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Urban Policy (2)
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16989413
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Urban Policy (2)
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The original documents are located in Box 39, folder "Urban Policy (2)" of the James M. Cannon Files at the Gerald R. Ford Presidential Library. Copyright Notice The copyright law of the United States (Title 17, United States Code) governs the making of photocopies or other reproductions of copyrighted material. Gerald Ford donated to the United States of America his copyrights in all of his unpublished writings in National Archives collections. Works prepared by U.S. Government employees as part of their official duties are in the public domain. The copyrights to materials written by other individuals or organizations are presumed to remain with them. If you think any of the information displayed in the PDF is subject to a valid copyright claim, please contact the Gerald R. Ford Presidential Library. Digitized from Box 39 of the James M. Cannon Files at the Gerald R. Ford Presidential Library 5/4/76 THE WHITE HOUSE At good- to WASHINGTON April 9, 1976 we ALL wt MEMORANDUM FOR: JIM CANNON pls FROM: STEVE McCONAHEY & PAT DELANEY we As a followup to our last meeting on Urban Issues and Art Sun Quern's memorandum of April 8 on that subject, we have (1) developed a brief analysis of the current financial status of several American cities and (2) drafted a procedure for handling calls and inquiries from cities claiming "financial crisis. FINANCIAL PROFILE There are two problems involved in developing a list of financially plagued cities. First, it is difficult to secure reliable and up-to-date data. Secondly, we feel it would be unwise to create such a list given the possibility that it would be circulated outside the White House. If circulated, it would be potentially hazardous to these cities as they sought financing. Nevertheless, we have described the con- dition of several cities in three ways: 1. Based on the 1972 ACIR financial study: In its original analysis, ACIR identified six warning signs: BIG DEFICIT IN WARENT YEAR a. an operating fund revenue-expenditure imbalance in which current expenditures significantly exceeded current revenues in one fiscal period. DEFICITS For b. a consistent pattern of current expenditures exceeding current revenues by small amounts for several years. C. an excess of current operating liabilities 7 over current assets (a fund deficit). d. short-term operating loans outstanding at the conclusion of a fiscal year (or in some in- stances the borrowing of cash from restricted funds or an increase in unpaid bills in lieu of short-term loans. Bonrowny from Restricted fords FORD i LIBRARY 938870 -2- Required owners can't pey tax e e. a high and rising rate of property tax delinquency. f. a sudden and substantial decrease in assessed OMP in amend Hope ty value values for unexpected reasons. aggiogate Tables 1,2,4 and 5 indicate the financial condition of cities identified by ACIR in its analysis. We have not been able to develop the information for all of these in- dicators because of the lack of consistent data. 2. Based on Standard & Poor's Ratings We have also provided the Standard & Poor rating for the selected list of 30 cities and the USCM list (see attached). This chart could be misleading in that it seems to portray a very strong picture for the financial condition of these cities. Those cities with a AA or A could in fact, during a period of tight money, run into difficulty with financing. The cities with a AAA would be the first in line in the money market. All of these, of course, would stand in back of Federal borrow- ing to finance the current deficits. For example, Detroit with a A rating during the New York City crisis could not find an underwriter. There was just no market for their bonds. So these ratings must be considered in tandem with "market conditions". United States ducyon 3. Based on the USCM Analysis We also have attached a somewhat different list prepared by the USCM at our request. This list contains cities that they have identified as problems (see attachment). This list contains several of the descriptors of the conditions found in Detroit, Cleveland, Yonkers, Newark, Boston, Baltimore and Buffalo. Again, one should note the incomplete nature of these data. These three analyses provide a sense of the financial con- ditions found in many cities. However, these data do not provide a good profile of smaller cities. Data for these jurisdictions is even more incomplete. Again, we want to caution against developing a specific problem list for White House monitoring. Our contact with cities and their public interest organizations should provide us with an adequate warning system. BERRLD R. FORD -3- INTERNAL PROCEDURE In response to the second request, we have drafted a procedure for the handling of specific inquiries from cities claiming a financial crisis (see attachment). ACIR STUDY Table I Revenue-Expenditure Comparison General Operating Fund Large Cities (Cash Basis) Excess or (Deficiency) of Revenues Compared to Expenditures Cities ($ millions) (in order of population) 1971* 1974* New York $ (656.2) $ (807.8) Chicago 14.0 36.7 Los Angeles (5.5) 40.7 Philadelphia (48.8) 5.5 Detroit 17.5 8.6 Houston (4.1) (8.0) Baltimore (8.3) 23.9 Dallas (.9) 1.2 