Mayor Sylvester Turner, GHP Lead Houston Delegation to Mexico

Targeted sectors include energy, health care, sports and tourism

Mayor Sylvester Turner and the Greater Houston Partnership will lead a delegation of top Houston-area business representatives on a trade mission to Mexico City Nov. 20–22.  The delegation will focus on growing Houston’s investment and trade relationship with Mexico. More than 1,000 Houston companies report doing business with Mexico, and total trade between Houston and Mexico was valued at close to $17.7 billion in 2015. The region also offers 425 non-stop flights per week from Houston to 27 Mexican airports.

The Houston delegation will host two high-level business forums: one focused on exchanging best practices and intellectual capital in the energy industry featuring a keynote address by Roberta Jacobson, U.S. Ambassador to Mexico; and a medical research forum led by Dr. Bobby Robbins, President and CEO of the Texas Medical Center, the world’s largest medical complex, to explore collaborative opportunities on genomic medicine and obesity-related diseases. Additionally, delegates will meet with various high-level government officials including Mexico City Mayor Miguel Mancera, Secretary of Economy Ildefonso Guajardo, and Secretary of Finance and Public Credit Jose Antonio Meade.

“As we work to expand Houston’s economic reach around the world, we must not forget to continue to nurture ties with our neighbors south of the border,” said Houston Mayor Sylvester Turner. “This trip is about building upon the excellent relationship we already enjoy with Mexico. It is also about marketing Houston as a tourism destination. World class sports, shopping, arts and culture are just a short flight away thanks to Houston’s two international airports.”

As Houston’s second largest trading partner, Mexico is a key focus of the region’s international efforts. “Houston is uniquely positioned – through its economy, culture and status as a Knowledge Capital – to be a strategic partner in the exchange of technology, expertise and best practices with our Mexican counterparts,” said Bob Harvey, President and CEO of the Greater Houston Partnership.

In addition to business and trade opportunities, the delegation will also focus on tourism and entertainment. “Houston has a well-deserved reputation as a great place to do business and features first-class amenities and an incredible quality of life. In Houston, the opportunities are limitless for businesses, residents and tourists alike,” said Jamey Rootes, Houston Texans President and Chair of the Greater Houston Partnership. The joint delegation coincides with the first ever Monday Night Football Game outside of the United States, featuring the Houston Texans vs. the Oakland Raiders on Nov. 21.

With more than 100 languages spoken, Houston is the most ethnically diverse metro in the nation.  “Mexico is Houston’s number one international leisure market. Our marketing campaign ‘Hola Houston’ has been well received among travelers, and we want to capitalize on that momentum to showcase not only our sports teams, but how cool our city is,” said Mike Waterman, President and CEO of Visit Houston. “Visit Houston is excited to join Mayor Turner, the Partnership and the Houston Texans on this historic visit.”

Led by the City of Houston and the Greater Houston Partnership, the Houston delegation also includes representatives from The Plank Company; Accenture; Tietronix Software; Tesco Corporation; The Atlantic Partners Group, LLC; Linebarger, Goggan, Blair & Sampson LLC; the Houston Minority Supplier Development Council; the Houston Airport System and the Port of Houston.

 

Mayor Turner makes key appointments – names new public safety chiefs, presiding municipal court judge, and housing director

Pena (left) joined the El Paso Fire Department in 1995 and then rose through the ranks to the position of fire chief, which he has held since 2013. Acevedo has served as Austin’s police chief since 2007. His 30 years of law enforcement experience began as a field patrol officer in East Los Angeles.
Pena (left) joined the El Paso Fire Department in 1995 and then rose through the ranks to the position of fire chief, which he has held since 2013. Acevedo has served as Austin’s police chief since 2007. His 30 years of law enforcement experience began as a field patrol officer in East Los Angeles.

In a sweeping announcement, Mayor Sylvester Turner named four new department directors and a reappointment Thursday.  Pending City Council confirmation, Art Acevedo of Austin will assume the position of police chief and El Paso’s Samuel Pena will take over the fire department. 

“Acting Police Chief Martha Montalvo and Acting Fire Chief Rodney West have performed exemplary in dealing with some challenges and we are indebted to them for their service,” said Mayor Turner.  “I had said all along that once we reached solution to our pension problems, I would move quickly to fill key positions.  This is the team that will carry us into 2017 and beyond.  We are going to build upon the successes of 2016 and be even more transformative, innovative and responsive.”

