Joseph Krist

Publisher

___________________________________________________________________________________________________

TEXAS HIGH SPEED RAIL UNDER LEGISLATIVE ASSAULT

The Texas Central Railroad would provide high speed rail service on a route covering a 240-mile stretch of mostly rural land sandwiched between the urban hubs of Dallas and Houston. The project is being privately financed. Its owners have gone out of their way to emphasize its private character. Nonetheless, the project is of interest to the municipal bond space. The resolution of its efforts to secure right of way will be a good indicator of whether high speed rail can be produced privately.

Rural landowners and their supporters say the project would unfairly strip land from private property owners for a project that could easily fail. It is primarily legislators from districts in those areas who are leading the legislation against the train. One proposed measure would prevent a company from surveying land for a high-speed rail project until it has all the necessary funding for construction. Another would prevent state agencies from issuing permits or negotiating rights-of-way with a high-speed rail company unless they’ve received what bullet train supporters have called an “alphabet soup” of all necessary federal approvals and permits.

The point of interest is to see how these issues are resolved in terms of whether the politics of high speed rail are effectively prohibitive. If a privately financed venture in a pro-business state like Texas cannot succeed, where can it?  If it cannot, then public financing will be the only route for high speed rail. That would likely be its death knell as the support for public subsidies seems lacking.

PUERTO RICO

The U.S. House Committee on Natural Resources has scheduled a hearing for May 2 titled “The Status of the Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA): Lessons Learned Three Years Later.”  It is likely that the hearing will be designed to highlight complaints over the actions taken by the Board reduce government spending, often affecting essential services the government provides to residents. The committee chair has expressed the view that potential amendments to the statute, created to oversee the fiscal policies of the elected government of Puerto Rico, that would allow for a “less oppressive” law be considered.

One of the hallmarks of Congressional involvement in the Puerto Rico debt crisis has been the politicization of the issue of Puerto Rico. This is true regardless of the change in the majority in the House. The unpopular board is being questioned in the midst of the unfolding legal process surrounding a ruling that declared the Financial Oversight and Management Board unconstitutional because its members were not confirmed by the U.S. Senate.

The whole process reflects Puerto Rico’s unfortunate role of being stuck in the middle between the partisan factions in Congress. None of it is helpful to any of the stakeholders involved in the process of dealing with the Commonwealth’s debt and still damaged economic realities.

AV TIDE RECEDES A BIT

The assumption of so many is that the technology wave is an unstoppable tsunami. Then every once in a while we get news that should cause one to step back. One example is the recent announcement that Toyota Motor Corp said it was halting plans to install Dedicated Short-Range Communications technology on U.S. vehicles aimed at letting cars and trucks communicate with one another to avoid collisions. Toyota announced plans in April 2018 to begin the installation of DSRC technology in 2021 “with the goal of adoption across most of its lineup by the mid-2020s.”

The move reflects the fact that “unfortunately we have not seen significant production commitments from other automakers.” One of the recurring issues to hold up momentum for adoption of AV is the lack of regulatory guidance. Without the establishment of standards for AV development and implementation, it will be impossible for infrastructure providers to respond to technological change as it relates to transportation.

Use a DSRC system or use a 4G- or 5G-based system? With questions as basic as this outstanding, how are municipal infrastructure providers supposed to adapt roads and systems to meet the needs of these emerging technology? Given the track record in this space, can the process be market based?

After all, automakers were allocated a section of spectrum for DSRC in the 5.9 GHz band in 1999 but it has essentially gone unused. Some FCC and cable company officials want to reallocate the spectrum for Wi-Fi and other uses. Testing has gone on for years to see if the band can be shared.

DSRC transmissions enable vehicle-to-vehicle and vehicle-to-infrastructure communications and broadcast precise vehicle information up to 10 times per second, including location, speed and acceleration. It is reported that the NHTSA has estimated that connected vehicles technologies could eliminate or reduce the severity of up to 80 percent of crashes not involving impaired drivers.