Cleveland (13.2) 0 Indianapolis .2 (.7) Milwaukee 12.2 7.3 San Francisco 13.4 9.8 San Diego 2.1 4.9 San Antonio ( .4) 1.6 Memphis 3.5 NA Boston 1.5 (15.9) St. Louis (4.5) (10.7) New Orleans 0 9.8 Phoenix (1.0) 8.5 Columbus 1.0 3.2 Seattle 1.8 (1.1) Jacksonville (2.5) 11.0 Pittsburgh 5.2 .3 Denver 4.2 4.0 Kansas City (1.3) 1.1 Atlanta (2.0) 8.7 Buffalo (5.4) (6.1) Cincinnati ( .5) 1.6 Nashville 2.6 .5 Minneapolis 1.1 (7.3) *Source: Compiled from available published financial reports for each city; see accompanying list. Table II Accumulated Fund Balance or Deficit General Operating Fund Large Cities (Pro Forma Cash Basis) Balance or (Deficit) Cities ($ millions) (in order of population) 1971* 1974* New York $ (657.6) $ (1,492.3) Chicago (188.3) (179.0) Los Angeles 115.0 160.3 Philadelphia (29.2) (6.7) Detroit (17.2) (25.6) Houston 13.6 6.8 Baltimore 9.2 15.4 Dallas 3.8 (1.2) Cleveland (13.6) 0 Indianapolis 2.0 3.1 Milwaukee 17.5 37.8 San Francisco 79.9 114.2 San Diego 4.8 2.8 San Antonio 2.8 1.4 Boston 25.9 (22.6) Memphis 5.6 NA St. Louis (3.5) (14.6) New Orleans ( .8) 2.8 Phoenix 3.0 .4 Columbus 1.7 6.9 Seattle 14.7 10.1 Jacksonville 15.4 14.1 Pittsburgh 7.3 16.5 Denver 7.2 3.9 Kansas City .7 .8 Atlanta 10.1 20.5 Buffalo 1.6 (21.8) Cincinnati 1.3 11.1 Nashville 2.8 10.4 Minneapolis 5.4 6.6 *Source: Compiled from available published financial reports for each city; see accompanying list. Table IV Annual Percentage Change in General Operating Fund Revenues and Expenditures, 1974* Large Cities Cities Percentage Percentage (in order of Increase (Decrease) Increase (Decrease) population) Revenues Expenditures New York 3.7% 10.1% Chicago 12.0 12.4 Los Angeles 9.7 (2.5) Philadelphia ( .1) 3.1 Detroit 0 1.6 Houston 9.1 12.7 Baltimore 4.1 .1 Dallas 9.6 7.7 Cleveland 13.0 1.5 Indianapolis 5.1 6.8 Milwaukee 9.4 .6 San Francisco (1.9) 2.3 San Diego 17.9 11.4 San Antonio 19.5 16.0 Boston 19.6 15.4 Memphis NA NA St. Louis 14.8 17.7 New Orleans 21.6 15.3 Phoenix 13.3 16.8 Columbus 8.1 8.4 Seattle 8.1 8.7 Jacksonville 20.9 9.8 Pittsburgh (10.0) (7.1) Denver 19.4 8.6 Kansas City 5.3 6.7 Atlanta 12.8 3.1 Buffalo 3.3 (8.0) Cincinnati 4.5 8.7 Nashville 19.4 10.1 Minneapolis (2.4) 5.8 Average 9.3% 7.0% Median 9.1% 8.4% *Source: Compiled from available published financial reports for each city; see accompanying list. GERALD LIQUEST R. FORD Table V General Obligation Bonded Debt Large Cities December 31, 1971 and April 30, 1974 Cities Debt as a (in order of Debt Per Capita Percentage of Value* population) 12/31/71 4/30/74 12/31/71 4/30/74 New York $612 $850 7.5 8.1 Chicago 204 357 2.7 3.8 Los Angeles 331 362 3.1 3.0 Philadelphia 456 445 12.5 6.6 Detroit 293 372 3.9 4.6 Houston 509 535 5.5 3.6 Baltimore 374 262 6.4 3.8 Dallas 521 666 5.0 5.8 Cleveland 369 369 3.9 3.9 Indianapolis 275 338 3.8 5.0 Milwaukee 316 357 4.5 4.0 San Francisco 455 564 3.4 4.0 San Diego 237 181 2.6 1.6 San Antonio 240 344 5.3 6.4 Memphis 435 386 6.6 4.8 Boston 536 456 17.2 5.7 St. Louis 338 259 4.7 3.2 New Orleans 486 504 6.9 5.4 Phoenix 230 304 3.7 3.3 Columbus 330 413 4.9 5.6 Seattle 422 540 3.6 4.5 Jacksonville 173 293 3.5 4.2 Pittsburgh 285 626 5.4 10.1 Denver 75 309 0.9 2.4 Kansas City 387 471 4.5 5.3 Atlanta 458 474 4.8 3.5 Buffalo 345 464 8.2 11.0 Cincinnati 432 409 4.6 3.5 Nashville 367 367 7.2 7.2 Minneapolis 254 467 2.6 5.1 Average 358 425 5.3 5.0 Median 356 398 4.8 4.6 Source: Municipal Bond Selector, Standard and Poor's Corporation, III, No. 6, December 31, 1971 and April 30, 1974. *Assessed Value STANDARD & POOR February 1976 Standard & Poor's Municipal Bond Ratings for 30 Selected Cities General Obligation Bonds (except where designated otherwise) Cities (in order of population) * New York AA Chicago (TAN) AA Los Angeles (County) A- Philadelphia A Detroit (I.S.D.) AA Houston A Baltimore AA Dallas (I.S.D.) AA Cleveland (Water Rev) AAA Indianapolis (Various Authority & S.D.) AAA Milwaukee (County) AA San Francisco (BART-Revenue) AA San Deigo (County) AA San Antonio A Boston AA Memphis A St. Louis A New Orleans (SWR & WTR Bonds) AA Phoenix (U.H.S.D.) AA Columbus AA Seattle AA Jacksonville AA Pittsburgh AAA Denver (S.D. #1) AA Kansas City AA Atlanta A Buffalo AA Cincinnati A+ Nashville (Various Revenue Bonds) AAA Minneapolis (USCM LIST) -- NR Yonkers BBB Newark AA Saginan (County) AA Flint (S.D.) AA Grant Rapids (S.D.) AA Royal Oak (S.D.) *Rating Suspended AAA Prime--These are obligations of the highest quality. They have the strongest capacity for timely payment of debt service. AA High Grade--Bonds rate AA have the second strongest capacity for payment of debt service. A Good Grade Principal and interest payments on bonds in this category are regarded as safe. BBB Medium Grade--This is the lowest investment grade security rating. NR No rating February 1976 Standard & Poor's Municipal Bond Ratings for 30 Selected Cities General Obligation Bonds (except where designated otherwise) Cities (in order of population) * New York AA Chicago (TAN) AA Los Angeles (County) A- Philadelphia A Detroit (I.S.D.) AA Houston A Baltimore AA Dallas (I.S.D.) AA Cleveland (Water Rev) AAA Indianapolis (Various Authority & S.D.) AAA Milwaukee (County) AA San Francisco (BART-Revenue) AA San Deigo (County) AA San Antonio A Boston AA Memphis A St. Louis A New Orleans (SWR & WTR Bonds) AA Phoenix (U.H.S.D.) AA Columbus AA Seattle AA Jacksonville AA Pittsburgh AAA Denver (S.D. #1) AA Kansas City AA Atlanta A Buffalo