Pondering the Past

My weekly NDN article published 11/11/11.

There are times in my life that I look back and ponder some decisions I’ve made regarding my career and education. Those would include my decision to stay “close to home” after high school vs. “going off” to college. They would also include my decision to NOT stay in school and pursue an advanced degree of some sort (MBA, Law Degree, etc.) after receiving my Bachelors’ degree from MSSU. But the one I ponder the most was my decision to NOT pursue a career in the US Military and serve my country in one of the branches of service.

Now that’s not to say I didn’t consider it. I did visit with recruiters after high school. I also spoke to some college friends who were in college ROTC programs. But with bad eyes (i.e. not 20/20) and knowing that my vision “issue” would preclude me from pursuing a career as a military aviator, I didn’t even consider other options. Looking back, I wish I would have considered it a bit more.

Yesterday, I had the privilege of presenting the local Missouri National Guard training facility at Fort Crowder with a proclamation recognizing their contributions and service to Neosho and our military. During the event, I got to meet a number of enlisted personnel and officers who work to train our soldiers as they prepare to defend our country and our freedoms around the world. It was both exciting – and humbling – as I (and other elected and Chamber of Commerce members) saw firsthand the technology and resources used to train our troops. We heard about IED’s, saw a trainer for Humvee rollovers, and even experienced simulated combat using an arcade-like training simulator to fire M-16’s and other weapons at the enemy.

In the simulator, ten of us took on the task to battle armed enemy forces coming from buildings. While the simulator didn’t tell me how many times I was shot and injured (or worse) as I defended my position, I did have the highest kill percentage of the group (my good friend and military veteran Sy Werner was right behind me.) While I don’t know if my score was “good”, 37% of the enemies I engaged were hit. For me, as someone who never thought I’d have the opportunity to fire a round from a military weapon, I was pleased. But more than that, it gave me a renewed respect and admiration for all of the men and women in our military who have, are, or will work to protect the freedoms and the country that we value so much.

Thank you to everyone at Fort Crowder (especially Chief Shields) for providing me with an experience I will remember for a lifetime. We have a great group of men and women working right her in Neosho who directly impact the lives of our soldiers all over the world. It’s a pleasure to know them. It’s a pleasure to honor them. And it’s reassuring to know they and many others are there for us – 24/7 – sacrificing their lives to protect, serve and secure our country.

Happy Veterans Day! Until next time, stay the course and God bless!

Sales Tax Revenues Remain Strong

For the first two months of FY2012, Neosho’s sales tax revenues are up 21% over the same time last year.  For the month of November, 1% general sales tax revenues were $156,247.12 (compared to $128,397.72 in 2011).

Sales tax revenues have remained strong since July of last year.  Conventional wisdom says revenues are up due mainly to the impact of the May 2011 tornado in Joplin.  The impact includes both the temporary displacement of families to our area along with the disturbance to available retail outlets in Joplin – primarily the Wal-Mart and Home Depot stores located on Rangeline Road.

That Water (Billing Policy) is Refreshing!

I saw some jaws drop Tuesday night as our new Finance Director, Jane Obert, made her first formal presentation to your city council. What went wrong you ask? Honestly? Absolutely nothing! It was one of the most professional, concise, to-the point, factual presentations that I’ve ever seen brought to your city council. And it’s yet another example of how we are changing the tone of government and working to improve oversight and customer service in our city.

Among other things, Jane’s report focused around her concerns that our city’s water billing policy was simply customer UNFRIEDLY! Specifically, until now, if your water bill due date was on a weekend or a holiday, the city expected you to pay it EARLY. That policy (which I complained about over 2 years ago to no avail) was certainly contrary to most business policies and practices today (including the IRS!) And thanks to Jane and her “common sense” approach this issue, that policy is no more!