Not everyone is willing to wait on a federal regulatory effort. In Oklahoma, legislation just passed would establish rules regulating how to safely operate driverless vehicles navigating state highways. One legislative sponsor said that “it is crucial for the state to implement uniform regulations when it comes to automated driving systems, adding that it is also important to encourage development of the emerging industry. We don’t want to have a hodgepodge of rules from city to city and county to county regulating this technology. It makes sense for the state to oversee that with guidance from (the Oklahoma Department of Transportation, Department of Public Safety) and other experts. 

IT’S STILL A SUBSIDY

We were caught by a story about The Florida Department of Transportation wanting to construct two new CSX railroad bridges over Interstate 4 that would include plans for high-speed rail. Plans submitted to the Southwest Florida Water Management District show an I-4 configuration that accommodates a multimodal envelope in the median for high-speed rail.

Qui bono? Who benefits? Well surprise, surprise  it’s Virgin Trains USA, formerly known as Brightline. Plans for connecting from Orlando International Airport to Tampa would use rights of way along I-4 and two other state roads.  “The corridor will then enter the I-4 median and the preserved rail corridor, proceed west through the Lakeland area, where a planned future station is under consideration, and continue until it exits I-4 near downtown Tampa to a terminal station,” according to the railroad.

In fairness,  Polk County’s 2040 long range transportation plan that was adopted in 2015  assumed high speed rail. At the time five stations were proposed along the I-4 corridor, with downtown Tampa and Orlando International Airport stations anchoring each end. The additional three stations would be located in Polk County, Disney World, and at the Orange County Convention Center, according to the 2040 plan.

If the state pays the cost of your infrastructure than the state has subsidized your business. It is a legitimate policy tool to support projects in this way. It would just be simpler for everyone if project participants were honest about the role of government and subsidy (by policy, funding, or finance) in their endeavors.

Disclaimer:  The opinions and statements expressed in this column are solely those of the author, who is solely responsible for the accuracy and completeness of this column.  The opinions and statements expressed on this website are for informational purposes only, and are not intended to provide investment advice or guidance in any way and do not represent a solicitation to buy, sell or hold any of the securities mentioned.  Opinions and statements expressed reflect only the view or judgment of the author(s) at the time of publication, and are subject to change without notice.  Information has been derived from sources deemed to be reliable, but the reliability of which is not guaranteed.  Readers are encouraged to obtain official statements and other disclosure documents on their own and/or to consult with their own investment professional and advisors prior to making any investment decisions.

Joseph Krist

Publisher

________________________________________________________________

ISSUE OF THE WEEK

$250,000,000

Michigan Finance Authority 

Henry Ford Health System

The system comes to market supported by a rating upgrade from Moody’s. The upgrade of existing ratings to A2 reflects Moody’s view that Henry Ford Health System will continue generating stronger margins and cash flow over the next year, leading to improved leverage metrics and stronger liquidity, despite the additional debt incurred with the proposed bond  transaction. Although it expect favorable performance trends to continue in both the provider and insurance divisions, Moody’s anticipates it will take some time for the insurance division to generate consistently stronger margins.

Henry Ford Health System is a large, fully integrated health system based in the Detroit metropolitan area. The system operates five acute care hospitals, two behavioral health hospitals, more than 60 ambulatory care and outpatient service facilities, a sizable health insurance business, and a large employed group physician practice. The flagship hospital, Henry Ford Hospital, is a tertiary/quaternary referral hospital located near downtown Detroit.

__________________________________

SANCTUARY CITIES

A three-judge panel in a federal appeals court decided unanimously that most of California’s so-called sanctuary laws can continue to be enforced. The decision came in a case brought by the US DOJ against California’s decision to declare itself a “sanctuary state”. The far reaching law prohibits police and sheriff’s officials from notifying federal immigration authorities of the release dates of immigrant inmates.

