The State of the City, 2009

Good evening…
Mayor Pelosi, members of the faculty, students—city councilors and all of you, welcome and thank-
you for coming here this evening. I want to thank the faculty and staff of Zion Bible College for
hosting this, the city council and school committee of Haverhill for their hard work over the past year.

We have several members of our legislative team here with us and I want to thank our legislative team
for their hard work in bringing millions of dollars to our city.

Times are tough

Tonight, as I speak to you, America is in the midst of the greatest crisis since the great depression.

This Great Recession has not spared Haverhill, nor will it but even in the height of this recession, good
things are happening here in Haverhill

I would like to spend a few minutes with you showing you a power point with some good things about
the city.

Five years ago, the shoe shop district next to our downtown was all abandoned shoe factories—fires
waiting to happen, and buildings that added little to our tax rolls.

We worked together with the city council to remove regulatory barriers and rezone the old shoe shop
area and build a new urban village. Tonight, we see the fruits of our labors.

The old 5th Avenue Shoe building, abandoned for nearly 5 decades tonight lives again as the Cordovan
Project, as young people, instead of moving out of a dying shoe city as they did for decades, are
moving back in.

A block away, the abandoned Hamel Leather Buildings was once the largest shoe shops in the country,
but they were closed for three decades, and the rear of the building became a dump yard, the buildings
themselves abandoned fire traps, a blot on our downtown.

Tonight, those abandoned factories are undergoing a $70 million investment in our new downtown—
what was once the Hamel Leather Building is today the Hamel Mills Lofts.

Those buildings Hamel Mills Lofts and the Cordovan, together bring with them $100 million in new
investment in our downtown, $150,000 in new recurring tax revenues, and every day, in the height of
the Great Recession, 200 people are employed at good jobs, remodeling those buildings.

These young people bring with them a new sense of vibrancy to our downtown, and new spending
power. In the heart of the recession, new restaurants have opened in our downtown and on a Saturday
night, in an area that once was only abandoned shoe shops, people flock to the best restaurant zone
north of the north end.

This new enthusiasm in our downtown brings something else. It brings State and Federal dollars to
help stimulate our economy. This spring, we break ground on a new boardwalk downtown, funded
entirely with State and Federal dollars,

And next year, we break ground on a new $10 million parking garage.

But not all progress has been downtown.

On the outskirts of our city, we rezoned the area, and removed regulatory barriers and recruited retail
stores to come to our city.

Today, the three largest retail stores ever to locate in Haverhill, BJ’s, Target and Lowes, are open for
business, with over 300 new jobs and $450,000 in new recurring tax revenues.

Two years ago, we set out to go the extra mile to bring new manufacturing jobs to our city. We became
the first city in the State to get a grant for expedited permitting; we were the first city in the State to be
designated as a growth district by Governor Patrick. We set out to attract new manufacturing
businesses not with fancy flyers and or an expensive advertising campaign, but with footwork. We got
on the phones and into our cars, went to see the top executives and asked them to come to Haverhill.

Tonight, in a building that had been vacant for years, Magellan Aerospace is open with 100 new
manufacturing jobs and new recurring tax revenues.

That filled half the building, located right off of Route 97. Then we heard that Southwick Clothing
had to move from Lawrence, and they were considering moving to Thailand taking 300 jobs with them.

Our economic development team got on the phone, got into their cars, and made the pitch—we want
you here in Haverhill.

Tonight, I am happy to announce that Southwick opens here in Haverhill later this month, and they
bring with, in the height of the recession, at a time when millions of manufacturing jobs are leaving
America, 325 new manufacturing jobs to Haverhill.

There are many members of the Southwick team this evening, and I would like them to stand and be
recognized—welcome to Haverhill.

And tonight, I am proud to be doing what president Obama did when he was sworn in, I am wearing
clothing made by Southwick—the most high tech energy efficient and green clothing manufacturer in
the world. Thank you for coming to Haverhill!

But perhaps our greatest triumph lies underneath our feet.

We stand here tonight on what was once an abandoned campus. Our greatest triumph lies in listening
to the collective wisdom of our citizens, working with a neighborhood group to turn this abandoned
Bradford campus into Zion Bible College.

Tonight, I say to our new neighbors, the faculty and staff, to the students, welcome to Haverhill.

Many of the members of that neighborhood group that led the fight to bring a campus here are here this
evening and I would like them to stand and be recognized—thank you for your hard work.
Improvements in city government
Thank you again.

