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Vol. 36, No. 8

Boca Grande, Florida

THIS WEEK

ONTHEISLAND

Your Locally Owned Weekly Newspaper

February 27, 2015

Economics forum:
Lets talk municipal
debt and Detroit

A message from
the GICIA:
Its membership month
SUBMITTED BY THE GICIA

he Gasparilla Island Conservation and Improvement Association continues its efforts to

protect the beauty and lifestyle that
make Boca Grande a special place.
Of course, it takes a strong membership base to maintain a growing and
successful nonprofit organization.
That is why we have designated
March as GICIA Membership Month!
We want to show our appreciation to
current members and encourage new
residents to become members.
The GICIA focuses on three important components in its efforts to maintain the small island charm and quality
of life of Boca Grande residents. First,
the Gasparilla Island Conservation
District Act of 1980: This important
legislation, championed by GICIA in
See GICIA on PAGE 18

Seeing shells
away from the
seashore?
You might find treasure!
STAFF REPORT

re you seeing seashells everywhere ... and not just at the

beach? Look around in your
local neighborhood stores, restaurants, churches, golf courses, parks
and bars, because you might find
treasure.
The Barrier Island Parks Society is
hiding informational seashells all over
See SEASHELLS on PAGE 22

BY JACK SHORT

he annual Boca Grande Economics Group discussion will

feature two prominent guests
this year, both federal judges with ties
to the Detroit bankruptcy. Federal
Judges Stephen Rhodes, who
presided over the bankruptcy, and
Gerald Rosen, who served as a mediator in the process, will join the forum
this year. They, along with emergency
manager Kevin Orr, were perhaps the
three key figures in what some have
called a textbook example of municipal financial restructuring.
In July, 2013, when the city of Detroit, Michigan filed for chapter 9 bankruptcy, a legacy of mismanagement,
population flight and corruption had
come to a head and captured the attention of a nation. While Detroit was
one of several hundred cities, counties and municipalities to declare
bankruptcy, it was, to date, the largest
(by population), and had the misfortune to do so during one of the worst
economic recessions since the Great
Depression.
Members of the Boca Economics
Group devoted a large share of last
See BANKRUPTCY on PAGE 16

Boca Grande visits Cuba:

Touring a land that time forgot
BY JACK SHORT

The following is a brief introduction

of our account of the Boca Grande
United Methodist Churchs recent mission trip to Cuba. Our reporter, Jack
Short, accompanied the group.
Please see subsequent issues of
the Beacon for more of the story.
ix fairly tired, dusty travelers
(and one writer) landed back in
Florida last week after a sevenday excursion to Cuba on behalf of
the Boca Grande United Methodist
Church.
The Methodist Church has seen
rapid expansion in Cuba in recent
years, and BGUMCs sister church in
Mayari, near Hoguin, had just completed the renovation of its church.
BGUMC supported the renovations,
and their missions visit coincided with
a three-day, district-wide celebration
at the new facility.

Just as with changes to CubanAmerican relations, the practice of religion has been more and more
accepted, especially in the last
decade or two. Initially, the Cuban
government promoted atheism in accordance with Lenins doctrine. For a
period after the revolution, Christians
and other religious individuals were
barred from joining the communist
party, and construction of churches
was restricted.
But since the collapse of the Soviet
Union in the early 1990s, much has
changed.
A member of the congregation told
me that years ago church doorways
were shut because people would
throw rocks or eggs at the parishioners. Now congregations spill out
into the streets from the new structure,
See CUBA on PAGE 16

Talking Civil War history, cattle with the Knight family at Bytes
BY JACK SHORT

ohns Knight and Mary Knight

Vickers headed up this weeks
History Bytes discussion, originally meant to be about the history of
cattle farming in Florida.
Robert Johnson didnt say why he
changed the focus of Wednesdays installment, but the result was a presentation by Johns and Mary about their
familys role in supplying, among others, the Confederate soldiers with cattle during the Civil War.
Florida was a major presence in the
nations cattle industry, at one time
one of the largest producers. Florida
See BYTE on PAGE 20

Shown above, Mary Knight Vickers, Johns Knight and Robert Johnson. Photo by Jack

Page 16

BOCA BEACON - February 27, 2015

Bankruptcy
From PAGE 1
years forum to unfunded liabilities in
the federal budget.
This year, said Jon Kissinger, a
long-standing member of the group,
we wanted to focus on the major financial challenges being faced by a
number of the cities which are overextended with regards to their obligations and commitments
Detroit had, at the time it filed, $18
billion in debt and, because of a dwindling tax base, corruption and other
factors, had few resources with which
to pay it. Both judges Rhodes and
Rosen agreed, during an interview
with the Beacon, that timeliness was
essential.
Of the $18 billion debt, according to
Rosen, approximately $3 billion was
underfunding of the uniform and
nonuniform pensions and approximately $7 billion was legacy costs for
health care. $8 billion was municipal
finance debt and the remainder was
debt of various types.
The bankruptcy was initially contended not only by creditors, but by
pensioners, whose financial burden
constituted a large portion of the citys
obligation though not the majority.
Because the Michigan constitution
prohibits the impairment of pensions,
some parties objected that the state
could not properly authorize the filing.
I did overrule that objection, said
Rhodes. I held that because in our
federal system, the Federal Constitution and federal law is supreme over
state law, and I further held that, under
Michigan law, the obligation of munici-