That provision is of particular concern to sanctuary city opponents, something acknowledged by the court. According to the decision, the law “may well frustrate the federal government’s immigration enforcement efforts. However, whatever the wisdom of the underlying policy adopted by California, that frustration is permissible.” The law also requires that employers to notify workers of inspections by immigration agents.

“Only those provisions that impose an additional economic burden exclusively on the federal government are invalid,” the court said. The court did say that the state, in inspecting federal detention centers, cannot impose requirements on the federal government that will force it to spend money. It did note however, that the law did “not treat the federal government worse than anyone else; indeed, it does not regulate federal operations at all.”

The Trump administration could request an en banc hearing for its appeal. That would require the whole 9th Circuit to review the  ruling or ask the U.S. Supreme Court to overturn the decision. If it ultimately stands, the decision would be a victory for those jurisdictions which do not support the specific tactics of the federal government in its enforcement of immigration laws. It would reduce their financial exposure to the threat of cutoffs of funding from the federal government for a variety of purposes including law enforcement.

WHAT’S GOING ON WITH THE CENSUS?

One of the fears going into the 2020 national census has been that urban populations will be undercounted. It is based on a number of concerns not limited to illegal immigration but also to the millennial aversion to answering questions from the government especially if they are not in an online format. Those issues may be superseded by problems already emerging in terms of urban area counting.

Last week, the Census Bureau released its estimates of population trends. It appears that changes in the Bureau’s methodology may be producing less reliable data. The change in methodology meant to make one of the American Community Survey questions less ambiguous. Instead of asking people born abroad when they arrived in the United States, the bureau based its latest count on a more specific question: It asked where they lived a year ago.

That change is being blamed for an effective undercount. Major cities are clearly being impacted regardless of which region is located in. Chicago, New York, Houston, Dallas, greater Los Angeles, and San Diego are among the losers of population. This would seem to run contrary to the prevailing wisdom regarding the attractiveness of cities and the Sun Belt.

It is an important question which needs to be resolved. With localities facing increasing funding demands for issues including transportation, resilience, and adaptation to climate change, accurate data will be essential to allowing these localities to qualify for and receive federal funding under a plethora of programs.

One data point of interest is the growth in exurban areas. It reflects a growing trend of movement to more outlier locations. It is reflected in increased demand for services like rural broadband which support small business establishment and expansion in many rural areas. The Census data shows that many rural areas are experiencing net in migration as individuals seek a lower cost of living especially in terms of housing costs.

ANOTHER STEP ON THE ROAD TO RECOVERY

Stockton, CA saw its rating upgraded by Moody’s. The upgrade to A3 reflects the continued moderate growth in the city’s assessed value and improved financial position supported by healthy reserves and liquidity. The city’s five year average available operating fund balance is strong at 39.6% of operating revenues. The A3 rating incorporates the city’s sizeable and diverse tax base and weak socioeconomic indicators. The rating also reflects the city’s low debt burden and elevated pension burden. Rising pension costs and funding city infrastructure needs will also continue to be budgetary pressures.

The stable outlook reflects Moody’s expectation that the city’s assessed value will continue to benefit from moderate growth and a sound financial position supported by the city’s formal policy of maintaining a working capital reserve at 17%. The move comes even despite court decisions favoring pensioners over debt holders.  

THE UBER REALITY

A recent study released by Georgetown University documents a number of hurdles faced by jurisdictions trying to arrive at a regulatory scheme which satisfy the many competing interests resulting from the growth of the ride sharing industry. The study follows a group of drivers working for Uber in the District of Columbia. D.C. has been a leader in efforts to regulate the industry while accommodating some of its realities.

In 2014 the D.C. Council adopted regulations to govern Transportation Network Companies (TNCs). The Vehicle for Hire Innovation Amendment Act of 2014 (“VHIAA”) required background checks, set general vehicle standards, mandated insurance coverage, and arranged for the collection of 1% of gross receipts for all UberX rides provided in the city. The law has weaknesses however. Under the VHIAA, regulatory authority over TNCs was delegated to the Department of For Hire Vehicles. However, the Department is prohibited from requiring companies to submit a list or inventory of vehicles or operators.