Acevedo has served as Austin’s police chief since 2007.  His 30 years of law enforcement experience began as a field patrol officer in East Los Angeles.  In Austin, he oversaw a department with more than 2,400 sworn officers and support personnel and a $370 million annual budget.  He joined the department at a time when relations with minorities were strained due to questionable police shootings.  He has been credited for a commitment to police legitimacy, accountability and community policing and engagement.  His accomplishments include creating a special investigative unit to criminally investigate officer involved shootings and a new disciplinary matrix.  Acevedo holds a Bachelor of Science in Public Administration from the University of La Verne, is a graduate of the FBI’s National Executive Institute and speaks fluent Spanish.

Pena joined the El Paso Fire Department in 1995 and then rose through the ranks to the position of fire chief, which he has held since 2013.  He has previous experience as a fire fighter, paramedic, media spokesperson, advanced medical coordinator, Combined Search and Rescue Team member, Hazardous Materials & Special Rescue Task Force member and academy training chief. He has a Bachelor’s Degree in Criminal Justice and a Master’s Degree in Business Administration from the University of Texas at El Paso.  He is a veteran of the U.S. Air Force where he served for four years as an air control specialist. Like Acevedo, he is fluent in Spanish.

“Acting Police Chief Martha Montalvo and Acting Fire Chief Rodney West have performed exemplary in dealing with some challenges and we are indebted to them for their service. I had said all along that once we reached solution to our pension problems, I would move quickly to fill key positions,” (Mayor Turner).

The mayor also announced that he has selected Judge Elaine Marshall to be the new presiding judge of Houston Municipal Courts, Tom McCasland as the permanent director of the Department of Housing and Community Development and the reappointment of Phyllis Frye to another term as a municipal court judge. 

Judge Marshall was first appointed a municipal court judge in 1987.  She assumed the position of associate presiding judge in 2014 and she is responsible for supervising more than 20 full time judges and court security officers.  She presides over the City’s Teen Court and assisted with the launching of the court’s new computer system.  Prior to joining city government, she served as an adjunct professor of law at Texas Southern University and as an assistant Harris County District Attorney.  She graduated from the University of Notre Dame with a Bachelor’s Degree in Psychology.

McCasland has been serving as interim director of the Houston Department of Housing and Community Development since July.  He was previously employed as the chief executive officer for the Harris County Housing Authority and also has experience working as a contractor for the Bayou Greenways 2020 project and Vinson and Elkins LLP.  His law degree is from Yale University, and he holds a Bachelor’s Degree from Hobe Sound Bible College and a Master’s Degree from Baylor University.

Frye, the first openly transgender judge appointed in Texas, has served on the municipal bench since 2010.  She graduated from Texas A&M University with a Bachelor of Science in Civil Engineering and a Master of Science in Mechanical Engineering and later earned a Master of Business Administration and Juris Doctor Degree from the University of Houston.  She was honorably discharged from the United States Army in 1972 and transitioned in 1976.

“Beyond being very capable, this group also reflects the diversity of this great city,” said Turner.  “It is important that we have a leadership team at City Hall that is able to understand the different populations they serve.”

The mayor is expected to ask City Council to confirm his nominees on November 30.

 

Mayor Turner Announces Agreement with Uber to Remain in Houston

As part of the agreement, the City will bring forward process-improvement changes to Chapter 46 of the City Code which regulates vehicles-for-hire such as taxis, limos, and TNCs (transportation network companies such as Uber).
As part of the agreement, the City will bring forward process-improvement changes to Chapter 46 of the City Code which regulates vehicles-for-hire such as taxis, limos, and TNCs (transportation network companies such as Uber).

With Launch of Arro, Full Range of Transportation Options available for Super Bowl

Mayor Sylvester Turner today announced a comprehensive strategy to streamline the City’s vehicle-for-hire licensing process to ensure that Uber remains in Houston and that Houstonians and visitors have as many transportation options as possible during the upcoming Super Bowl. As part of the plan, Uber has committed to continuing operations in Houston with the use of fingerprint background checks through the Super Bowl.

“I am thrilled we can finally put this issue to rest and focus on the real task at hand—providing a great Super Bowl experience that shows off our City,” said Mayor Turner.  “We’ve crafted a proposal that reduces the length and cost of a driver application but still protects public safety.  This is a win for drivers and passengers alike.  These changes will help make sure that visitors have a seamless experience during the Super Bowl and Houstonians have diverse transportation options to meet the growing needs of our city.”