Despite our triumphs, the recession is upon us

But, for all of our triumphs, tonight, we face the greatest financial crisis in our lifetimes.

We have faced these challenges before

No one knows exactly when this recession will end, but we do know this: we have faced great
challenges before, and we have always prevailed.

Think back just five years, when some were predicting that Haverhill’s bond rating would go down,
and that we would go into receivership.

Working together, we met that challenge. We consolidated departments and eliminated four top
management positions. We consolidated five employee health care plans into one, and then worked
with our unions to save $1.5 million a year on healthcare costs.

We used techniques from private business to improve efficiency in city hall-- installed a new computer
system, changed telephone systems, put GPS in city vehicles, instituted regional purchasing, cracked
down on city take home vehicles, and eliminated dozens of jobs from the payroll. Today, we have 43
fewer people working for city government than we had when I took office 5 years ago.

Those remaining city employees—43 fewer than the day we started—are truly Haverhill’s finest. That
remaining, trimmed-down work force has improved customer service to the point where we have a
95% customer satisfaction rate, patched more potholes and repaired more streets, kept streets clean,
cutback on crime thanks to our great police department, fought every fire courageously thanks to a
great fire department, serviced more library patrons with a smaller staff and truly done more with less.

I am very proud of our city employees, they do not get anywhere near enough thanks or credit for the
great job they do, and any city employees who are here tonight, I ask them to stand and be recognized.

But most of all, over the past five years, we imposed strict fiscal discipline. We said no to
unreasonable union demands, we refused to spend what we did not have, and we set money aside for a
rainy day, a day we knew we would come.

Instead of sinking into receivership, over the past five years we have had our greatest triumphs.

Our bond rating didn’t go down, it went up. We were especially proud when a Wall Street firm,
Standard and Poor’s, said one of the reasons it went up – good management, gave us the highest
possible management rating that any city in the country can receive.
In five years, we have had $100 million of new investment in our downtown, our math MCAS scores
are up 15%, our children at the high school have brand new, state of the art computer systems and we
have had the greatest retail boom in our history.

Strongest financial position in years

Because of the strict fiscal discipline we imposed for the past 5 years, we approach this crisis from our
strongest financial position, with the largest amount in reserves that we’ve had for years.
These reserves are not enough to get us through this crisis without layoffs, but they will help cushion
the blow. Had we not imposed strict fiscal discipline several years ago, instead of facing a budget crisis
here this evening, we would be facing a budget catastrophe.

Outline the budget problems that are before us

But for all of our preparation, tonight we face a budget crisis. This crisis is not ours alone, it has hit
every city in the State and most cities in the country. Every State and every city is doing what you are
doing with you household budgets, what we have to do- scaling back.

In Haverhill, our aid was $1 million in October—a cut you never saw, as we had the reserves to absorb
it. We are now cut $2 million more, and have the possibility of a further cutback in June.

At city hall, we have already cutback. Inside city hall itself, we have far fewer employees than we did
just five years ago when I took office. We’ve already cut city hall back, and there is very little left to
cut except the things that no one wants to cut: the teacher in the classroom, the policeman on the street,
the firefighter in the neighborhood fire stations, and the librarian in Haverhill’s gem, the Public Library.

Solutions to our budget crisis

Health care reform has to be part of the solution

But before we cutback on the basic services that are so critical to you, we must first examine how
government itself is run.

The simple truth is, as New York Mayor Bloomberg pointed out recently, we can no longer afford to
run government the way we have been.

We can no longer afford costly work rules that make it impossible for managers to manage and difficult
for cities to run.

We can no longer afford outdated union rules that require us to pay time and a half if an employee
moves during the day or during the week from one fire station to another fire station.

We can no longer afford outdated union rules that prevent us from having what most communities in
the country are able to have—part time, well trained reserves—in order to help with tasks and cut back
on a $3 million overtime bill.
And, most of all, we can no longer afford the government benefit package we have been offering.

This new fiscal reality is not anyone’s fault. It is certainly not the fault of our hard working employees
and it is not the fault of their unions. They were only doing their job. But this isn’t about blame, it is
about change and we have to change these rules.

We are in a world wide recession, and everyone has to give a little.

We need to start is with our health care plan.

