The Baystate Objectivist

The Baystate Objectivist

Sunday, April 6, 2008

Neal's Legacy

Revelations from the Neal era.

While continuing to rummage through my vaults, I stumbled upon this gem of a lost document. It's a Valley Advocate article by veteran reporter Stephanie Kraft that was published in September of 1992. This is not the complete two part article, but includes only those parts I considered still relevant to current issues. None of this has never appeared online as part of the Valley Advocate's archives or anywhere else, with exception of portions of The Ogulewicz Chronciles which appeard on this website, despite its obvious value as an essential documentation of some of the forces that led to Springfield's tragic decline.

He Bombed in Springfield

Springfield taxpayer's are still paying
for Richie Neal's mismanagement.

by Stephanie Kraft
for The Valley Advocate
September 3rd issue 1992

Why is Technical High School, a prime piece of city owned real estate, still an unused, boarded up shell?

A fine 81 year old brick structure in an ideal location on quiet Elliot Street near the Library, the Quadrangle and St. Michael's Cathedral, Technical High was shut down along with Classical High because it was thought that building the new Central High School made them unnecessary. Technical High was slated to be converted to market-rate housing - a good idea, if only it had worked out.

When Mayor Richard Neal named a preferred developer from among eight companies contending for the $9 million project, it was Springfield Schoolhouse Development Association of Boston, one of whose principals was Sen. John Brennan of Malden. Like Neal, Brennan is a moderately conservative politician with strong Irish interests. Brennan was also chairperson of the Special Senate Committee on Redistricting - a good man for an ambitious politician to know. As recently as September 1990, Brennan's name turned up on Neal's campaign finance report as a contributor of $250.

Schoolhouse Development put down a very small deposit - $5,000 - on the building it was expected to pay $500,000 for. No work began. Yet Neal extended the purchase-sale agreement for three disastrous years, during which the city could not look for another developer. Legally, the city was still the owner, but no one had insurance on the empty school and no one saw to its maintenance.

Vandals stripped valuable copper piping and other trim, which caused water damage and made the building less valuable than it was when plans for housing were first broached. The police and fire departments warned the City Council that the building would be ruined if it were not secured. The Technical High story became such a symbol of the city's laxity in maintaining surplus properties waiting for sale or development that even Springfield Union reporter Carol Malley called it "a model of city government at its worst."

Finally - after Neal went to Washington as Congressman in 1989 - Mayor Mary Hurley ordered the Springfield Redevelopment Authority to secure the building.

Ironically, by 1989, the School Department was paying $798,000 a year to rent portable classrooms. (One of the most sensible suggestions made in the aftermath of the Schoolhouse Development fiasco came from School Superintendent Peter Negroni, who asked that Technical be used for some school support operations, thus freeing up classroom space in buildings owned by the School Department. But nothing was ever acted on.)

Today, Technical High School - a beautiful, historic building on one of the city's most charming streets - is still empty, damaged inside, wasting away in a time when the need for housing and for school space are both acute.

Then there is the larger, more appalling story of the Hollywood project, a $14 million South End development effort that had mixed results, involved highly questionable actions by the Springfield Redevelopment Authority and is still costing the city money. Neal announced this development with great excitement, and appointed all the members of the committee that shepared it through to its unsatisfactory completion.

The Hollywood project was touted as the salvation of the South End neighborhood comprising Dwight Street Extension, Maple, Oswego and Richelieu Streets. Run down housing, drug-related fights and other crime had disrupted the lives of hundreds of tenants in apartment blocks there. Plans included the acquisition of 31 properties, some demolition and millions of dollars worth of rehab to produce 174 units of subsidized and 64 of market-rate housing. Funding would come from a combination of public and private sources.

Most of the project was completed and it did improve the quality of the housing stock in the neighborhood, though some poor workmanship - cracked walls painted over but not plastered, porch railings not built so as to be safe for children - was reported by tenants from the beginning. But the development wasn't up to the quality promised by the city and developers Lester Fontaine and Paul L. Oldenberg - in particular promises about security - and today conditions in that part of town are hardly better than when the plan first went on the drawing boards.

