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Monday, December 29, 2008

Who Oversees the Overseers?

Posted By on Mon, Dec 29, 2008 at 10:14 AM

I'll confess that when City Councilor Pat Dowd starts thundering about "transparency," sometimes my mind starts wandering. After he took office earlier this year, for example, he was all het up about the transfer of years-old UDAG funds, monies that he maintained were not properly being allocated on the balance sheets of ...

OK, I'll stop now. Because Dowd is onto something potentially much more interesting, and problematic: who is really calling the shots in this town.

Earlier this morning, Dowd's office sent out a copy of a proposed proposed "restricted defeasance account agreement between the city and the Intergovernmental Cooperation Authority, one of two state-appointed panels charged with overseeing the city's troubled finances. And as Dowd first began noting a few days ago, the agreement raises questions about who oversees the overseers. 

Essentially, the agreement would "irrevocably transfer" some $45.3 million in public money to an ICA-managed account, where it could only be used to pay off debt. The goal is straightforward: Put city funds in the equivalent of a "lockbox," where politicans can't get their grubby hands on them and use them for luxuries like, um, filling potholes or hiring cops.

But decisions about which debts to pay, and under what circumstances, would be made by the ICA alone (with the city controller's office facilitating transactions). Once the agreement is signed, elected officials would have no say in how the money is spent. Ordinarily, for example, city council is charged with the responsibility for approving expenditures -- right down to what it spends on photocopies. But in the three-page agreement, the words "city council" appear only once: The ICA pledges to notify council after any debts are paid.

Not surprisingly, that doesn't sit well with at least one city councilor. Of special concern to Dowd is paragraph 9 from the agreement:

The selection of trustee banks or any other professional support for
transactions under this Agreement shall be made by the Executive Director of the ICA pursuant to Act 11 of 2004, 53 P.S. 28101 et seq.

Act 11, for those following along at home, is the legislation that created the ICA. And among the powers allocated to the board is the ability

to make and enter into contracts and other instruments necessary or convenient for the conduct of its business.

It's not clear how the ICA would choose the financial advisers and other consultants who would help it manage that $45 million. The agreement says nothing about it, and ICA Executive Director Henry Sciortino told the Post-Gazette last week that "We do not have a preconceived notion of who should do what or how it should be done."

Generally, financial advice falls under the category of "professional service" -- and contracts for such services do not require competitive bidding. In the past, that has often led to "pinstripe patronage," in which politically connected lawyers and other professionals get lucrative contracts. And it would be ironic if the ICA decided to ignore such procedures: The legislation which created the board stressed the need for "improvement of procurement practices, including competitive bidding procedures."

Or as Dowd noted in a statement: "In a matter so critical to the city’s financial recovery, the ICA shows a blatant disregard for the
need for reform."

Personally, I'd feel a lot better if the draft agreement didn't commit everyone to wrapping up this whole deal by the day after tomorrow. (The agreement reads: "On or before December 31, 2008, the City and the City Controller shall irrevocably transfer $45,300,000 from its unrestricted general funds into the Restricted Defeasance Account.")If the mayor tried to sneak through an 11th hour transfer of $45 million to anyone else, we'd all be howling.

I'd also feel better if the ICA didn't already have a track record for playing fast-and-loose with the Sunshine Act, which requires advance public notice about its meetings. I'm sure everything the ICA does complies with the letter of the law. But the same could be said of a lot of objectionable behavior by elected officials. 

In recent months, the mayor and city council have been going through an almost proctological amount of scrutiny for almost everything they do. It'd be ironic as hell if the ICA -- whose unelected board is supposed to hold officials accountable -- was able to avoid practicing what it preached.  

But hey, maybe that's just me. And, I guess, Pat Dowd.

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