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Akron Sewer Smack Down
The plan to leverage a lease of the Akron sewer system to fund a scholarship program still looks like a loser. After Monday's council meeting in which numerous proposed charter amendments were given up or down votes the odds of the proposal being implemented as envisioned have decreased. As reported in the ABJ the propsals veered of course at times. Council ended up voting down large portions of the Mayor's thrust to make the lease happen. The measure related to allowing the City to spin off city infrastructure to larger governmental entities actually fit into Plusquellic's vision of consolidating (read regionalizing) local governance. What we're left with in teh wake of the this latest round of bickering is a flawed approach to making the Akron education plan work.
Uses of Funds
The idea for an educational fund to enable the youth of Akron to attend college or vocational schools has merit. We all agree here that education is the great equalizer and the best economic development engine is job creation. The good mayor likes to refer to the Kalamazoo Promise as a way to move forward on meeting these needs. As his media release states even the crazies at the Wall Street Journal have admitted to the benefits of free college education plans like the one in Michigan. I would agree that a well thought out and extensive plan of this sort could be just as advantageous in Akron. There are two catches to the Akron proposal that are potential deal breakers. The first is the thirty year residency requirement for the students that use the plan to attend college. The plan stops being free if the participants take the money and run. Considering all of the issues around employee residency requirements and Ohio cities this feature may be troublesome.
The other sizable hurdle for the Plusquellic's plan is of course funding it. The Kalamazoo plan is funded through private donations from multiple sources. The Akron plan is not based on this concept. That leave the controversial approach of selling or leasing a public asset to generate the dollars to fund the program.
Sources of Funds
The concentration from the Mayor's office has been on the universally appealing aspects of providing higher education to our youth. The ability of a lease of a piece of public infrastructure (smallish in size relatively speaking, it's no PA turnpike) to generate the millions of dollars touted seems nefarious. I'm waiting to see an overview of a proposed financial structure that shows the net savings (which would be used for funding said plan) from lease back agreement would bring in enough. Has someone at Morgan Stanley (they love these things) provided the City with a viable financing plan? Have any of the companies, most of them foreign, that specialize in infrastructure leases expressed any interest?
Until there is more information provided by the City on the sources of funds this thing is not even realistically going to deliver as promised. There are plenty of us finance geeks out there that would love to see some numbers on the lease end of this proposal. For now I'll refer back to my previous posts and stick with the time tested free lunch limitation of all financial transactions.
Uses of Funds
The idea for an educational fund to enable the youth of Akron to attend college or vocational schools has merit. We all agree here that education is the great equalizer and the best economic development engine is job creation. The good mayor likes to refer to the Kalamazoo Promise as a way to move forward on meeting these needs. As his media release states even the crazies at the Wall Street Journal have admitted to the benefits of free college education plans like the one in Michigan. I would agree that a well thought out and extensive plan of this sort could be just as advantageous in Akron. There are two catches to the Akron proposal that are potential deal breakers. The first is the thirty year residency requirement for the students that use the plan to attend college. The plan stops being free if the participants take the money and run. Considering all of the issues around employee residency requirements and Ohio cities this feature may be troublesome.
The other sizable hurdle for the Plusquellic's plan is of course funding it. The Kalamazoo plan is funded through private donations from multiple sources. The Akron plan is not based on this concept. That leave the controversial approach of selling or leasing a public asset to generate the dollars to fund the program.
Sources of Funds
The concentration from the Mayor's office has been on the universally appealing aspects of providing higher education to our youth. The ability of a lease of a piece of public infrastructure (smallish in size relatively speaking, it's no PA turnpike) to generate the millions of dollars touted seems nefarious. I'm waiting to see an overview of a proposed financial structure that shows the net savings (which would be used for funding said plan) from lease back agreement would bring in enough. Has someone at Morgan Stanley (they love these things) provided the City with a viable financing plan? Have any of the companies, most of them foreign, that specialize in infrastructure leases expressed any interest?
Until there is more information provided by the City on the sources of funds this thing is not even realistically going to deliver as promised. There are plenty of us finance geeks out there that would love to see some numbers on the lease end of this proposal. For now I'll refer back to my previous posts and stick with the time tested free lunch limitation of all financial transactions.
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