I’m taking an extended break from blogging for personal reasons but didn’t want the passing of former Lowell / Cambridge City Manager Jim Sullivan to go unnoticed.
When we talk about “Professional Managers” Jim Sullivan set the bar and it was because of Jim Sullivan and the salary he demanded to take the Lowell job and then to return to Cambridge that many of today’s Manager’s receive the compensation they do. Mr. Sullivan was not shy about what he felt the value of his and any Managers service was worth and it was because of Jim Sullivan that today’s Manager’s are so well compensated.
Mr. Sullivan also recognized that to truly succeed you need to surround yourself with people who were as smart or smarter than yourself and listen to what they suggest. He also was a smart politician which is why he lasted so many years in Cambridge and his assistant current Cambridge Manager Healy has lasted and prospered.
It was also because of former Manager Sullivan that this blog received so much attention and acceptance. He wrote a lengthy letter to the Editor regarding the current City Manager and Manager Lynch answered my email and allowed me to post his response to Mr. Sullivan.
That caught the attention of Warren Shaw who was kind enough to invite me on his Saturday Morning show and publicize the blog (and then worked me into a regular on the show) and John McDonough to invite me often on his City Life show and my fellow bloggers like RichardHowe.com and LeftinLowell who added my Blog to their roll and encouraged people to read it by referencing and linking to it.
I had the great pleasure of spending 3 hours with Mr. Sullivan and his lovely wife to discuss his time in Lowell and Cambridge, Lowell politics, his great friend former Mayor Armand LeMay and Lowell in general along with his response to Mr. Lynch’s comments.
One of the things I found most interesting was this nugget from Manager Sullivan, He was sitting at home waiting for a referendum in Cambridge about whether he should get his job back when Lowell City Councilor Paul Tsongas talked him into accepting the Lowell City Manager position for $25,000 and that prior to his departure in Lowell , Sullivan recommended that his assistant city manager, Bob Healy be chosen as his successor The city council instead chose former state representative Paul J. Sheehy and Healy accepted the assistant city manager’s job in Cambridge.
It makes me wonder what might have been if that council saw in Bob Healy what Jim Sullivan and ultimately the Councils in Cambridge saw. Paul Sheehy’s tenure was very short.
I am reposting the article I wrote from that visit which was Mr. Sullivan’s response to Manager Lynch and offer my Thanks to Jim Sullivan and condolences to his family and friends especially Armand LeMay who I interviewed in 7th grade when he was Mayor and who fostered my interest in local politics.
Gerry: Just returned from a remarkable visit with Former Manager Jim Sullivan. I will post more on that later but for now here is Mr. Sullivan’s response to City Manager Lynch.
“It should come as no surprise that I have been critical of many of the financial transactions undertaken by the City Manager and the City Council in the last five years. What does come as a surprise is that for the first time City Manager Lynch has been willing to respond to some of my criticisms in writing.
My criticisms have always been in writing so now the Taxpayers of Lowell can judge which one of us is telling the truth. It should be evident that since Manager Lynch and I disagree– one of us is wrong.
Let’s look at the financial facts.
To determine the increase in property taxes during the Lynch years we must use as a base the level of property taxes during the last municipal budget filed by the Cox Administration for fiscal 2006.
In fiscal 2006, the total property tax levy was $77,280,078.
In fiscal 2007, City Manager Cox was appointed on August 15 ,2006 and examined the Municipal budget that had been approved and he determined that the budget was not in balance and recommended an increase in property taxes and fees because the shortfall he believed was approximately 8 million dollars. Since by this time it was December 2006 and there was only 6 months to go in the fiscal year, the magnitude of the total increase recommendation was about $16,000,000.
This would enable the city to obtain $8,000,000 by June 30, 2007.
The corrected fiscal 2007 Municipal Budget thus became the responsibility of the Lynch Administration. The property tax levy increased by $8,260,584 to $85,540,662.
In fiscal year 2008, the property tax levy increased to $90,856,310.
In fiscal year 2009, the property tax levy increased to $95,520,809.
In fiscal year 2010, the property tax levy increased to $100,280,537.
The fiscal year 2011 property tax levy is projected as $104,407,615.