To address some of these issues, in 2018 the D.C. Council approved a 6% tax on TNC services to support Metro, and passed a data-sharing requirement for ride-hailing services. The Private Vehicle-For-Hire Data Sharing Amendment Act of 2018 requires quarterly transmissions of data on: numbers of drivers; trip location pick-ups and drop-offs; dates and times of ride requests, pick-ups and drop-offs; total miles driven by drivers en route to a pick-up and during a ride (but not while waiting for a ride request); and average fares and distances driven.

The point of all of this is that even in a jurisdiction which seems to be proactive or  ahead of the curve, regulation is a difficult matter. Many of the hurdles to regulation,   operations, are imposed by the legislation enacted ostensibly to better regulate the services. Under the 2014 D.C. law, Reports on safety and consumer protection are prohibited from public release. Finally, journalists, researchers, and policymakers may not use the federal Freedom of Information Act to access basic information about the operation of TNCs in its jurisdiction. The 2018 law also seeks to impede inquiries under the Freedom of Information Act.

These provisions support the tendency of TNCs to observe secrecy as a prime modus operandi. It is difficult to square the position of the industry as a positive force when it is so resistant to simple informational requirements. We believe that the tendency towards opacity and secrecy will only impede the growth of technology especially in the transportation sector and its acceptance. Can you imagine if a public transit system refused to make operating data available or did not take responsibility for the background of the individuals it employs?

TOBACCO REGULATION GETS A NEW ALLY

The new realities of the tobacco industry can be summed up in this week’s news that Senator Mitch McConnell will introduce legislation to raise the legal age to buy tobacco from 18 to 21, calling it a “top priority” when the Senate returns from recess in late April. McConnell said he wants to change the law to discourage vaping and teenage nicotine addiction and improve Kentucky’s public health.

The news is interesting from a public health point of view but does little to change the overall trajectory of cigarette sales. The attraction of vaping to the next generation of nicotine consumers is troubling if this becomes the preferred nicotine conveyance method. As for tobacco credits, the preferred return of principal date should still be sooner than later. If anything, the trend towards vaping bodes poorly for those bonds with the longest maturity.

It’s the fact that McConnell represents the nation’s second largest producer of tobacco as much as his Senate leadership position that makes this move especially relevant. It means that he will probably get the bill passed given the bipartisan nature of current tobacco politics. That will address the variety of age-related sale and marketing restrictions existing under the current state based structure. So one gets a bit of regulatory consistency but also gets a bit of pressure on overall sales.

FITCH ON SPECIAL REVENUE BONDS

In response to the March 26, 2019 ruling by the United States Court of Appeals for the First Circuit regarding the bondholder protections provided by special revenue status under Chapter 9 of the U.S. bankruptcy code, Fitch Ratings has developed rating sensitivities corresponding to the likelihood and severity of potential rating changes resulting from a final court ruling upholding the decision. 

Fitch Ratings has placed the seven U.S. Public Finance ratings that are more than six notches higher than the Issuer Default Rating (IDR) for the associated local government on Rating Watch Negative. According to Fitch, The ratings placed on Rating Watch Negative have the highest ratings relative to their associated governments’ IDRs. Ratings on special revenue bonds that are closer to the associated government’s IDR are less likely to be affected by a re-evaluation of special revenue protections. While special revenues offer substantial protections in the event of a bankruptcy filing, the ruling creates uncertainty about full and timely payment of special revenue obligations during the bankruptcy of the associated government. 

Going forward, Fitch will offer one of three comments regarding the rating sensitivities corresponding to the likelihood and severity of potential rating changes resulting from a final court ruling upholding the decision.  Ratings for which the sensitivities are relevant are utility and tax-supported ratings that are higher than but within six notches of the related government’s Issuer Default Rating (IDR). 