Starting with bills due on October 15^th, 2011 (which was a Saturday), if the due date falls on a non-business day (i.e. weekend or holiday), you as a water customer now have until the end of business on the FOLLOWING business day to pay your bill. In other words, if your bill was due on a Saturday, you now can pay it the following Monday without penalty. We’ve also increased the frequency of when our payment drop box is checked for payments. Effective immediately, all payments dropped by 4:00pm will be applied the same business day. Again – a change that some would say is a “no brainer”!

So to those who are watching, make note that we are following through on our commitments to improve the service offered by your local city government. When we find something that is contrary to the conventional wisdom, we’re now working to change whatever that “something” is. If we identify areas that common sense would tell you need to be improved, we’re improving them. And we’re doing it for no other reason than because it’s the right thing to do.

If you’re out and about at the Neosho Wildcat football game tonight, make a point to stop and say hello. I’ll be working concessions during the 2^nd half at the main concession stand. And to our Wildcat football team, good luck as you battle the Tigers from Ozark! It should be a great game.

Until next time, stay the course and God Bless!

Officials Apparently Knew About Problems at Solyndra

Below are a few paragraphs from today’s NY Times article on the ongoing investigation into the government’s loan guarantees to Solyndra.  They are very telling as it relates to how the government used wasted millions in tax payer funds.  Emphasis is mine.  The entire article can be found here.

• “One of our solar companies with revenues of less than $100 million (and not yet profitable) received a government loan of $580 million,” the investor, Brad Jones, an executive at Redpoint Ventures, wrote in December 2009 to Lawrence H. Summers, then the president’s chief economic advisor, referring to Solyndra. “While that is good for us, I can’t imagine it’s a good way for the government to use taxpayer money.”
• “The memorandum, prepared for Democrats who serve on the House Energy and Commerce Committee, details how officials at the White House considered scaling back or even terminating the loan guarantee program, because of concerns over how it was being managed. The dispute went all the way to the president, the memo says, but there is no evidence that he made any changes in the structure of the loan program.”
• “The most alarming issue to the White House official was growing evidence that Solyndra, which filed for bankruptcy last month, was headed toward a collapse even in early 2010. It led the Office of Management and Budget officials to predict widespread problems with companies getting loan guarantees.”
• “What’s terrifying is that after looking at some of the ones that came next, this one started to look better,” said one April 2010 e-mail, referring to the Solyndra decision, and others that followed. “Bad Days are coming.”

Town Hall Turnout Improves – Was it the Food?

Thanks to everyone who came out last night to the quarterly Town Hall meeting held at the Civic Auditorium.  Absent meetings last summer during the discussions of a property tax increase, last nights meeting was one of the best attended so far.  Was it the meat and cheese trays from Family Market?  Maybe.  Was it the cookies from SC Bakery?  Probably!

But regardless of the reasons, thanks to everyone who came out.  While I can’t confirm the menu for December, Big R’s is a top contender!

Having said all that, the turnout was not what was typical in the past – past meaning prior to my election in 2009.  In February of 2009, the Neosho Daily reported that 101 people turned out for the first-ever “State of the City” address by then mayor Howard Birdsong.  Being in attendance at that meeting, the crowd makeup was much different.  There were a number of business owners there.  Chamber members.  Realtors and bankers too.  Not so last night.

But regardless of the makeup, it was a good time for all and I appreciate all who took the time to make it by and hear what’s happening in your city.

Durable Goods Orders Down in August

New orders for manufactured durable goods in August decreased 0.1 percent, to $201.8 billion. Excluding transportation new orders also declined 0.1 percent. Overall shipments fell 0.2 percent, while capital goods shipments increased 2.7 percent. Unfilled orders and inventories both rose 0.9 percent.

• Advance Report on Durable Goods (August 2011).pdf

Business Week Article Questions “Big Box” Subsidies

An on-line article from Business Week questions whether subsidizing Big Box retailers for development results in net gains in jobs and overall retail increases.

One paragraph reads as follows:

“A recent study, however, indicates that subsidizing retail development produces neither job gains nor new tax revenue. Earlier this year a consortium of local governments in the St. Louis metro area found that cities and counties in the region had diverted more than $5.8 billion in public tax dollars to finance private development. More than 80 percent of these funds supported the construction of new chain stores and shopping centers.