Today, we offer our employees a benefit package far better and richer than anything offered in private
industry and with lower deductibles and co-pays than the generous plans than even the plans offered to
Massachusetts State employees. To give just one example, the city’s plan has a $5 co-pay for a doctor’s
visit. It is far more generous than the State plan which has a $15 co-pay. We provide 2008 health care
coverage at 1950’s prices. We can no longer afford to do so.

There are options.

One option is the State Group Insurance Plan, called the GIC. That insurance plan, if we opt into it,
would save us around $2 million a year.

But to get into the State plan, over 70% of our unions have to agree, and thus far they have not. Even if
we opt in today to the State plan, it would take us a year to get into it under current State law. Our
crisis is today and we need to take action today.

Yesterday, I met with the union representatives and our insurance advisory committee representatives
and gave them a new option: a new health care plan that will allow all of our employees to stay with
the same health carrier that they have today, Blue Cross, keep the same doctors and go to the same
hospitals.

This new plan increases the co-pays and deductibles to the same level that 300,000 State employees
and retirees now pay—instead of paying $5 when you go to the doctor, you will now have to pay $15.
It is still a better and more generous than almost any plan offered by private industry. It is a sacrifice,
and a change, but if we are going to get through this, change is required.

This new plan, if it is combined with modest increases in employee contribution rates, will save us up
to $2 million a year.

Tonight, I ask our municipal unions: Take this new plan – help keep fire stations open, police on the
street and teachers in the classrooms. Ask yourself this: isn’t this new health plan with a job better than
no plan and no job?

Changing our health care system is only one change

Changing our health care has to be the start, not the end of reforming our system. No one group can be
expected to bear all the burden of this massive deficit.
To get through this crisis, there has to be a common sense of shared sacrifice.

Fee Increases

As part of this sacrifice, we may need to ask you, the public, to pay more in fees for certain services.
It is never easy to do this, but, as President Obama said, everyone has to have an oar in the water.

Local Meals Tax

The Governor has proposed giving us a new option: the option of a local meals tax. If we are given the
option, we must seize upon it.

I urge our legislators tonight to give us that option, a local option meals tax, so that we can cushion the
cuts we have to make today and we are not forced to make even more Draconian cuts in July.

Increasing energy efficiency

If we are going to trim $2 million from our budget, we have to trim our energy costs.

Thanks to the help of the State and to Rep. Brian Dempsey, later this year, we’ll have new energy
audits on every building, and we’ll do everything possible to cut our energy bills.

Federal Help for the Hale Debt

To get through this financial crisis, we will once again ask our Federal delegation for help with the
Hale debt. Our message is simple: if the Federal government can spend $750 billion on the toxic debt
of banks, surely you can spend a few million take our toxic debt and get this Hale hospital albatross off
our backs once and for all.

Tough Fiscal Discipline

But most of all, to get through this, we will have to continue to do what we have been doing: strict
fiscal discipline and refusing to spend what we do not have.

The days of automatic pay raises every year are over—we have to live within our means. There is a
new fiscal reality—none of us likes it, but we have to live with it. We have to make certain our school
department gets the same message—and I know that some members of the school committee get it loud
and clear. Thank you.

Moving Forward
Stimulus package
Today, the budget cuts may seem to some as if this is our darkest hour.

But even in this ongoing recession, President Obama’s message of hope and change gives us hope.

Today, we see hope in the Federal stimulus package, that promises to put millions of citizens back to
work.

When that stimulus package is ready, we will be ready.

We will be ready with proposals for millions of dollars in stimulus money: money to money to fix our
crumbling roads, bridges and infrastructure, money to make our buildings greener and more energy
efficient, and money to improve our downtown and, most importantly, to expand and improve our
public education. Our city needs to be and will be at the top of the list to get money to expand our
school preschool programs, and we need to be at the top of the list to fix our school buildings.

Bringing new jobs to Haverhill

The stimulus package will help bring Federal jobs to our city, but we know that the vast majority of
jobs are in the private industry. Starting today, we will be ready to bring in the new jobs of tomorrow,
the green jobs and the bio tech jobs of tomorrow here.

On the outskirts of Haverhill, at the very end of Hilldale Avenue, in an area most of our citizens have
never been to by the Atkinson line, lies our hope for a better tomorrow.

We have a grant, called a MORE grant, to extend water and sewer service to that area, and to make job
creation in that park a top priority.

Attracting green and clean jobs is only one aspect of our program to go green to save green. Later this
year, we’ll install new solar panels on the citizen’s center, to match the solar panels we installed last
month at GAR Park.