Just weeks ago, one landlord told the Advocate he was furious at the way crime problems from the redeveloped apartment blocks - especially the vacant buildings never rehabbed for market-rate housing - spill over onto his property.

The failure to complete the market rate phase was the damning feature of the Hollywood venture. The SRA bought back the four undeveloped parcels that had been slated for rehab into market-rate housing for more than it sold them for in the first place. The vacant buildings still blight the neighborhood and there are still lively suspicions that someone wasn't serious about getting the market rate component of the project built in the first place.

"A lot of people who are residents in the south End believe there was never any intention to build Phase Three," says City Councilor and outspoken SRA critic Tony Ravosa Jr. who is challenging Neal this November for the Congressional seat.

"I don't think you can blame the economy for the reasons Phase III never moved forward. You have to take a look at the whole package and how much the buildings were sold for and how much they were bought back for. It was a cute deal and I'm not sure we'll ever get the real answers. This is one of the great debacles of the Neal administration," says Ravosa Jr.

Hers'a an example fo the funny arithmetic that went into the Hollywood project:

On July 31, 1984, Paul L. Oldenberg sold Lester Premo, a real estate agent who also was the city's tax title officer and a member of Hollywood Associates II, four properties in the Hollywood area for $432,000.

The very same day, Premo sold those properties plus two others on Bayonne and Saratoga Street to Springfield Renovation Associates (an arm of the Springfield Redevelopment Authority) for 833,610.10. The two extra properties he threw in had cost him a totla of $180,000, according to the Registry of Deeds. So Premo apparently pocket $221,619.10 at the city's expense.

On August 15, 1984, then-Mayor Neal named Lester Fontaine and Oldenberg as principals in Hollywood Associates II Limitied Partnership, developers for the Hollywood project.

Weeks later, Hollywood Associates II bought the four properties for $495,899.

(Interestingly, though the HUD forms used for such sales leave space for deposits paid by "redevelopers" in this case the form shows the city didn't charge Fontaine and Oldenberg a deposit on this purchase of half a million dollars worth of property.)

Hollywood Associates II failed to redevelop the four properties and on May 31, 1988 sold them back to the Springfield Redevelopment Authority for $749,325.78 - over 50 percent more than they had paid for them in the first place.

In another transaction much publicized but still not completely understood, Springfild Restoration Association paid Premo $1,684,100 for another 11 properties he had bought only a day and a half earlier for $1,207,500. Dominic Sarno, who was head of the Springfield redevelopment Authority and of Springfield Renovation Association, later said publicy that Premo received the generous payment because he had incurred carrying and maintenance costs.

Sarno later admitted under questioning from the City Council that he did not know how much those alleged expenses had amounted to, or whether Premo had made a profit.

Why did all this money change hands - with the city taking a loss every time - for a development that was mediocre at best and never finished?

Neal blamed "the economy" for the developers failure to build the martket-rate phase, as well as the fact that crime problems had reasserted themselves by the time the subsidized housing was finished.

That excuse isn't good enough. If Richie Neal had forced the developers to build the market-rate housing first, laying the cornerstone of quality for the project, the area would have stood a better chance of improving and the public money would have been better invested.

As for the financial highjinks of the Springfield Redevelopment Authority (SRA) Neal put no curbs on those. On the contrary in 1987 - after the Hollywood Project hijinks - he made Sarno head of the city's Community Development Department as well as the SRA.

When Bob Markel became mayor, he ended the era that had Sarno as the head of the SRA and the head of the Community Development department, a situation with untold conflict of interest opportunities, because Community Development takes in federal funds and then disburses them to the SRA.

Hollywood Associates principal Leon Fontaine referred all our questions to Sarno, who did not return our calls. Meanwhile, the city has to keep plodding along with payments on the debt for the publicly funded part of the project. A total of nearly $4 million is still owed for a $3 million bond issue and a $3 million federal loan that went to finance Hollywood.