Yet the region has seen virtually no economic growth. “The number of retail jobs has increased only slightly and, in real dollars, retail sales per capita have not increased in years,” the authors of the study wrote, noting that many of the region’s municipalities are now broke. According to the study, more than 600 small retailers have closed in the St. Louis metro area. The resulting job losses have offset the job gains from the new development.”

The link to the entire article in here.

Neosho’s MAP Scores Continue Upward Trend

While some schools around the area were down a bit on MAP scores, Neosho continued to show improvement over their previous year’s numbers.

In 2011, math improved from 57.1% to 58.9% while Communication Arts went from 56.2% to 58.0%.  Those numbers represent the % of students scoring as proficient or better.

Neosho’s scores are higher than Carthage in both areas.  Neosho and Carl Junction are split with Neosho leading in Math while CJ leads in Comm Arts.  Both Webb City and Joplin remain higher than Neosho, but those two schools saw their there scores DROP vs. 2010. 

You can check out all of the scores at the DESE website. 

Oh How Things Can Change In One Year

My Friday column in the NDN:

As I mentioned to you last week, your city council is now reviewing the 2011-2012 operating budget in preparation of final approval sometime in September. This past Tuesday, the council and city directors had our first chance to have open discussions regarding a majority of the budget plans for next year. I’m very pleased to say that things are looking far better than they did just 12 months ago.

Most notable to me is the first planned pay raise for our employees since 2008. The planned 3.5% cost-of-living increase for 2012 is in contrast to a 0% increase last year and a 3.75% DECREASE in 2009. We’ve got a great group of folks who work both in the public eye as well as behind the scenes to keep our city functioning. They are very deserving of this increase.

Other notable highlights include the planned addition of two more police officers to our force in October. Combine that with the two officers added last month and we’re making some good headway to restore a force that saw almost half of its headcount cut just one year ago. Our fire department should also see the final two firefighters return to the city’s payroll in 2012. Thanks to the 24-month SAFER grant, the fire department is now back to full force.

One last note of good news is that overall sales tax revenues for the city continue to show some positive, albeit slight, increases from this time last year. While the overall impact will be small, it’s a welcomed sign that things are slowly improving and the local economy is doing better.

As with any budget, there are some challenges on the horizon. Golf course revenues are lagging behind where they need to be. Options are still being explored to help that cash drain to the city, but there will be no quick or easy fix. We also have to plan for the end of the SAFER grant funding in May, 2013. That grant allowed us to restore our fire station staffing, but the city will once again be responsible to start paying those salaries 18 months from now. We’ve got time to plan, but the $300K+ annual cost is a sizeable amount that will require some hard work to cover. Capital needs for fire truck and police car repairs/replacements are also on the list for 2013. Our crews have done a great job keeping our equipment working longer than its expected lifespan, but even the best kept equipment will have to be replaced at some point.

Overall, it was a good session and a positive change. Your city staff has worked hard to keep costs low and expenses under control. We’ve got a long road ahead, but the financial disaster of 2009 is now in our rearview mirror and I’ve very pleased to tell you that we are heading in the right direction once again!

Until next time, have a great week. Best of luck to our football boys tonight against Bolivar in their home opener. GO WILDCATS!

Joplin Sports Authority Notes Positive Economic Impact

The Joplin Sports Authority released their 3rd quarter results and they were impressive.  Economic impact for Joplin was posted at $504,675 for the quarter with 5,536 visitors coming into Joplin for events.  Major events included baseball and softball tournaments as well as a tumbling and trampoline competition.

For the year, the JSA shows an overall economic impact of $1,073,944 to the area.  Given JSA’s spending of $200,155 during the same period, they show an ROI of 4.4 (or 436.6%) on their investment.

The full report showing the positive impact of their sporting events can be found here.