Thus in the five years of Municipal Budgets created and approved by the City Manager and the City Council, the property tax levy has increased by $27,127,537.
In his written response to my criticisms Manager Lynch states Jim Sullivan “once again misrepresents and misinterprets history in an attempt to make the argument that Lowell is recklessly spending taxpayer money at an alarming rate. Nothing could be further from the truth.” An increase in the property tax levy of $27,127,537 in 5 years is certainly alarming to most taxpayers. He can’t deny that the tax levy for the years in question are absolutely accurate..
City Manager Lynch in his response attempts to describe my performance in Cambridge in 1974 which was 36 years ago. He has little understanding of the complexities of the City of Cambridge which runs both a Municipal Hospital and Levels 1,2,3 Nursing Home. He doesn’t bother to state than in my last three years in Lowell, I reduced the tax rate three years in a row and in my return to Cambridge, I reduced the tax rate three years in a row.
He doesn’t mention the fact that when I returned to Cambridge in 1974 that the fiscal condition had deteriorated and Cambridge had a Negative Free Cash Position of over five million dollars. I immediately set about turning the financial condition around.
In an Article in the Christian Science Monitor describing how “Sullivan helps turn Cambridge finances around”. The author Emille T. Liverey
stated “His efforts in that direction began in April 1974 when he returned to the Cambridge position that he had held from 1968 to 1970.
The City’s finances were in such disarray that it was not until six months after the fiscal year ended that the balance sheet even became available. And then it was revealed that the city had run up a deficit of nearly 5 million dollars.”
“Turning the situation around, Mr. Sullivan wound up the first year of his new administration with a 3 million dollar surplus. In an inflationary year he cut the tax rate for fiscal 1976 by $5.50.”
“The two chief ways to hold down a tax rate are to reduce municipal services by employee cutbacks or to generate revenue from sources
other than property taxes.
“Taking the latter course Mr. Sullivan has become a relentless pursuer of tax delinquents and an aggressive “grantsman” – chasing down every means of increasing the city’s income from state or federal sources.”
“When he returned to Cambridge in 1974, there was almost $8 million due the city in unpaid real estate and personal property taxes. By the end of 1975, the city’s financial director had collected over $3 million which explains the surplus that year.”
If City Manager Lynch objectively reviewed my experience, he might have learned something about managing a city in financial distress.
I continued my restructuring of the City’s financial system and it has continued in place. I might add that the City of Cambridge currently has a free cash position currently of $84,000.000 and a stabilization fund position of $54,000,000.
City Manager Lynch certainly did not learn much from his review of my background as Lowell has a minus free cash position of almost $500,000.
City Manager Lynch in his response to my criticisms states “Mr. Sullivan continually raises the issue of the Early Garage as an example of excessive borrowing. This decision was made before I became City Manager but more importantly it was good decision that has paved the way for hundreds of millions of dollars of private investment and is operationally sustainable if we look as the parking program of the city as a system and not as a stand alone operation”
The bond prospectus for the garage is dated September 15, 2006, and if I am not mistaken City Manager Lynch was appointed City Manager on August 15, 2006.
He therefore can not deny his involvement from the beginning with the construction and management of the Early Garage.
The total of Principal and Interest amounts to over $46.000, 000 over the life of the bond. This means that over 20 years the average annual payment for principal and interest is $2,300,000 a year or $180,000 a month.
To pay the principal and interest alone would require a revenue stream of $180,000 a month. For fiscal year 2010 Parking revenues were less than $40,000 a month. For the current fiscal year 2011 the budget estimates annual parking revenue at the Early Garage of $439,000.
The Early Garage fell short of Revenues necessary to pay principal and interest on the garage by $1,800,000 in fiscal 2010 and is projected to be short another $1,800,000 this fiscal year. This does not take into consideration the necessary revenues for maintenance, employees, or security. There is no way this garage is not a financial burden to the
Taxpayers of Lowell and will continue to be. Just to pay the bonded indebtedness would require all 900 spaces being rented for $200 a month. The City currently charges $65 a month for parking.
City Manager Lynch can not deny his involvement in this financial mess for he has been involved since the construction has gotten underway.