AA Cincinnati A+ Nashville (Various Revenue Bonds) AAA Minneapolis (USCM LIST) -- NR Yonkers BBB Newark AA SaginanA (County) AA Flint (S.D.) AA Grant Rapids (S.D.) AA Royal Oak (S.D.) *Rating Suspended AAA Prime--These are obligations of the highest quality. They have the strongest capacity for timely payment of debt service. AA High Grade Bonds rate AA have the second strongest capacity for payment of debt service. A Good Grade Principal and interest payments on bonds in this category are regarded as safe. BBB Medium Grade--This is the lowest investment grade security rating. NR No rating USCM STUDY Detroit Cleveland Yonkers Newark Boston Baltimore Buffalb Unemployment Rate (Dec.75) 17.4 (Nov75) 10.8 16.9 Total Budget FY 75-76 808.0 Million 324.8 Million 124.0 Million 209.8 Million 661.0 Million 1,425.5 Million 480.0 Mill (with School) (1/75-12/75) (with school) (with schools) Federal Revenue Sharing 39.5 Mill. 16.0 Mill. 1.6 Mill. 8.7 Mill. 25.0 Mill. 27.0 Mill. 8.2 Mill State Revenue Sharing or Aid 67.2 Mill. - 10.2 Mill. 2.5 Mill. 140.0 Mill. - 21.4 Mil Projected Deficit 44.3 0 22 8.5 Mill. 5.5 Mill. 33.0 Mill. 0 34.0 Mill Previous Year Carry over 17.2 0 6.5 Mill. 0 14.7 Mill. 0 20.0 Mil Highest Level of Employment 19,942 (1/75) 13,000 (1970) 5,500 (1975) 6,100 (1/75) 23,327 (2/1/74) 31,000 6,330 (19 Present Level of Employment 18,314 (12/75) 10,992 4,683 5,100 14,282 32,882 5,250 Projected Level 7/1/76 ? 10,800 4,500 4,900 13,700 32,882 4,050 CETA Employment (Current) 2,864 1,700 ? ? 1,310 200 1,600 Areas of Past Employer Waste,Health, Across the Bd. Across the Bd. Mostly garba Reduction Across the Bd. Rec, Finance Parks but Across the D Areas of Anticipated Pks. to go 0 Employee Reduction Across the Bd. Recreation & Across the Bd. Parks & Rec. of business Property Shorter work week Yes Work Without Pay Reduced Services GERALD Mounted Squad No backyard Disbanded garbage FORD Closed Facilities Library, Museum Printing plant Closed Parks shorter hours closed Rec Centers -2- Detroit Cleveland Yonkers Newark Boston Baltimore Buffalo Pay Freeze Municipal increase Pay freeze 11/75 negotiated Pay Cut Tax Increase Referendum Rejected Real Prop. Tax by voters increased to max. Bonding Operating Exp 85.0 Mill. 54.0 Mill or Tax Anticipation Notes 8.5 Mill. 15.0 Mill. Interest Rate 9.0 % 8.75 % 7.30 % 9.0% GERALD FORD -2- Grand Royal Seattle Atlanta Philadelphia Saginaw Flint Rapids Oak Tax Increases Prop. Tax Increase Tax increases in Prop. Tax Increase In 1974 virtually all 3 mils. for 5 year: categories Bonding Operating Exps. or Tax Anticipation Notes Interest Rate 100 Million GERALD FORD Seattle Atlanta Philadelphia Saginaw Flint Grand Royal Rapids Oak Unemployment Rate 8.8 12.0 (Metro) 9.4 (Jan.76) 8.5 12.0 Total Budget FY 75-76 279.9 Million 130.5 Million 1,160.0 Million 36.6 Million 49.9 Million ? 13.0 Mill Federal Revenue Sharing - 7.0 Mill. 52.2 Mill. 2.7 Mill. 4.2 Mill. 3.5 Million .5 Mill State Revenue Sharing or Aid 8.7 Mill. 2.5 Mill. - 2.6 Mill. 5.1 Mill. 6.9 Mill. 2.2 Mill Projected Deficit 0 0 80.0 Mill. 0 0 0 3.0 Mill Previous Year Carry Over 0 0 11.0 Mill. 0 0 0 0 part of Mill. Highest Level of Employment 12,000 (1973) 35,000 1,073 2,000 2,517 461 Present Level of Employment 9,090 35,000 1,073 2,000 2,447 451 Projected Level 7/1/76 9,090 35,000 1,073 1,800 2,447 451 ? CETA Employment (Current) 600 400 417 74 Areas of Past Employee Reduction Across the Bd. Across the Bd Across the Bd Areas of Anticipated Employee Reduction Across the Bd. Across the Bd. Shorter Work Week Work Without Pay Rextuced Services Closed Facilities GERALD Close Hospital Pay Freeze FORD Freeze being negotiated Pay Cuts DRAFT PROCEDURE PROPOSED PROCEDURE FOR MONITORING CITY FINANCIAL PROBLEMS Outlined below is a suggested procedure for responding to calls and correspondence outlining a city's financial problem and/or requesting assistance. The process would provide a focal point for information and would insure a coordinated White House response. The procedure would involve the following steps: 1. Complete check list of information based on tele- phone conversations or written correspondence, and forward this information to the Office of Inter- governmental Affairs. The check list should include the following information: A. Name of City B. State C. Name of Mayor D. Provider of information/position E. Brief description of the problem - -Nature of problem Amount of money involved State action and response to date Alternatives available Proposed solution Availability of documentation - Nature of request to Federal Government - Other groups involved, e.g. banks, business 2. Develop and maintain in the Office of Intergovern- mental Affairs a file on the city in question. The files should include the following items: A. Completed check list B. Log of calls and discussions along with description of actions taken C. Correspondence D. Assignment of lead responsibility E. Copies of memoranda and decision papers 3. Assign day-to-day responsibility for monitoring and follow up with the city. (This would likely be IGA staff or specific agency representatives) 4. Alert the President of the situation through Jim Cannon's weekly report. 5. Circulate check list from Jim Cannon to the Urban Task Force. The circulation list should include at a minimum the following: A. Cannon B. Seidman C. O'Neill D. Simon E. Fletcher F. Quern G. McConahey H. Appropriate Domestic Council Staff 6. Convene Urban Task Force as necessary to review the situation, receive analysis and information from the city in question, and develop necessary memoranda and recommendations for the President. 