Small, Locally-Owned Businesses Better for Economic Development

From www.dailyyonder.com

Researchers at Penn State University have found that smaller, locally-owned businesses are better for growing incomes in a county than the presence of larger companies or big box stores owned outside the county.

Counties with more small, locally-owned businesses have faster growing incomes than those places with big box stores and large firms owned by those outside the community. Here is a picture of the main street in Red Lodge, Montana.

It does matter whether a business is locally owned.

Researchers at Pennsylvania State University have found that counties with more small, locally owned businesses have stronger economic growth than communities with larger businesses owned by outsiders. "Local ownership matters in important ways," said economist Stephan Goetz who was co-author of the study with David Fleming, a Penn State graduate student. "Smaller, locally owned businesses, it turns out, provide higher, long-term economic growth."

Larger firms owned by people outside a county depress growth, the researchers found.

Goetz and Fleming looked to see if per capita income growth in counties was affected by the size and ownership of local businesses. The two studied U.S. counties during the period from 2000 to 2007.

The effect of having locally-owned, small firms (with between 10 and 99 employees) on a county's economy was significant. There was a strong, positive relationship between the presence of smaller, locally-owned firms and faster growth in incomes.

The presence of larger firms owned by those outside the county had the opposite impact. Those counties had slower growth in incomes. Goetz and Fleming found that this impact extended to big box retail stores, such as Walmart and Home Depot.

"Although these types of (larger, non-local) firms may offer opportunities for jobs, as well as job growth over time, they do so at the cost of reduced local economic growth, as measured by income," Goetz and Fleming wrote. "Small-sized firms owned by residents are optimal if the policy objective is to maximize income growth rates."

One of the reasons locally owned firms are better for county economies than big box stores and larger, out-of-town corporations is that these larger firms outsource many services that the smaller companies buy within the community, Goetz explained. They use local accountants and wholesalers while big firms do this work themselves.

Small businesses and local start-ups not only buy locally, but they tend to spur innovation and productivity within the county.

"This is really a story about start-ups," said Goetz. "Many communities try to bring in outside firms and large factories, but the lesson is that while there may be short-term employment gains with recruiting larger businesses, they don't trigger long-term economic growth like start-ups do."

Goetz said his findings might provide a better strategy for local economic development officials. Encouraging local businesses would be better for growth than recruiting larger firms from outside the county.

"We can't look outside of the community for our economic salvation." Goetz said. "The best strategy is to help people start new businesses and firms locally and help them grow and be successful."

Goetz is the director of the Northeast Regional Center for Rural Development. The Goetz and Fleming research appears in the Economic Development Quarterly.

Pay Study Shows Sum Increases Planned for 2012

As the city considers the new budget and giving employees their first raise (vs. cuts) in 2 years, I thought this article was timely.

From the AP:

NEW YORK (AP) -- A new survey says salaried U.S. workers can expect another year of modest raises in 2012.

After increasing salaries by 2.6 percent this year and last year, companies are planning a 2.8 percent bump in 2012, benefits and human resources consultancy Towers Watson reported Monday.

That's somewhat smaller than raises in the last decade. From 2000 to 2006, the year before the Great Recession began, salaries rose an average 3.9 percent for workers who were not executives.

And the modest bump may not help add much buying power for shoppers. In the 12 months through July, prices for consumers have risen 3.6 percent, according to the government's latest calculations.

Salary increases have been small, even though many companies are sitting on huge cash stockpiles. They're being conservative with permanent salary hikes because of uncertainty about the economy and memories of the deep cuts during the recession, said Laura Sejen of Towers Watson.

Because of worries about the economy, companies are trying to avoid "fixed costs," such as permanent payroll increases, Sejen said. Hiring has also been tepid this year. More than 9 percent of the country's workers, or 13.9 million people, are unemployed.

Instead, companies "are trying to pure more emphasis on the variable components of compensation," she said. That means bonuses, which make up a far bigger chunk of total pay for executives than for other salaried workers -- 41 percent this year, versus 10 percent.

Salaries for executives are also expected to rise 2.8 percent next year, the survey said.