The Hamilton Canal Project consists of approximately 15 acres. It should have been developed as an industrial and commercial center to create job opportunities and a stronger tax base for the community. Instead the City Government is allowing the development of condominiums and artist lofts for housing. The City should have worked with the University to attract companies interested in the nanotechnology research to be undertaken by the University.
The City Manager signed a lease in 2009 to lease the Ball Field to the Spinners for $150,000 a year for 10 years. The Facility cost $15,000,000 to build with the Commonwealth financing $10,000,000 of the cost, the City bonding $2,000,000 of the costs, and contributing about $1,000,000 of the Riverwalk funds and the University putting up $2,000,000 for its construction. The $150,000 a year rental is one % of the cost of construction. It would take 100 years to recover the principal of the costs and that would not include the interest on $15,000,000 for 100 years.
No prudent investor would ever consider a one percent return on investment. However the City Manager did. To make matters worse, the agreement was entered in 2009 between the Spinners and the City, but in 2008, the Spinners had a firm examine the facility. It was found that about a million dollars worth of repairs were needed to fix up some physical problems. Why should the City of Lowell be responsible for the repairs, when the Spinners were tenants and responsible for maintaining the facility for the previous ten year?
The City of Lowell has established a number of Enterprise Accounts to take them out of the General Fund and have them self sustaining with their support to come from fees.
Bonded Indebtedness and operating costs should be paid for by the fee systems established. Unfortunately however most of the funds are in a deficit position. By a deficit position, it means that their revenues are not sufficient to pay their costs. If the fees are not sufficient, then the
costs must be made up from property taxes because city costs and revenues must be balanced.
The Water Enterprise Account from page 144 of the 2011 Municipal Budget of
for 2011 minus $1,008,939
for 2012 minus $3,451,982
for 2013 minus $6,747,345
for 2014 minus $10,199,615
for 2015 minus $13,716,028
The Wastewater Enterprise Account from page 141 of the 2011 Municipal Budget of
for 2011 plus $1,535,732
for 2012 minus $5,601,168
for 2013 minus $14,376,172
for 2014 minus $24,785,282
for 2015 minus $36,972,548
The Parking Enterprise Account from page 143 of the 2011 Municipal Budget of
for 2011 plus $46,926
for 2012 minus $284,283
for 2013 minus $623,283
for 2014 minus $970,595
for 2015 minus $1,328,924
The free cash account from page 140 of the 2011 Municipal Budget
Shows a free cash deficit of For 2011 minus $490,543
How can the Taxpayers of Lowell possibly accept increased fees or taxes in the near term to eliminate these unfunded liabilities?
The City Manager does not seem to realize that the average per capita income in Lowell is only $15,500 a year and the unemployment rate is 11.5 per cent.
Look at the multitude of foreclosures listed in the back pages of the Lowell Sun. Check your own tax bill.
I am a private citizen who has been City Manager of Cambridge 11 and 1/2 years and City Manager of Lowell 3 and 1/2 years. I have a Bachelor’s degree and a Master’s Degree from B.C. and a Doctorate from Suffolk University. I was a Senior Research Assistant at the Urban Systems Laboratory at the Sloane School of Management at MIT and have lectured at Harvard University and Boston College on Municipal Government.
I was the President of the Massachusetts League of Cities and Towns in 1978. I was the President of the Greater Boston Chamber of Commerce from 1981 till 1991. I have lived in the City of Lowell since 1970 to the present date and I am not interested in public service. I have had that experience for most of my life. I believe that the Citizens of Lowell deserve to know why their taxes are going up and why.
The Arena, the Ball Park, and the Jam Plan are projects that should never been undertaken without the utilization of a cost benefit analysis. They have not and will not improve the financial condition of the City. Such investments should be made by the private sector and encouraged by the governmental and financial community.
The City Government of Lowell should realize its financial limitations and take advantage of the University’s and Middlesex’s talent and contacts with the economic and financial community.
The University has a Chancellor who has an extensive political background and has demonstrated executive skills and a willingness to work with the City. Take advantage of all that he has to offer.”
James L. Sullivan