7. Make recommendations to the EPB as necessary. Cities May Flourish In South and West, Decline in Northeast But Manhattan Could Be A Rich Enclave; Suburbia To Expand Everywhere A Downturn in Violence? By ROGER RICKLEFS Stoff Reporter of THE WALL STREET JOURNAL NEW YORK-Only a dozen years ago, 32 THE WALL STREET JOURNAL, Tuesday, April 6, 1976 The Future Revised: Cities Likely To Flourish in the South and West THE WHITE HOUSE WASHINGTON April 9, 1976 MEMORANDUM FOR: JIM CANNON FROM: STEVE McCONTHEY & PAT DELANEY As a followup to our last meeting on Urban Issues and Art Quern's memorandum of April 8 on that subject, we have (1) developed a brief analysis of the current financial status of several American cities and (2) drafted a procedure for handling calls and inquiries from cities claiming "financial crisis. FINANCIAL PROFILE There are two problems involved in developing a list of financially plagued cities. First, it is difficult to secure reliable and up-to-date data. Secondly, we feel it would be unwise to create such a list given the possibility that it would be circulated outside the White House. If circulated, it would be potentially hazardous to these cities as they sought financing. Nevertheless, we have described the con- dition of several cities in three ways: 1. Based on the 1972 ACIR financial study: In its original analysis, ACIR identified six warning signs: a. an operating fund revenue-expenditure imbalance in which current expenditures significantly exceeded current revenues in one fiscal period. b. a consistent pattern of current expenditures exceeding current revenues by small amounts for several years. C. an excess of current operating liabilities over current assets (a fund deficit). d. short-term operating loans outstanding at the conclusion of a fiscal year (or in some in- stances the borrowing of cash from restricted funds or an increase in unpaid bills in lieu of short-term loans. -2- e. a high and rising rate of property tax delinquency. f. a sudden and substantial decrease in assessed values for unexpected reasons. Tables 1,2,4 and 5 indicate the financial condition of cities identified by ACIR in its analysis. We have not been able to develop the information for all of these in- dicators because of the lack of consistent data. 2. Based on Standard & Poor's Ratings We have also provided the Standard & Poor rating for the selected list of 30 cities and the USCM list (see attached). This chart could be misleading in that it seems to portray a very strong picture for the financial condition of these cities. Those cities with a AA or A could in fact, during a period of tight money, run into difficulty with financing. The cities with a AAA would be the first in line in the money market. All of these, of course, would stand in back of Federal borrow- ing to finance the current deficits. For example, Detroit with a A rating during the New York City crisis could not find an underwriter. There was just no market for their bonds. So these ratings must be considered in tandem with "market conditions". 3. Based on the USCM Analysis We also have attached a somewhat different list prepared by the USCM at our request. This list contains cities that they have identified as problems (see attachment). This list contains several of the descriptors of the conditions found in Detroit, Cleveland, Yonkers, Newark, Boston, Baltimore and Buffalo. Again, one should note the incomplete nature of these data. These three analyses provide a sense of the financial con- ditions found in many cities. However, these data do not provide a good profile of smaller cities. Data for these jurisdictions is even more incomplete. Again, we want to caution against developing a specific problem list for White House monitoring. Our contact with cities and their public interest organizations should provide us with an adequate warning system. -3- INTERNAL PROCEDURE In response to the second request, we have drafted a procedure for the handling of specific inquiries from cities claiming a financial crisis (see attachment) . Note: Attached is a Wall Street Journal Article ACIR STUDY Table I Revenue-Expenditure Comparison General Operating Fund Large Cities (Cash Basis) Excess or (Deficiency) of Revenues Compared to Expenditures Cities ($ millions) (in order of population) 1971* 1974* New York $ (656.2) $ (807.8) Chicago 14.0 36.7 Los Angeles (5.5) 40.7 Philadelphia (48.8) 5.5 Detroit 17.5 8.6 Houston (4.1) (8.0) Baltimore (8.3) 23.9 Dallas ( .9) 1.2 Cleveland (13.2) 0 Indianapolis .2 ( .7) Milwaukee 12.2 7.3 San Francisco 13.4 9.8 San Diego 2.1 4.9 San Antonio ( .4) 1.6 Memphis 3.5 NA Boston 1.5 (15.9) St. Louis (4.5) (10.7) New Orleans 0 9.8 Phoenix (1.0) 8.5 Columbus 1.0 3.2 Seattle 1.8 (1.1) Jacksonville (2.5) 11.0 Pittsburgh 5.2 .3 Denver 4.2 4.0 Kansas City (1.3) 1.1 Atlanta (2.0) 8.7 Buffalo (5.4) (6.1) Cincinnati (.5) 1.6 Nashville 2.6 .5 Minneapolis 1.1 (7.3) *Source: Compiled from available published financial reports for each city; see accompanying list. Table II Accumulated Fund Balance or Deficit General Operating Fund Large Cities (Pro Forma Cash Basis) Balance or (Deficit) Cities ($ millions) (in order of population) 1971* 1974* New York $ (657.6) $ (1,492.3) Chicago (188.3) (179.0) Los Angeles 115.0 160.3 Philadelphia (29.2) (6.7) Detroit (17.2) (25.6) Houston 13.6 6.8 Baltimore 9.2 15.4 Dallas 3.8 (1.2) Cleveland (13.6) 0 Indianapolis 2.0 3.1 Milwaukee 17.5 37.8 San Francisco 79.9 114.2 San Diego 4.8 2.8 San Antonio 2.8 1.4 Boston 25.9 (22.6) Memphis 5.6 NA St. Louis (3.5) (14.6) New Orleans ( .8) 2.8 Phoenix 3.0 .4 Columbus 1.7 6.9 Seattle 14.7 10.1 Jacksonville 15.4 14.1 Pittsburgh 7.3 16.5 Denver 7.2 3.9 Kansas City .7 .8 Atlanta 10.1 20.5 Buffalo 1.6 (21.8) Cincinnati 1.3 11.1 Nashville 2.8 10.4 Minneapolis 5.4 6.6 *Source: Compiled from available published financial reports for each city; see accompanying list. Table IV Annual Percentage Change in General Operating Fund Revenues and Expenditures, 1974* Large Cities Cities Percentage Percentage (in order of Increase (Decrease) Increase (Decrease) population) Revenues Expenditures New York 3.7% 10.1% Chicago 12.0 12.4 Los Angeles 9.7 (2.5) Philadelphia ( .1) 3.1 Detroit 0 1.6 Houston 9.1 12.7 Baltimore 4.1 .1 Dallas 9.6 7.7 Cleveland 13.0 1.5 Indianapolis 5.1 6.8 Milwaukee 9.4 .6 San Francisco (1.9) 2.3 San Diego 17.9 11.4 San Antonio 19.5 16.0 Boston 19.6 15.4 Memphis NA NA St. Louis 14.8 17.7 New Orleans 21.6 15.3 Phoenix 13.3 16.8 Columbus 8.1 8.4 Seattle 8.1 8.7 Jacksonville 20.9 9.8 Pittsburgh (10.0) (7.1) Denver 19.4 8.6 Kansas City 5.3 6.7 Atlanta 12.8 3.1 Buffalo 3.3 (8.0) Cincinnati 4.5 8.7 Nashville 19.4 10.1 Minneapolis (2.4) 5.8 Average 9.3% 7.0% Median 9.1% 8.4% *Source: Compiled from available published financial reports for each city; see accompanying list. Table V General Obligation Bonded Debt Large Cities December 31, 1971 and April 30, 1974 Cities Debt as a (in order of Debt Per Capita Percentage of Value* population) 12/31/71 4/30/74 12/31/71 4/30/74 New York $612 $850 7.5 8.1 Chicago 204 357 2.7 3.8 Los Angeles 331 362 3.1 3.0 Philadelphia 456 445 12.5 6.6 Detroit 293 372 3.9 4.6 Houston 509 535 5.5 3.6 Baltimore 374 262 6.4 3.8 Dallas 521 666 5.0 5.8 Cleveland 369 369 3.9 3.9 Indianapolis 275 338 3.8 5.0 Milwaukee 316 357 4.5 4.0 San Francisco 455 564 3.4 4.0 San Diego 237 181 2.6 1.6 San Antonio 240 344 5.3 6.4 Memphis 435 386 6.6 4.8 Boston 536 456 17.2 5.7 St. Louis 338 259 4.7 3.2 New Orleans 486 504 6.9 5.4 Phoenix 230 304 3.7 3.3 Columbus 330 413 4.9 5.6 Seattle 422 540 3.6 4.5 Jacksonville 173 293 3.5 4.2 Pittsburgh 285 626 5.4 10.1 Denver 75 309 0.9 2.4 Kansas City 387 471 4.5 5.3 Atlanta 458 474 4.8 3.5 Buffalo 345 464 8.2 11.0 Cincinnati 432 409 4.6 3.5 Nashville 367 367 7.2 7.2 Minneapolis 254 467 2.6 5.1 Average 358 425 5.3 5.0 Median 356 398 4.8 4.6 Source: Municipal Bond Selector, Standard and Poor's Corporation, III, No. 6, December 31, 1971 and April 30, 1974. *Assessed Value STANDARD & POOR February 1976 Standard & Poor's Municipal Bond Ratings for 30 Selected Cities General Obligation Bonds (except where designated otherwise) Cities (in order of population) * New York AA Chicago (TAN) AA Los Angeles (County) A- Philadelphia A Detroit (I.S.D.) AA Houston A Baltimore AA Dallas (I.S.D.) AA Cleveland (Water Rev) AAA Indianapolis (Various Authority & S.D.) AAA Milwaukee (County) AA San Francisco (BART-Revenue) AA San Deigo (County) AA San Antonio A Boston AA Memphis A St. Louis A New Orleans (SWR & WTR Bonds) AA Phoenix (U.H.S.D.) AA Columbus AA Seattle AA Jacksonville AA Pittsburgh AAA Denver (S.D. #1) AA Kansas City AA Atlanta A Buffalo AA Cincinnati At Nashville (Various Revenue Bonds) AAA Minneapolis (USCM LIST) -- NR Yonkers BBB Newark AA Saginan (County) AA Flint (S.D.) AA Grant Rapids (S.D.) AA Royal Oak (S.D.) *Rating Suspended AAA Prime--These are obligations of the highest quality. They have the strongest capacity for timely payment of debt service. AA High Grade--Bonds rate AA have the second strongest capacity for payment of debt service. A Good Grade--Principal and interest payments on bonds in this category are regarded as safe. BBB Medium Grade--This is the lowest investment grade security rating. NR No rating USCM STUDY Detroit Cleveland Yorkers Newark Boston Baltimore Buffalt employment Rate (Dec.75) 17.4 (Nov75) 10.8 16.9 otal Budget FY 75-76 808.0 Million 324.8 Million 124.0 Million 209.8 Million 661.0 Million 1,425.5 Million 480.0 Mi (with School) (1/75-12/75) (with school) (with schools) ederal Revenue Sharing 39.5 Mill. 16.0 Mill. 1.6 Mill. 8.7 Mill. 25.0 Mill. 27.0 Mill. 8.2 Mi tate Revenue Sharing or id 67.2 Mill. - 10.2 Mill. 2.5 Mill. 140.0 Mill. - 21.4 MA rojected Deficit 44.3 0 22 8.5 Mill. 5.5 Mill. 33.0 Mill. 0 34.0 Mi revious Year Carry over 17.2 0 6.5 Mill. 0 14.7 Mill. 0 20.0 Mi ighest Level of mployment 19,942 (1/75) 13,000 (1970) 5,500 (1975) 6,100 (1/75) 23,327 (2/1/74) 31,000 6,330 (In resent Level of mployment 18,314 (12/75) 10,992 4,683 5,100 14,282 32,882 5,250 rojected Level 7/1/76 ? 10,800 4,500 4,900 13,700 32,882 4,050 ETA Employment (Current) 2,864 1,700 ? ? 1,310 200 1,600 reas of Past Employer Waste,Health, Across the Bd. Across the Bd. Mostly gart eduction Across the Bd. Rec, Finance Parks but Across the reas of Anticipated Pks. to go mployee Reduction Across the Bd. Recreation & Across the Bd. Parks & Rec. of business Property horter work week Yes brk Without Pay GERALD educed Services FORD Mounted Squad No backyard Disbanded garbage losed Facilities Library, Museum Printing plant Closed Parl shorter hours closed Rec Center: -2- Detroit Cleveland Yonkers Newark Boston Baltimore Buffalo Freeze Municipal increase Pay freeze 11/75 negotiated Cut Increase Referendum Rejected Real Prop. Tax by voters increased to max. ding Operating Exp 85.0 Mill. 54.0 Mill Tax Anticipation Notes 8.5 Mill. 15.0 Mill. erest Rate 9.0 % 8.75 % 7.30 % 9.0% GERALD LIBRANT FORD ? Scattle Atlanta Philadelphia Saginaw Flint Grand Royal Rapids Oak employment Rate 8.8 12.0 (Metro) 9.4 (Jan.7 8.5 12.0 otal Budget FY 75-76 279.9 Million 130.5 Million 1,160.0 Million 36.6 Million 49.9 Million ? 