The human resources company conducted the survey in June and July, polling 773 U.S. companies.

My Softball Girls for 2011

I’d forgot to post a picture of my 2011 Marco Softball girls team.  We had a great year.  Proud of all of them!

August Sales Tax Up – Joplin Tornado Likely Cause

The 1% sales tax deposits received this week from the state were up 19.25% over the same time last year.  Monthly receipts were $151,415.55 (vs. 126,970.44 in 2010.)  The major increase is likely due in part to the May tornado in Joplin as retail sales were pushed to outlying areas not impacted by the storm.

For the year, the 1% sales tax is 3.28% ahead of last year at $1,871,794.74.

One month remains for sales tax collections in this fiscal year which ends Sept. 30.

Not In Our Town!

Saturday morning’s arson fire at the Neosho city pool has raised the stakes of taking action against the criminals who are causing havoc in our town. The city is committed to find and prosecute those responsible to the fullest extent of the law. For me, I’m doing my part by adding a $1000 to the reward pool for information that leads to the arrest and conviction of the coward or cowards who did this.

As an elected official, I’ve grown accustomed to reading about the occasional break-in here and some vandalism there, but to set fire to a public building that serves all of Neosho was a cowardly act. And this fire doesn’t just shut down a pool for a few days. It impacts everyone in our town in one way or another. Whether it’s the kids looking for a few more days of summer fun before school, the lifeguards seeking a few more weeks of pay for their summer job, or the individual tax payer who will now have their taxes spent to repair a building needlessly damaged…we are all impacted.

But for many, it goes beyond that. It begins to cross an invisible line of tolerance and invades the space that we call “home”. As someone who was born in Neosho, I’m very angry about the events of Saturday morning. But I take solace in that our Neosho PD will find those responsible. I call on everyone in this town who has seen enough of the crime and vandalism in our parks and across our city to stand together and say “no more”. Whether it’s a dime or a dollar or a strong word of encouragement, please contribute to the efforts to find these cowards and bring them to justice. Take and stand and send a message – “NOT IN OUR TOWN!”

Debt Load is Substantial…But!

After Monday night’s audit, I’ve fielded a number of questions about the city’s debt.  And it’s been fairly easy to discuss because as a council member (and your Mayor), debt discussions have been happening in our city for over a year – long before the audit confirmed our concerns about issues such as the golf course.

Here are a few facts and comments I have on the debt issue and some clarifications that might help you understand more of what that debt load is and what it means to you as a citizen.

As of today, the city has a debt load of approximately $14.27 million (that’s the principal balance today).  That number comes from the debt schedules for the six (6) debts currently being paid by the city.  This debt load does NOT include any Water/Wastewater projects because that debt is covered and paid for by water/sewer collections.

The first instinct (mine included) is “WOW – that’s a lot of debt!”  Well, it is…but. (There always seems to be a “but” in politics).  Of that $14.27 million debt, $10.18 million is supported (and currently being paid on time) by sales tax revenues…voter-approved sales tax revenues.  A big chuck of that (approximately $8 million or 80%) is for recent voter-approved projects like the Civic Center, Senior Center, South Street Bridge, and the Howard Bush Drive Extension.  As of now, those projects ARE fully supported by the sales taxes being collected and are NOT a draw on the city’s general fund.  (Let’s ignore for a moment that the projects had overruns and part of the street projects were never completed –that’s a separate and important discussion, but outside the scope of looking at the debt load today.)

To cut to the chase, $10 million of our debt is current financed by sales taxes.  As long as sales taxes remain at the levels they are, we’re good on that portion of the debt.

That leaves us with just over $4 million of debt that is the real headache – broken down, it is $3.4 million for the golf course and $650K for the airport.  This debt is (in a perfect world) supported by fees from things like hangar rent and golf course fees.  It’s when that perfect world becomes not so perfect (and that’s where we are today) that issues arise. 

