Although controversy surrounds Pittsburgh Mayor Luke Ravenstahl, whose administration is under fire amid a federal investigation of the city’s police department and the firing of its chief, bond analysts praise the mayor for helping guide the city to financial recovery.
Ravenstahl, who became mayor at age 26 in 2006 when predecessor Bob O’Connor died of brain cancer while in office, said last Friday he would not seek re-election this year.
He cited fatigue from the job. “Many will speculate about my motives and conclude that the investigation is the reason for my decision,” he told reporters. “It’s not, because I’ve done nothing wrong.”
Ravenstahl, who won a special election in 2007 and a general election in 2009, said he plans to finish his term.
The Federal Bureau of Investigation is examining police department financial records. Ravenstahl, who had acknowledged to reporters that he has spoken with the U.S. Attorney’s office and the FBI about the probe, fired Police Chief Nate Harper on Feb 20. The previous week, FBI personnel removed financial documents from police headquarters and from the Pittsburgh police federal credit union.
Pittsburgh last fall applied for the state Department of Community and Economic Development to remove the “distressed” tag – and stigma – and exit the DCED’s workout program for such communities, known commonly as Act 47. Ravenstahl, who met with DCED officials in November, said exiting Act 47 would remove a “black cloud.”
Alan Schankel, a managing director at Janney Capital Markets in Philadelphia, gave Ravenstahl’s administration high financial marks.
“I think Pittsburgh has made significant financial progress in most of those years. Given the challenge of big cities, and big Rust Belt cities, he’s done pretty well. They’ve addressed the pension problem, though it still needs a lot more work. But it succeeded in keeping the state away.”
In January 2009, Pittsburgh’s combined pension plans were funded at merely 34%. To avoid state intervention, the city boosted its pension funding levels to 62% as of September 2011 by earmarking $736 million of parking tax revenues as a new funding source through 2041.
In January 2012, Moody’s Investors Service and Standard & Poor’s revised their outlooks on Pittsburgh’s general obligation bonds to stable from negative after Ravenstahl and other city financial leaders pitched the big three rating agencies in New York – against the advice of the city’s other overseer, the Intergovernmental Cooperation Authority.
Moody’s rates Pittsburgh A1, while Standard & Poor’s and Fitch Ratings assign BBB and A ratings, respectively.
“I’m proud that we’re no longer bankrupt,” Ravenstahl said Friday. Actually, Act 47 is a pre-bankruptcy intervention and even if it exits, Pittsburgh must still answer to the ICA, which oversees finances in Pennsylvania’s second-class communities. The state categorizes its cities by population tiers.
Keeping ICA oversight makes sense, according to Schankel. “I’m much more familiar with Philadelphia and in that case it worked out fine. It helps cities like these get through the tough issues,” he said.
David Fiorenza, the former chief financial officer of Radnor Township, also praised Ravenstahl.
“The mayor endured one of the worst national recessions in history with the continued economic redevelopment in the downtown area and some of the neighborhoods. He was very supportive of the Business Improvement District and worked with the Urban Redevelopment Authority on many projects during his tenure,” said Fiorenza, a professor at Villanova School of Business.
The open-seat mayor’s race may draw additional candidates. City Controller Michael Lamb, a frequent critic of Ravenstahl on financial matters, and City Councilman Bill Peduto have already announced they would run.