Cuba
From PAGE 1
shored up with $40,000 dollars from
the BGUMC over the last three years.
Their total mission budget is considerably larger, and works in Cuba and the
Dominican Republic are prominent examples of their mission work.
Pastor Brian Brightly and Dan
Christopherson (a lay leader in the

palities to pay pensions is a contractual obligation and in bankruptcy (we)

impair contracts all day, every day
Though pension claims, as a result,
were not entitled to special protection,
their creditors fared better than municipal bond holders, but the pain was
shared by most to some extent, according to The Economist. In November, that publication wrote that
pensions would see cuts of 4.5 percent and that, except for police and
firefighters, cost of living adjustments
would be eliminated. Those groups
would face cuts to their health care
benefits, too. Some bondholders
faced losses of 25 percent while others would fare much worse.
Because the claims of the bondholders and the claims of the pensioners
were all unsecured, under bankruptcy
law they must be treated alike, according to Rhodes.
The people that lost the most
money were some of the insurance
companies that were guaranteeing
some of the loan obligations of the city
of Detroit, said Bruce Birgbauer, a
friend and former colleague of
Rhodes, who will moderate the forum.
Kissinger added that some of those
insurers were given development
rights that might help recoup losses in
the future.
One of the difficult challenges for
mediators, said Rosen, was that this
was largely an assetless bankruptcy.
I think at the time of the filing the
city had about eight weeks of cash on
hand, he said.
He described a city whose finances
were simply unsustainable.
By the same token, he said, the

n At right, Pastor Brightly addresses Boca

Grande visitors and Cuban residents.

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ability in this country is somewhere

between $1 billion and $4 billion,
Rhodes said. Thats a big number
and it needs to be addressed with
some urgency.
He said that there were unique aspects to the Detroit bankruptcy that
may prevent it from serving as a blueprint in future cases, but that the
prompt action of the mediators was
essential. Additionally, nothing was
going to get better with time, as judge
Rosen said.
Rosen said that because his deliverable was an agreed upon plan of adjustment, to the extent possible, part
of his goal was to avoid precedentsetting decisions.
Detroits case was also at least
somewhat unique in the that the federal government refrained from offering aid or guarantees.
Where does that money come
from, asked Kissinger, and where
does it stop?
John Kissinger said that the forum
will begin with a macroeconomic perspective from Fred Allardyce, former
corporate executive and current member of the Boca Economics Group.
Its a fairly common issue throughout the country said Allardyce.
The sooner people recognize that
theyve got a growing problem, the
better the opportunity to try to make
their environment more appealing so
that they dont lose business or attract new business to get some underpinning to the economy.

Methodist church) led the trip. Brightly

preached in several churches and
homes, and each American present
returned with a new perspective to
share.

See our window display on Park Ave.

Heidemarie J. Burke, CPP

very real human cost and what it

would have meant to the state to cut
pensions by the very, very severe levels that (Orr) was proposing would
have had drastic ramifications, not just
for the city but certainly for the ability
of the city to attract employees in the
future
One of the centerpieces of the restructuring, the Grand Bargain,
saved the Detroit Institute of Arts collection, once imperiled, and brought
pledges from numerous entities including private foundations, businesses and the state to, among other
things, fund the cities ailing pensions.
They purchased the art, raising $820
million, and placed the art in a nonprofit trust. That bargain was Judge
Rosens responsibility and, as he put
it, one of his first challenges monetizing the citys only asset, a large collection of art, without selling.
I felt it was very important not to liquidate the DIAs art, he said. Its an
iconic, world-class art collection.
The bankruptcy has not been without problems. Last year, the ACLU
filed suit on behalf of residents whose
water had been shut off for nonpayment, and the need for a restructured,
regional water system became apparent. Though Rhodes dismissed that
suit, Rosen said, it is now on appeal.
Looking ahead, Rhodes said that
municipalities need to consider changing from defined benefit programs to
defined contribution plans (more like a
401(k)), wherein the pension beneficiary assumes the risk, though they can
mitigate that by choosing how money
is invested in markets.
The unfunded municipal pension li-

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