It’s no secret that golf revenues are down.  It’s no secret that the golf course has NEVER covered its full load of debt since adding 9 holes of play in the early 2000’s.  It’s no secret that for the past decade or so, our general fund has spent funds it could otherwise use elsewhere (including for police and fire) to make those payments!  Combine that with a financial crisis caused by the 2008-2009 fund “borrowing” that occurred under the previous administration and we’re in a really tough spot.

The good news is that we’re really only having to focus on $4 million of debt right now – not the entire $14 million.  The good news is overall sales tax revenues have rebounded in the past few months and are slightly ahead of last year’s collections.  The bad news is we’ve cut some essential services and cut pay and staffing to ensure we can keep paying on that $4 million debt.

In the long run, cuts in pay and services cannot continue.  Our city employees do a great job.  They deserve a fair wage for a day’s work.  Our staffing in police MUST come back up.  Our fireman MUST stay on the job after federal assistance runs out in 2013.  Streets must be better maintained.  Parks must be mowed.  Equipment and facilities must be maintained.  Worn our equipment must be replaced.  It all costs money…money that we currently don’t have but will NEED to keep our city functioning years into the future.

I hope these comments have been helpful.  I could spend the next hour or more laying out more detail, but that’s for another day and another post.  Until then, know that your city council is working hard to find solutions to these issues.  Know that the past mismanagement is no longer happening in our city.  We’ll never be perfect (no one is) and it’s easy to criticize when mistakes happen, but your city is back to being run like a city should be run – open and honest communication – proper council oversight – decisions based on fact and the overall good of ALL of Neosho.

It’s an honor to serve.  I love our town.  I hope you agree we’re finally starting to head in the right direction.

Debt Concerns “No worry” With China

Despite dire predictions of a global market crash this morning due to the lack of an agreement on the US debt limit, China is taking a much more positive view of things.

Xia Bin, a member of the central bank’s monetary policy committee was quoted as saying "Don't worry too much about it. The United States will have to issue more debt and issue more currency".  Xia went on to say that the debt talks had gained too much media attention.

Currently, the US debt ceiling is capped at $14.3 trillion.  China is believed to hold 70% of its reserves in US dollar assets. 

As of 1:30pm CDT, the DOW was off just under 50 points.  The NASDAQ was down under 4 points.  It appears the concerns were very-much overblown based on the market’s trading today.

China GDP Growth Rate Continues Strong Pace

From ChinaDaily

But report notes inflation, property bubble and credit quality problems

WASHINGTON - China will continue to drive global economic development with an estimated growth rate of 9.6 percent this year, despite signs of an economic slowdown, the International Monetary Fund (IMF) said in a report issued on Wednesday.

China, however, still faces a number of risks, such as high inflation, a precarious property bubble and a decline in credit quality due to an excessive amount of bank loans, according to the annual IMF report on China.

A key gauge of manufacturing activity showed that the factory sector shrank for the first time in a year in July.

The HSBC Manufacturing Purchasing Managers' Index fell below 50 for the first time since July 2010. Analysts said it signaled a slowdown in growth as a result of tightened monetary policy. When the index is above 50 it signals expansion, when beneath it, contraction.

"Industrial growth is expected to decelerate in the coming months as tightening measures continue to filter through," said Qu Hongbin, chief economist for China and co-head of Asian Economic Research at HSBC.

China's economy grew 9.5 percent in the second quarter, exceeding expectations and easing concerns of a hard landing amid tight monetary policies to curb inflation.

The better-than-expected economic data for the second quarter gave some economists grounds for optimism over the prospects for China's economic growth.

"We raised our 2011 GDP growth forecast to 9.5 percent from 9.4 percent," Sun Chi, an economist at Nomura Securities, said.

According to the IMF, China has increased its sway over the global economy and holds "an important stake for the world in its stability".

The fund's executive board reached these conclusions after some of its members visited China between May 23 and June 9 to collect economic and financial information and hold discussions with officials, such as Vice-Premier Wang Qishan, Minister of Finance Xie Xuren and People's Bank of China Governor Zhou Xiaochuan.