For special revenue ratings between one and three notches above the IDR: “The rating is unlikely to be affected by a recent ruling by the United States Court of Appeals for the First Circuit regarding the protections provided to holders of bonds secured by pledged special revenues. Fitch believes those protections warrant a distinction in ratings above the IDR regardless of the outcome of the case.” 

For special revenue ratings between four and six notches above the IDR: “The rating may be affected by the recent appeals court ruling regarding the protections provided to holders of bonds secured by pledged special revenues. Fitch believes those protections warrant a distinction in ratings above the IDR regardless of the outcome of the case. However, a final decision consistent with the First Circuit’s ruling may result in security ratings closer to the IDR.”

For California school districts with ratings above the IDR that are not currently on Rating Watch Negative because of the ruling:  “The rating may be affected by the recent appeals court ruling regarding the protections provided to holders of bonds secured by pledged special revenues. Fitch believes those protections warrant a distinction in ratings above the IDR regardless of the outcome of the case. However, a final decision consistent with the First Circuit’s ruling may result in security ratings closer to the IDR. Given state constitutional and statutory restrictions, Fitch believes potential rating changes would be modest.”

Disclaimer:  The opinions and statements expressed in this column are solely those of the author, who is solely responsible for the accuracy and completeness of this column.  The opinions and statements expressed on this website are for informational purposes only, and are not intended to provide investment advice or guidance in any way and do not represent a solicitation to buy, sell or hold any of the securities mentioned.  Opinions and statements expressed reflect only the view or judgment of the author(s) at the time of publication, and are subject to change without notice.  Information has been derived from sources deemed to be reliable, but the reliability of which is not guaranteed.  Readers are encouraged to obtain official statements and other disclosure documents on their own and/or to consult with their own investment professional and advisors prior to making any investment decisions.

Joseph Krist

Publisher

________________________________________________________________

ISSUE OF THE WEEK

The Brightline debt train finally picked up passengers this past week with a $2.7 billion private activity bond issue. The bonds were said to be strongly oversubscribed with ultimate yields above 6.5% on the long dated maturities. In this market, that represents a significant yield premium even for high yield municipal bond debt generally. That reflects the relatively strong market conditions and generally narrow credit spreads which characterized the municipal market throughout the first quarter of 2019.

The market seems a bit entranced with the participation of Richard Branson’s Virgin Group in the Brightline project. As we pointed out to the Associated Press, “Branson is a huge branding success — and that’s not to say he hasn’t been an economic success,” Krist said, calling him a “genius” when it comes to getting Virgin’s name in front of the public. “His brand as an innovative, somewhat thinking out-of-the-box kind of guy has survived regardless of the absolute level of operating success achieved by his various businesses.” I also noted that while Branson has had success in widely divergent fields, from recording to transportation, his British train operation has had a mixed record over 20 years.

The completion of the financing does answer one major credit concern – will project completion to Orlando be funded? The adoption of the Virgin brand does create some more opportunities for ridership but the risk of underperformance continues to be tipped against the bondholder. Only time will answer the overarching question shadowing the enterprise – has the municipal market once again fallen for a technology and a plan which supposedly wiser heads chose to decline participation in?

__________________________________

HEALTHCARE TECH GETS A GENTLE NUDGE

Those who subscribe to economic nudge theory will be heartened by the news that the Centers for Medicare and Medicaid Services is moving to expand the range of beneficiaries eligible for telemedicine benefits. Telemedicine has been proceeding forward at a less than rapid pace and the move by CMS to nudge hospitals to more widely adopt the services is seen as enhancing the adoption of the technology on a wider scale.

The new rule, scheduled to go into effect in the 2020 plan year, will allow Medicare Advantage to offer telehealth services as part of their basic benefits package, providing patients more options to receive healthcare services from locations like their home. This is a significant change from current policy which historically had been limited to beneficiaries in rural areas with limited access to brick-and-mortar care facilities. 