13.0 Mi ederal Revenue Sharing - 7.0 Mill. 52.2 Mill. 2.7 Mill. 4.2 Mill. 3.5 Million .5 Mi tate Revenue Sharing or Aid 8.7 Mill. 2.5 Mill. - 2.6 Mill. 5.1 Mill. 6.9 Mill. 2.2 Mi rojected Deficit 0 0 80.0 Mill. 0 0 0 3.0 Mi revious Year Carry Over 0 0 11.0 Mill. 0 0 0 0 part of Mill. ighest Level of mployment 12,000 (1973) 35,000 1,073 2,000 2,517 461 resent Level of mployment 9,090 35,000 1,073 2,000 2,447 151 rojected Level 7/1/76 9,090 35,000 1,073 1,800 2,447 451 ? ETA Employment (Current) 600 400 417 74 reas of Past Employee Reduction Across the Bd. Across the Bd Across the Bd reas of Anticipated Employee Reduction Across the Bd. Across the Bd. horter Work Week lork Without Pay Services losed Pacilities Close Hospital ay Freeze FORD Freeze being negotiated LISSANY ay Cuts Grand Royal Seattle Atlanta Philadelphia Saginaw Flint Rapids Oak X Increases Prop. Tax Increase Tax increases in Prop. Tax Increa In 1974 virtually all 3 mils. for 5 ye categories nding Operating Exps. or IX Anticipation Notes terest Rate 100 Million GERALD FORD DRAFT PROCEDURE PROPOSED PROCEDURE FOR MONITORING CITY FINANCIAL PROBLEMS Outlined below is a suggested procedure for responding to calls and correspondence outlining a city's financial problem and/or requesting assistance. The process would provide a focal point for information and would insure a coordinated White House response. The procedure would involve the following steps: 1. Complete check list of information based on tele- phone conversations or written correspondence, and forward this information to the Office of Inter- governmental Affairs. The check list should include the following information: A. Name of City B. State C. Name of Mayor D. Provider of information/position E. Brief description of the problem - Nature of problem Amount of money involved State action and response to date - Alternatives available - Proposed solution - Availability of documentation - - Nature of request to Federal Government - Other groups involved, e.g. banks, business 2. Develop and maintain in the Office of Intergovern- mental Affairs a file on the city in question. The files should include the following items: A. Completed check list B. Log of calls and discussions along with description of actions taken C. Correspondence D. Assignment of lead responsibility E. Copies of memoranda and decision papers 3. Assign day-to-day responsibility for monitoring and follow up with the city. (This would likely be IGA staff or specific agency representatives) 4. Alert the President of the situation through Jim Cannon's weekly report. 5. Circulate check list from Jim Cannon to the Urban Task Force. The circulation list should include at a minimum the following: A. Cannon B. Seidman C. O'Neill D. Simon E. Fletcher F. Quern G. McConahey H. Appropriate Domestic Council Staff 6. Convene Urban Task Force as necessary to review the situation, receive analysis and information from the city in question, and develop necessary memoranda and recommendations for the President. 7. Make recommendations to the EPB as necessary. THE WHITE HOUSE WASHINGTON April 12, 1976 MEMORANDUM FOR: JIM CANNON FROM: ART QUERN Artor SUBJECT: Follow-Up to April 9, 1976, Urban Issues Meeting The following are the next steps to be taken in exploration of urban issues: 1. Annexation Steve and Pat will look into the existing research on the use of annexation by cities to expand their revenue base. 2. Free Trade Zones Lynn will look into concept of "free trade zones" for urban areas. 3. EDA Quern will inquire about EDA's programs which have been directed toward urban areas. 4. HUD Lynn will circulate copies of HUD urban issues paper and each member of the working group will provide Lynn with comments in anticipation of a meeting with Secretary Hills. 5. Johnson and Johnson Art Fletcher will proceed to set up a briefing session by drafting a letter for Jim Cannon's signature. 2 6. U.S. Chamber of Commerce Art Fletcher will suggest Fletcher/Quern meeting with Chamber Washington Urban Affairs Representative. 7. Briefing on Revenue Sharing Quern will invite Paul Myer to next working session to brief on Revenue Sharing. 