The visit focused on China's macroeconomic outlook, the potential for a property bubble and factors endangering the banking system, said Nigel Chalk, senior adviser at the fund's Asia and Pacific Department, who led the IMF visit to China. He spoke via a conference call before the fund released the report on China.

Chalk said his team noted that a great deal of progress had been made in China in changing the GDP-based growth model while expanding the social safety net.

Inflation will start to "move to a downward trend" toward the end of the year, Chalk said.

He Jianxiong, IMF executive director for China, and Zhang Zhengxin, senior adviser to the executive director, said China's key challenges are to "balance the need for containing inflation, sustaining strong growth, and accelerating the transformation of the growth model.

"The task is complicated by the difficult external environment," He and Zhang said in a statement.

Both He and Zhang took issue with IMF assessments that the yuan is undervalued.

Both argued that the IMF report is based on "the assumption of unchanged policies and a constant exchange rate" and "ignores the trend of exchange rate movement and the far-reaching legally binding rebalancing measures to be implemented in the medium term".

Chalk, however, said that a stronger yuan is necessary for reform and growth. "We do believe that China's currency needs to be stronger," Chalk said.

Reform of the yuan exchange rate is part of a "package of reforms", Chalk said, that will make China's financial sector more market-oriented and better integrated into the global financial system.

Currency appreciation is important in efforts to rebalance the economy, Chalk said.

But he also noted that China's financial reform is a "risky undertaking" and "needs to be managed carefully".

Chen Jia in Beijing contributed to this story.

China Daily

China Currency Rates Continue to Drive Up Import Prices in US

From the ChinaDaily

BEIJING -- The renminbi (RMB), China's official currency, set a new high for the second day to a ratio of 6.4536 yuan per US dollar on Thursday.

It indicates a 22-percent increase after the country launched exchange reforms on July 21, 2005. The ratio was 8.11 yuan per US dollar when the reforms were launched six years ago.

The RMB, or yuan, has appreciated in an unilateral way and anticipation on this is attracting more capital inflow, burdening domestic liquidity management, said Chen Bingcai, a researcher with the National School of Administration.

The yuan's unilateral appreciation has brought challenges such as global payment imbalances, soaring foreign exchange reserves, inflows of speculative "hot money" and high trade costs for exporters.

Troubles brought by the unilateral appreciation are more serious than those caused by pegging the yuan to the US dollar, said Lu Zhengwei, a senior economist with the Industrial Bank.

The yuan's real effective exchange rate (REER) went up 14 percent in the past six years, far below the yuan's appreciation against US dollar, according to the Bank for International Settlements (BIS).

The yuan's REER currently stands at 116.31, up from 101.42 when China launched the exchange reforms six years ago, according to the BIS. Meanwhile, the ratio of yuan against the US dollar rose 2.45 percent this year, but the yuan's REER actually depreciated 3.02 percent.

The REER index of the yuan is used to measure the yuan's external competitiveness vis-a-vis the currencies of the country's major trading partners and competitor exporter countries.

A hike in the REER index would mean the currency is appreciating on a real, trade-weighted basis, suggesting a loss in external price competitiveness.

China faces risks from inflation and a possible boom and bust in real estate prices and should allow its currency to rise to promote economic stability, the International Monetary Fund said in an annual review on Wednesday.

It said a stronger yuan is "a key ingredient to accelerate the transformation of China's economic growth model."

China abandoned a decade-old peg to the US dollar by allowing its currency to fluctuate against a basket of currencies on July 21, 2005.

The reforms were suspended in a bid to fight the global downturn in 2008. The yuan exchange rate again was pegged to the dollar at a ratio around 6.83 from September 2008.

The peg was lifted on June 19, 2010, when the central bank announced further yuan exchange rate formation mechanisms.

In China's foreign exchange spot market, the yuan is allowed to rise or fall by 0.5 percent from the central parity rate each trading day.

The central parity rate of the yuan against the US dollar is based on a weighted average of prices before the opening of the market each business day.