State analysts noted that while the city went from a $6.6 million deficit to a surplus of $9 million under Neal's predecessor Ted Dimauro, the Neal years ended with the city some $10 million in the hole - and the big cuts in state aid had not yet set in.

Neal's administration was rapped by the the Local Services Division of the state Department of Revenue in 1989 for what DOR analysts called "a general and longstanding weakness in sound fiscal management. Particularly in the area of expenditures in excess of appropriation and payrolls, there are gaps in the control of expenditures that allow overspending to occur without warning," was the stern verdict from DOR.

Former City Councilor Mitch Ogulewicz recalls many examples of "overspending without warning" situations he said were difficult for the Council to question because Neal becam angry and defensive:

MOCA - "When MOCA (Mayor's Office of Cultural Affairs) ran up a deficit in excess of $400,000 because events and programs were contracted for without the programs being self sufficient, I remember him coming to a Council meeting very angry," says Ogulewicz. "He cloaked himself in red, white and blue and felt you were unpatriotic if you complained about the deficit."

Springfield Central - Late in 1986, according to Ogulewicz, the mayor first directed Springfield Central to do some ornamental work downtown, and later went to the Council insisting on an appropriation. "At our first meeting in 1987, what we call our organizational meeting, when we elected the president and don't usually do financial business, he came in under a suspension of rules for an appropriation of $100,000 for Springfield Central," Ogulewicz recalls. "Two of us objected, Vin DiMonico and I. We wanted to ask questions about where this $100,000 appropriation was going. The mayor had no right to direct Springfield Central to spend moneys without the City Council having appropriated the money first."

Neal's administration made funding for Springfield Central a high priority, which strengthend his ties to Springfield Newspaper's publisher David Starr, a leader of Springfield Central. Another link between Neal and Springfield Central is David Kenney, who was an aide to Ed Boland, Springfield's Congressman before Neal. Kenney now works in Neal's Springfield office and doubles as clerk of Springfield Central Business District Inc. one of Springfield Central's three corporations.

The Police Department - The DOR noted that in the city's 1989 budget, the Police Department's payroll was "underfunded" by a whopping $l.2 million because the Neal administration had gone on a hiring spree the year before. Says Ogulewicz, "One of the problems leading to the police department payroll underfunding in 1990 was that 50-odd employees on that payroll did not have authorized and funded positions. But the mayor ordered it."

The result? Subsequent layoffs of police, which were demoralizing for the city and a waste of money. Laments Ogulewicz, "We spent thousands of dollars training police officers who now have jobs in Chicopee, Tampa, any place you can name."

This is the DOR's analysis of the fiscal malaise that built up during the Neal years, and struck in force during Mary Hurley's early days as mayor: "Had the city not appropriated virtually every dollar of increased revenue each year, but rather smoothed out the growth rate in the budgets, holding to a more sustainable rate of growth, the need for major cutbacks would have been greatly moderated and in many areas avoided."

Here is a translation in street English from a source who asked not to be identified, "He spent money on glitz, green triangles, fireworks. It was "Take care of everybody. Never say no. If somebody calls up saying, 'My daughter needs a job for the summer' give her a job." It gives you a hold on the caller (the summer job patronage mess was also cleaned up by Markel, with a lottery). In the summer the parks had to close early because he had hired twice as many lifeguards as they needed and five or six times as many recreation leaders. He didn't care what happened after him."

"In 1989 Richie Neal went to Washington and laughed all the way to the House bank, while the taxpayers of the City of Springfield were left holding the bag," says Ravosa, who continues his research into the city's debt service. "Within a matter of months after he left, the city was forced for the first time in its history to enter into a deficit reduction plan with the state Department of Revenue, to pick up the tab for the Neal legacy."

So you can see from the preceding excerpts from an old Advocate article how the path was paved for the Control Board to be put in place long before they actually arrived in Springfield in 2004.

But enough politics. I like the saying on this sign outside an Amherst Church.

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