8. Allied Services Steve will have more detailed work prepared examining Allied Services and Joint Funding Simplification Act. 9. Tax Incentives Quern will get further information on Administration's tax incentive proposal. Sir. THE WHITE HOUSE WASHINGTON April 13, 1976 MEMORANDUM FOR THE MEMBERS OF THE DOMESTIC COUNCIL STAFF URBAN POLICY STUDY FROM: LYNN MAY hyn q SUBJECT: Legislation In the interest of making our group more aware of background material related to urban policy questions, I will be forwarding to you relevant items of information from my sources. Please note the attached item. It is from the Housing and Development Reporter, Vol. 3, #23, April 5, 1976. Attachment Housing and Development Reporter Vol. 3, #23 April 5, 1976 WAYS AND MEANS PASSES 35 PERCENT INTEREST SUBSIDY FOR TAXABLE BONDS The House Ways and Means Committee reported out the "Municipal Taxable Bond Alternative Act of 1976" to provide federal payment of 35 percent of the interest on taxable municipal bonds beginning July 1, 1977. The bill, (H.R. 12774), which passed the committee on March 29 by four votes, faces an uncertain future on the House floor later this month. Despite Administration support of the measure, only one Republican, second ranking Barber B. Conable, Jr., of New York, voted in favor of it. Republicans and Southern conservative Democrats are expected to launch a strong campaign against it on the floor. Proponents, led by the bill's sponsor, Ways and Means Com- mittee Chairman Al Ullman (D-Ore), argue that the new tax- able bond bill will provide state and local governments an op- tional route to the corporate bond market when they are having or inadequate agency safeguards, but expressed amazement that despite these warnings, HUD did little to head off impend- ing disaster. Specifically, the committee found that HUD lost millions of dollars in insurance claims and caused personal tragedy to foreclosed homebuyers because it did not monitor closely enough the activities of approved mortgagees. Partly as a result of the committee's hearings, the depart- ment wrested control over the mortgagees from the office of the FHA Commissioner, where it had been for over 40 years, and placed it in the hands of a four-party committee, the Mortgagee Review Board. This group has already moved against a number of mortgagees, including the Advance Mortgage Corp., a sub- sidiary of Citicorp, and the second largest mortgage banking firm in the country. The report points out, however, that this could have been done years ago, since the department was aware of servicing shortcomings long before it took any action. "Perhaps the most disturbing fact about this situation was that everyone knew of the inadequacies in mortgage servicing," the committee wrote, "but felt powerless to do anything to cor- rect them." The report scored private lenders participating with the government in HUD-FHA insurance programs for failing to live up to the standards laid out in guidelines issued both by HUD and the Federal National Mortgage Association (FN- MA), the organization which holds much of the government-in- sured debt. Once homes are foreclosed, the report states that the abuses for THE WHITE HOUSE WASHINGTON April 15, 1976 MEMORANDUM FOR: JIM CANNON FROM: ART QUERN Hrter SUBJECT: Discussion Paper on Cities It seems to me that our general discussion of urban issues has produced a number of threads of thought which are worth summarizing and pursuing. The following brief rundown of these "threads" is offered only as a means of promoting our continued explorations of particular urban questions. 1. Private Sector Involvement A. Corporations -- What is it that leads a corporation to commit itself to the betterment of an urban area. B. Banks -- What roles do banks play in assisting urban areas to weather fiscal crisis and restore fiscal stability. 2. Expanding Revenue Base A. Annexation -- What are the various possibilities, advantages and disadvantages of annexation. B. "Free trade zones" -- Whether this concept offers any advantages to urban areas. 2 3. Use of Federal Funds -- We are exploring the "allied services" concept for cities to see if we can enable much greater flexibility in their use of Federal funds. In effect this is an "urban block grant" concept. 4. Economic Development A. We are examining current EDA policies toward cities. B. We are reviewing a type of urban development bank concept. 5. Welfare Reform -- The welfare reform studies we are engaged in could offer some relief to cities. 6. General Revenue Sharing -- We are monitoring the current deliberations on the Revenue Sharing issue as it relates to cities. 7. Gauging Fiscal Health A. Steve and Pat have compiled basic information on the major cities as judged by outside groups. B. Norm Hurd's intergovernmental finance project could assist by identifying better tools to be used in gauging fiscal conditions of cities. 8. Current Federal Programs A. HUD -- Carla Hills will be meeting with us soon to review HUD's approach to urban questions. B. Transportation -- Judy Hope has been reviewing "urban" questions with DOT staff. CC: Art Fletcher Steve McConahey Pat Delaney Lynn May Allen Moore THE WHITE HOUSE WASHINGTON April 15, 1976 MEMORANDUM FOR: JIM CANNON FROM: ART QUERN Hrter SUBJECT: Discussion Paper on Cities It seems to me that our general discussion of urban issues has produced a number of threads of thought which are worth summarizing and pursuing. The following brief rundown of these "threads" is offered only as a means of promoting our continued explorations of particular urban questions. 1. Private Sector Involvement A. Corporations -- What is it that leads a corporation to commit itself to the betterment of an urban area. B. Banks -- What roles do banks play in assisting urban areas to weather fiscal crisis and restore fiscal stability. 2. Expanding Revenue Base A. Annexation -- What are the various possibilities, advantages and disadvantages of annexation. B. "Free trade zones" -- Whether this concept offers any advantages to urban areas. 2 3. Use of Federal Funds -- We are exploring the "allied services" concept for cities to see if we can enable much greater flexibility in their use of Federal funds. In effect this is an "urban block grant" concept. 