suppose the Council, like all of us, needs to learn how to fish rather than wait for the daily catch (or bait) from the mayor's office.

Bottom line - alders are in direct, daily contact with constituencies. Why not give Madisonians greater influence over policy making by creating a stronger legislative body? Why not create the organizational conditions for a Council to become more effective? And why not create a stronger check and balance between the branches to allow for more rigorous debate? Isn't this the spirit of a progressive democracy?