TDD Audits Note Troubles

 

The article below is from the Columbia Daily Tribune on Wednesday, March 30, 2011.  While it’s a few months old, it does a good job highlighting issues with TDD’s around the state.  The key item I focused on – competitive bidding.  After all, this is public tax money.  Competitive bidding assures that taxpayers are getting the most for their money.  The problem as I see it is that these TDD’s are run by people not familiar with the requirements of political subdivisions spending public money.

Don’t get me wrong, I’m not against TDD’s, but they must learn the rules and follow them.

 

Auditor notes TDD troubles

Schweich cites overspending.

By Jacob Barker

Wednesday, March 30, 2011

Missouri Auditor Tom Schweich released his annual review of the state’s Transportation Development Districts yesterday, again noting problems with competitive bidding, budgeting and reporting finances to the state.

Each statewide audit of the districts since the first one was conducted in 2006 has been critical of the quasi-public entities. The districts, known as TDDs, are established via a petition in the courts and impose a tax on retail sales in their boundaries to pay for road and site improvements. Almost all the districts are formed by the property owner or developer of a commercial venture and are governed by a public board, though members usually are appointed by the owner or developer.

Supporters say the districts finance projects that would not otherwise be built. For instance, the Stadium widening project is financed in part by three TDDs.

Columbia has 14 TDDs that charge a half-percent sales tax at nearly every large shopping center in the city, including the Columbia Mall, all three Walmarts and the Bass Pro Shops.

The report issued by Schweich surveyed 16 selected TDDs, including the Gans Road and Highway 63 TDD in Columbia, and noted many of the same problems as his predecessors. Statewide, there were 154 TDDs established as of December 2008. Through their lifespans, which can be as long as 40 years, they had total estimated project costs of $1.5 billion and total estimated revenues of $1.8 billion, according to the audit.

The report noted many of the audited districts’ budgets contained math errors, overspent or weren’t properly documented. In some cases, the report noted the auditor’s office was not aware when a new TDD was formed, highlighting the difficulty of overseeing public money in the hands of private developers.

Missouri law requires the state auditor to review each TDD once every three years and for each TDD with financial activity to submit a financial report to the state auditor. But 21 TDDs did not file a report with the auditor on time in 2007 or 2008, including two Columbia districts. The Northwoods TDD at Smiley Lane and Range Line Street did not file a report in 2008. The CenterState TDD, on property owned by Columbia Bass Properties, did not file a financial report in 2007 or 2008. Representatives of the districts could not be reached by deadline.

The audit noted the Gans and 63 TDD “overspent its 2008 and 2007 budgets by approximately $59,000 and $4.2 million, respectively.” The report also said a formal budget resolution was not approved authorizing the expenditures.

The Gans and 63 TDD was formed in 2006, and the land it covers was later acquired by Bristol Development Group, an entity owned by now-deceased Columbia developer Jose Lindner and his son, Jay Lindner. The Lindners had plans for a mixed-use development at the site and helped finance the Gans Road interchange built in 2008, planning to get repaid with TDD revenues.

The TDD had $4.2 million in debt obligations to Bristol Development, but the Lindners lost that property in foreclosure in August. Those notes were used as collateral in a financing agreement with Sapp-Bristol Management Group, led by Elvin Sapp, according to a legal notice. That company bought some of the land at Gans and 63 at the foreclosure sale in August and now holds the TDD notes.

But because nothing was ever developed at the site, there is no revenue to pay off the notes. Sapp’s attorney, Bruce Beckett, said the company is working toward settling those obligations. A legal notice said they are to be sold at auction April 11.

Attorney Craig Van Matre, who works with many of the city’s TDDs, said he is working to dissolve the Gans and 63 TDD. He said once the district’s debts are resolved the district should be able to dissolve.

In January, Columbia’s 14th TDD was formed on land owned by Red Oak Investment Co. across from Grindstone Plaza, according to court filings. There is no development there now, though last summer the company won approval from the Columbia City Council to rezone the land to commercial.