4. Economic Development A. We are examining current EDA policies toward cities. B. We are reviewing a type of urban development bank concept. 5. Welfare Reform : The welfare reform studies we are engaged in could offer some relief to cities. 6. General Revenue Sharing -- We are monitoring the current deliberations on the Revenue Sharing issue as it relates to cities. 7. Gauging Fiscal Health A. Steve and Pat have compiled basic information on the major cities as judged by outside groups. B. Norm Hurd's intergovernmental finance project could assist by identifying better tools to be used in gauging fiscal conditions of cities. 8. Current Federal Programs A. HUD -- Carla Hills will be meeting with us soon to review HUD's approach to urban questions. B. Transportation -- Judy Hope has been reviewing "urban" questions with DOT staff. CC: Art Fletcher Steve McConahey Pat Delaney Lynn May Allen Moore 12A THE WICHITA EAGLE Thursday, April 15, 1976 Urban Drive to Fight Bias "What we have already done is to Ford Aide Hits racialize public service programs so much that nobody wants them. "You know there are while blks in the inner city who are without jobs Campaign Hate too. There are white folks there who shoot other people and who take dope. Public service service programs are By BOB HEATON for everyone who needs them." Staff Writer Fletcher said he feels more cities will follow New York City into radical A presidential advisor, visiting in programs of financial reform. Wichita Wednesday, lashed out at "They are going to have to hold the "race baiting" and "hate baiting" by line on expenses, I think," he said. "I presidential candidates. can see more and more cities taking Art Fletcher, deputy assistant to the advantage of bankruptcy laws to get President for urban affairs and a their houses in order." former Kansan, was here to address Fletcher was critical of public THE WHITE HOUSE WASHINGTON April 12, 1976 MEMORANDUM FOR: JIM CANNON FROM: ART QUERN Art SUBJECT: Follow-Up to April 9, 1976, Urban Issues Meeting The following are the next steps to be taken in exploration of urban issues: 1. Annexation Steve and Pat will look into the existing research on the use of annexation by cities to expand their revenue base. 2. Free Trade Zones Lynn will look into concept of "free trade zones" for urban areas. 3. EDA Quern will inquire about EDA's programs which have been directed toward urban areas. 4. HUD Lynn will circulate copies of HUD urban issues paper and each member of the working group will provide Lynn with comments in anticipation of a meeting with Secretary Hills. 5. Johnson and Johnson Art Fletcher will proceed to set up a briefing session by drafting a letter for Jim Cannon's signature. 2 6. U.S. Chamber of Commerce Art Fletcher will suggest Fletcher/Quern meeting with Chamber Washington Urban Affairs Representative. 7. Briefing on Revenue Sharing Quern will invite Paul Myer to next working session to brief on Revenue Sharing. 8. Allied Services Steve will have more detailed work prepared examining Allied Services and Joint Funding Simplification Act. 9. Tax Incentives Quern will get further information on Administration's tax incentive proposal. Urbangolicy THE WHITE HOUSE At WASHINGTON April 15, 1976 Let two To yood - Review, when MEMORANDUM FOR: JIM CANNON ART QUERN Hitor week, are. FROM: we SUBJECT: Discussion Paper on Cities June It seems to me that our general discussion of urban issues has produced a number of threads of thought which are worth summarizing and pursuing. The following brief rundown of these "threads" is offered only as a means of promoting our continued explorations of particular urban questions. 1. Private Sector Involvement Dut you England Corporations What is it that leads a corporation to commit itself to the betterment of an urban area. Banks is B. in my!? -- What roles do banks play in assisting urban areas to weather fiscal crisis and restore fiscal stability. 2. Expanding Revenue Base A. Annexation -- What are the various possibilities, advantages and disadvantages of annexation. B. "Free trade zones" -- Whether this concept offers any advantages to urban areas. GERRLD 8. FORD 2 3. Use of Federal Funds good -- We are exploring the "allied services" concept for cities to see if we can enable much greater flexibility in their use of Joint Federal funds. In effect this is an "urban block grant" concept. 4. Economic Development I'd like to an a A. We are examining current EDA policies toward cities. defunter of (2) A Policy B. We are reviewing a type of urban development bank concept. 5. Welfare Reform -- The could welfare offer reform some relief studies to we cities. are engaged in Pight 6. General Revenue Sharing -- We are monitoring the current deliberations on the Revenue Sharing issue as it relates to cities. 7. Gauging Fiscal Health A. Steve and Pat have compiled basic information on the major cities as judged by outside groups. B. Norm Hurd's intergovernmental finance project could assist by identifying better tools to be used in gauging fiscal conditions of cities. 8. Current Federal Programs A. HUD -- Carla Hills will be meeting with us soon to review HUD's approach to urban questions. B. Transportation -- Judy Hope has been reviewing "urban" questions with DOT staff. CC: Art Fletcher Steve McConahey Pat Delaney GERALD LIQUEST = FORD Lynn May Allen Moore