And, as part of our green efforts, later this month, we’ll expand our recycling program in a way that
does not expand our budget. Starting on February 19, there will be single stream recycling at the
recycling center on Primrose Street, you’ll be able to bring everything down in one container, and it
will be sorted with new technology.

Later this year, we’ll expand our recycling program even further. We’ll start a new pilot program in
one district in the city for door to door pickup of single stream curbside recycling. If this effort is
successful, we will expand this curbside single stream recycling program to the entire city as soon as it
is economically feasible to do so.

Now, we have been working for some time on expanding the recycling program, and there are citizen
volunteer groups that have been working on this. I want to recognize tonight some members of the
recycling committee, and representatives of Team Haverhill, that have worked so hard and long on this
over the past years. Thank you for your service.

Real Impact of Recession is on People, Not Government

We’ve talked this evening about the deep and profound impact this recession is having on city
government. But the greatest impact of this recession is not upon government, it is on our citizens.

I see that impact everywhere I go, and every time I speak with people.

I see the impact of this recession in the eyes of the people who visit me every week at office hours, and
who pour out their hearts and souls to me.

I see the face of the recession in the faces of the people I meet around the city.

I hear the voice of recession in the voice of the man who came to see when the Paperboard closed—he
was out of work, losing his home and out of hope. We referred him to Southwick and we hope he was
able to find a new job.

I hear the voice of the recession in the voices of the people I speak with all around the city who are
losing their jobs, losing their homes, and losing their life savings.

Tonight, I pledge to all of you, to those hurt by the recession, to those who are unemployed, to those
who are losing their homes, and to those who are losing their hope, no matter what our troubles are, we
in city government will not abandon you. It is the duty of government to help, that is why I ran for
office in the first place, and we will do what we can to help in your hour of need.

Bring government to your neighborhood

We don’t have any more money to help with, so we have to be innovative and find new ways to help
with the money we already have.

To help those do not have transportation to get to city hall, or can not make it during regular business
hours, we’ll equip our police tactical mobile van as a rolling city hall, and we’ll bring government to
your neighborhood.

We’ll bring with us our foreclosure task force to tell you about programs to save your home, officials
from the state energy programs to tell you about programs to make your home more energy efficient,
and State officials to help you with your applications for unemployment or food stamps.

We know that the most important parts of government aren’t in city hall at all; they are here in the
neighborhoods, so I’ll be in every neighborhood over the next several months, bringing city officials
with me, to give you a quarterly update on this budget crisis, to answer your questions and to serve you
better in your neighborhoods.

You can help too

Government has to be there to help, that is why we have a government, but government can not do it
all. All of us have an obligation too—an obligation to help those in need, an obligation to chip in to
keep our city clean, green and safe.

To help fill in the cracks that government can not fill, tonight I announce the formation of the Haverhill
Citizen Volunteer Corps. This Corps will clean up our neighborhoods, plant flowers and make our city
shine. We do not have the money to fund this program, and I want to publicly thank John Chemaly and
Trinity Ambulance Company for agreeing to pay the first year’s modest stipend for a director for this
program.

Tonight I am asking citizens from all walks of life to join with us and sign up to make Haverhill better,
cleaner and greener. There will be more on the city web site shortly.

Conclusion
Five years ago, our future looked bleak. We worked together, Haverhill avoided receivership, and
Haverhill prospered.

I know that it looks bleak this evening also, but tonight I tell you that once this recession is over,
Haverhill’s future is bright.

Our best days are not behind us, they are ahead of us. As I look ahead, I see a thriving downtown, with
the best restaurant zone north of the north end. I see a new boardwalk, which we will break ground on
in the spring. I see a rail trail, which we will close on in the summer. I see that thriving consumer city,
a city you’ll be proud to live in, work in, and dine it and proud to send your children to school in. I see
world class schools, funded by the stimulus package and growth from our new districts, and I see a
Haverhill oriented towards our river, just as we were 100 years ago.

To those who say this is our darkest hour, I am reminded of the old country music song, the darkest
hour is just before dawn.

Here at Zion Bible College I am reminded of something else, of the words the Bible, of the Prophet
Jeremiah Concerning God’s plans: “…plans to prosper you and not to harm you, plans to give you
a hope and a future. (Jer. 29:11).

Here in Haverhill, there is hope. Our future is a great city and our future is in our hands. For
that reason I say to you tonight with confidence, the state of our city is, and will remain, strong.

Thank you and good evening.

PAGE

PAGE 1