The dice lord of Motown

Don Barden's troubles continue, as Standard & Poor's assigns a B minus rating with negative outlook for the holding company (PITG Gaming) he set up for his proposed Pittsburgh casino. In case you're wondering, B- is very bad. The next-lowest rating after that -- CCC+ -- represents a company that is in serious trouble. A negative outlook means that PITG is slipping into that territory. And in fact, S&P has already downgraded Barden's parent company -- Majestic Star, through which he operates casinos in Indiana, Mississippi and Colorado -- to CCC+.

Given this, it ought to be downright shocking that of the $390 million in loans that Barden is asking Pennsylvania's Gaming Control Board to approve, some $150 million is backed by the two public pension systems of the City of Detroit. Both the police and fire fund and the general retirement fund for that city have been financially troubled, and they were a source of frustration for Mayor Kwame Kilpatrick who three years ago sought steep union concessions and resorted to layoffs even after issuing some $1.2 billion in pension obligation bonds to try to close the gap on pension obligations.

Seeing as I am an amateur blogger in Pittsburgh, it seems to me that there are several questions that need to be answered about this:

(1) Is it typical for troubled public pension funds to invest sums of this magnitude in B- rated casino projects? How does this fit into the asset mix of Detroit's funds? Andrew Conte of the Tribune-Review took the time to interview two trustees from the police and fire fund who offered conflicting views: police trustee Paul Stewart said that the gaming industry is "always booming" and therefore a "very sound investment," while firefighter trustee Jeffrey Pegg said that he "thought it was too risky." How well-aware were these trustees about the problems facing Barden's venture in Pittsburgh, and did they anticipate the negative Wall Street outlook when they made the decision to back Barden's venture?

(2) Who really controls the pension boards? In 2004, the Kilpatrick administration was fighting with the pension board over who got to hire the executive secretary for the fund. I can't for the life of me find Detroit press reports that explain exactly who dominates the pension boards now, even though someone in Detroit's city hall must know. Formally, a minority of each pension board's trustees are mayoral or city council appointees, while a majority are elected by actual city employee participants in the fund and/or by retirees who are actually receiving benefits. Surely the Kilpatrick administration and other political interests in the city must have had their favorite candidates for the pension boards. Who were they? Who was aligned with whom? And most importantly, how are campaigns for these offices funded, and who did the funding? Is any of this public information? Does anyone know? Has anyone ever seen fit to report on this, or are the vagaries of pension fund administration just too boring -- or perhaps too expensive to cover in the eyes of Gannett and Knight Ridder, who forced a five-year strike in part to gut the newsrooms of Detroit's two newspapers?

(3) Ten years ago, Don Barden fought then-mayor Dennis Archer when he did not get a casino license in Detroit. Barden's argument was that a Detroit resident would keep the casino profits in Detroit and be more likely to further black employment at the casinos. He eventually funded an unsuccessful recall attempt against Archer. The recall attempt against Archer was well-deserved for a host of reasons, although Barden was obviously self-interested. I am not one to raise questions about John Conyers -- who is one of a handful of true progressives in Congress -- but Conyers is also a fixture of long standing in Detroit's political firmament, so he has received political donations from Barden, as has Kwame Kilpatrick's mother. This is an illustration of how influential Barden's money must be in Detroit's political process. Did he essentially "buy" the loan with political donations or favors? Note that the state of the city's pension funds does not have to be a "partisan" question in Detroit's fractious municipal politics, since Dennis Archer himself was a consultant for UBS when the city issued its $1.2 billion in bonds to finance the pension obligations.

These are all questions that should be of keen interest to the people of Pittsburgh, and of even greater interest to the people of Detroit, including its city workforce who depend on these pension funds for their retirement security. The way the Detroit media cover these things does not give me hope that these questions will be answered, however. They did cover a February incident where Monica Conyers -- the Congressman's wife and a City Council member who sits on the General Retirement Fund board -- got into a shouting match with one of Kilpatrick's aides, after which the aide filed an exaggerated police report claiming that Conyers had threatened to shoot him. (In fact, Conyers had only referred to her husband metaphorically as a "gun," in the political sense, that was bigger than Kilpatrick as a political "gun." But I am growing too bored with this story to explain it any further.) From reading the conflicting stories in the press, it is obvious that no reporter actually attended the pension board meetings where the incident occurred, and no one reports on the substance of the issue (a study related to some investments of the pension fund) that precipitated the spat in the first place.

The local press were all over this story of personality conflicts (which occurred even though Conyers is a Kilpatrick ally), but as far as I can tell, they have not seen fit to cover the disposition of $150 million in retirement funds on behalf of city workers, now used to back a questionable investment in another city (mine) by a wealthy and politically-connected local businessman. And the current asinine sex scandal in which Kilpatrick is involved is of far more interest to both Detroit's local press and to the national media.

I consider all of this vindication of point 6 in the original statement of principles for this blog, which rejects the obsession with petty corruption (legislative pay raises, personal use of city vehicles) that is characteristic of media in Pittsburgh as well as Detroit (including most of the supposedly oppositional blogs). All of them can write interminably about petty nonsense, but $150 million in city pension fund money is somehow not worthy of in-depth coverage.

I am waiting for the mainstream media in Detroit -- or perhaps an intrepid reporter from Pittsburgh -- to prove me wrong on this. Will someone other than an amateur blogger -- you know, someone who actually gets paid to do this shit and therefore has some time to do actual research and reporting -- please take a look at some of this stuff? Will someone please actually report the dirty truth behind what's really going on? Or are you all going to keep ignoring the boring multi-million-dollar details of municipal finance in the Rust Belt in favor of stories about who sent salacious text messages to whom and penny-ante crap like who appropriated a city SUV for personal use?