Medicare Advantage plans previously had the flexibility to provide telehealth services under their supplemental benefits banner. The new rule shifts remote visits to a core part of the benefits covered by CMS. Under the current rules MA plans are not permitted to directly allocate federal dollars to telehealth services.

CONGESTION PRICING – CREDIT POSITIVE?

There seems to be a discernable wave of academic/professional support for the congestion pricing proposal adopted by the NYS Legislature. We choose our words carefully as it is important to emphasize was that what was approved was a serious concept but nowhere near a detailed plan. The devil as always will be in the details and significant interests have staked out potentially difficult implementation issues.

Despite the lack of detail – the level of charge and  the potential exemptions from the base – are the most prominent issues to be left to an “independent” board. The likelihood is that a plan will be adopted and implemented by the scheduled January 1, 2021 start date. It is likely that there will be substantial exemptions for a variety of transit cohorts so it is difficult to estimate a real sustainable revenue stream the plan will provide.

If it succeeds in reducing congestion in a meaningful and clearly manifest way, than congestion pricing will be credit positive for a variety of New York credits including those of the City and State of New York. Recently, Moody’s indicated that it views a congestion pricing plan as credit positive. We agree with a significant amount of Moody’s comments in support of its view. We differ in that in the absence of real details about who pays how much under whatever final scheme emerges, we are less comfortable estimating future funding realities and their implications for the MTA credit and that of its related credit partners.

ONE SMALL COLLEGE FIGHTS THE TREND

One college in New Rochelle NY is in the news for its announced closing and criminal financial mismanagement. It could be just one more chapter in the recent history of small college financial difficulties. There are always exceptions to trends. In this case one does not have to leave New Rochelle to find another small college with a credit that is on the way up.

Moody’s Investors Service has revised Iona College, NY’s outlook to positive from stable and affirmed the Baa2 rating on roughly $74 million of outstanding revenue bonds. According to Moody’s, ” The revision of the outlook to positive incorporates the combination of continued solid operating cash flow, material growth in flexible reserves fueled by retained surpluses, and modest but steady debt reduction achieved over the past several years. The college’s management has a track record of strong fiscal discipline, consistently generating robust debt service coverage. This is particularly impressive given that the college’s student market position, which accounts for over 80% of revenue, is experiencing strong competition and has limited ability to generate net tuition revenue gains. That competition is reflected in a very high selectivity rate of 88%, a very low matriculation rate of 9.6%, and volatility in enrollment and net tuition revenue. Despite those challenges the college’s liquidity continues to improve and its spendable cash and investments provide a good cushion to debt and expenses.”

COMMUNITY HOPSITAL FIGHTING CHOPPY WATERS

Milford Regional Medical Center is a 145 bed community hospital located approximately 40 miles southwest of Boston and 15 miles southeast of Worcester, Massachusetts. The obligated group also includes Milford Regional Physician Group (MRPG), a multi-specialty physician group practice with 94 employed physicians across multiple sites. It has some $102 million of debt outstanding rated below investment grade at Ba2 after a recent downgrade.

Like so many hospitals of this size, high financial leverage id a significant issue. At the same time, incremental debt borrowings associated with a new IT project hurt the credit but are likely necessary as technology becomes more and more prominent in the provision of direct patient care (see our earlier comments on CMS changes in funding) . It competes with the high level Boston institutions for patients but struggles with its ultimate level of profitability. Ultimately, significant profitability is not likely.

SINKING FERRY SERVICE

The NYC Comptroller has proposed that the city’s Department of Transportation “immediately explore” taking over NYC Ferry. The DOT, he said, already has experience running the 202-year-old Staten Island Ferry and could improve the efficiency of NYC Ferry’s six routes. The service has been controversial due to the high level of subsidy provided by the City to support low fares on the ferries.

The Citizens Budget Commission found the ferry service costs city taxpayers $10.73 per ride, compared to $1.05 for each subway ride. Critics have noticed that the contract with the operator finds the City having committed to buy boats from the operator. Recent press reports indicate that a runner-up bid for the ferry contract could have saved money by providing its own boats. The contract was won with a bid that was about $30 million lower than its competitor’s. But that bid left city taxpayers on the hook for $232 million to purchase 38 vessels, with another $137 million allocated for future ferry purchases.

It is one thing to push for expanded means of public transport. It is another to be open about the full economic implications of any alternative transit program. In this case the continued level of high individual ride subsidy indicates that the economics of public ferry service at its current scale just does not make a lot of sense. It makes less sense when that level of individual ride subsidy applied to the subway would fund lots of capital upgrades.

METRICS MATTER IN A DATA DRIVEN AGE

One of the challenges facing the municipal market is the increasing reliance on data by all participants – underwriters, raters, investors, analysts – to evaluate the creditworthiness of borrowers and to accurately price risk. When municipal bonds come under attack as they did in the tax cut debate in Congress in 2017, it is often hard for proponents of municipal bonds to make the case for the positive impact of municipal  bonds on society as a whole.

So in the middle of this kind of debate, it is important that cities and other borrowers employ data to monitor performance and impact of major programmatic initiatives. That is why it is so disappointing to see the lack of such data on two major program  initiatives undertaken by NYC mayor Bill DeBlasio and his wife Chirlaine McCray. Recent hearings conducted by the NYC Council shined a spotlight on the difficulties facing those seeking to evaluate the efficacy and impact of large social service programs.

In 2017, The Mayor announced  New York Works,  a   plan to create 100,000 jobs paying an average of $50,000 per year. The $850 million initiative should be subject to normal oversight with metrics established to measure to efficiency and impact of that level of spending. Alas that is not the case. Officials from the Economic Development Corporation, the agency charged with delivering upon the mayor’s plan say it is “impractical for the city to track specific jobs created.” 

The second program is Thrive NYC, a program with the very laudable goal of increasing awareness and treatment of mental health issues  especially among lower income residents. Led by the Mayor’s wife, that program has received some $250 million in funding. Recently, the NYC Council criticized the management of the program citing a lack of transparency as to spending and programmatic results.

These two programs are in the spotlight in the wake of the ending of a program known as Renewal. Renewal was an effort to turn around failing schools that cost $773 million over three years but improved only a quarter of the schools in the program. That program was also plagued by a lack of good supporting data.

Why do we care? The three programs have in common high levels of spending, poor results relative to promises, and questionable management. “Renewal Schools is failing to renew. ThriveNYC is failing to thrive and New York Works is failing to work,” according to one Councilperson,  “because there is a pattern of failing to measure outcomes.” It is not an accident. According to the NY Times, officials from the economic development agency said they had chosen “not to burden” companies “with tracking every single job created by their actions,” since “further actions” are often required by the city’s partners to create the jobs.

In today’s market, a municipal borrower just cannot consume resources without some accountability to those who provide those resources. If you wonder why there is such suspicion about the implementation of things like congestion pricing to fund mass transit, look no farther than the Mayor’s office and its lack of data transparency to understand why.

Disclaimer:  The opinions and statements expressed in this column are solely those of the author, who is solely responsible for the accuracy and completeness of this column.  The opinions and statements expressed on this website are for informational purposes only, and are not intended to provide investment advice or guidance in any way and do not represent a solicitation to buy, sell or hold any of the securities mentioned.  Opinions and statements expressed reflect only the view or judgment of the author(s) at the time of publication, and are subject to change without notice.  Information has been derived from sources deemed to be reliable, but the reliability of which is not guaranteed.  Readers are encouraged to obtain official statements and other disclosure documents on their own and/or to consult with their own investment professional and advisors prior to making any investment decisions.