As part of the agreement, the City will bring forward process-improvement changes to Chapter 46 of the City Code which regulates vehicles-for-hire such as taxis, limos, and TNCs (transportation network companies such as Uber). The streamlined changes will reduce the costs of licensing from nearly $200 to $70, cut the licensing process in half, and allow drivers to be licensed in under 20 minutes.  The City’s policy on background checks will not change.  The proposed changes are expected to come before City Council before the New Year.

Mayor Turner also announced the launch of Arro, the City’s official multimodal transportation app, which will help make the City’s fleet of over 9,000 taxi and limo drivers more readily accessible to the general public.  Building on Top Taxi, Houston First’s initiative to improve the quality and customer service of Houston’s taxi industry, Arro will help transform the taxi experience in Houston. 

“In a city as large and diverse as Houston, taxis and limos will always play a critical role in our transportation strategy,” said Turner.  “Arro and Top Taxi will help modernize our taxi industry by making our fleet more efficient and equipping Houstonians with access to multiple forms of transportation at the push of a button.”  

While initially offering taxi rides, Arro’s offerings will expand in the coming months to include limos, wheelchair accessible vehicles, and collaborations with other forms of vehicles-for-hire and METRO.  Arro is available for download on Google Play and the Apple App Store.

“We are very excited to bring Arro’s consumer and driver friendly app to the people of Houston starting today. Arro’s presence is a significant step toward enhancing robust transportation options throughout Houston,” said Mike Epley, founder of Arro. “Our app has already enjoyed great success in several cities by offering a potential boost to drivers’ incomes and providing faster and easier transportation access for passengers. ”   

“Houston First recognizes that reliable and safe transportation is essential to the city’s success as a destination,” says Dawn Ullrich, president and CEO of Houston First Corporation. “That’s why we launched the Top Taxi Program in 2015 to coach our taxicab drivers on delivering a better customer service experience. Now, Mayor Turner is taking it a step further with the implementation of Arro, which we believe will revolutionize the user experience with taxis in Houston. We’re excited to partner with the city on the ongoing Top Taxi program and the rollout of Arro.”

 

Mayor Turner Leads a Trade Delegation to South Africa

Johannesburg is the largest city in South Africa and is one of the 50 largest urban areas in the world. The economic powerhouse of Johannesburg generates 17 percent of the country’s gross domestic product, mostly through manufacturing, retail and service industry sectors.
Johannesburg is the largest city in South Africa and is one of the 50 largest urban areas in the world. The economic powerhouse of Johannesburg generates 17 percent of the country’s gross domestic product, mostly through manufacturing, retail and service industry sectors.

Mayor Sylvester Turner and a 24-member delegation leave on Friday, October 28 on an investment and trade mission to South Africa to promote Houston as a business gateway and tourist destination. The Honorary Consul General to South Africa and Texas State Representative Helen Giddings, Texas State Representative Borris Miles, City Council Vice Mayor Pro Tem Jerry Davis, City Council Member Amanda Edwards, President of the Texas Medical Center Dr. Bobby Robbins, Greater Houston Partnership Senior Vice President Robert Pertierra and Visit Houston Senior Vice President Jorge Franz along with representatives from the Houston Port Authority, Houston Airport System and several members of Houston-based companies will accompany Mayor Turner.

The trade delegation will visit with the First Lady of South Africa Gloria Bongi Ngema-Zuma and the Mayors of Tshwane, Johannesburg and Cape Town. Meetings will primarily focus on energy, aerospace and healthcare opportunities. In Cape Town, Mayor Turner will also give remarks at the Annual General Meeting of the World Energy Cities Partnership (WECP).

“This trade mission is an opportunity to connect with South African companies and create sustainable relationships for business and tourism,” said Mayor Sylvester Turner.  “Houston is positioned to be a long-term partner for energy, manufacturing and healthcare.  If you want to do business on the African continent, South Africa is a great jumping off point.”

The trade delegation will visit with the First Lady of South Africa Gloria Bongi Ngema-Zuma and the Mayors of Tshwane, Johannesburg and Cape Town. Meetings will primarily focus on energy, aerospace and healthcare opportunities. In Cape Town, Mayor Turner will also give remarks at the Annual General Meeting of the World Energy Cities Partnership (WECP).
The trade delegation will visit with the First Lady of South Africa Gloria Bongi Ngema-Zuma (pictured), and the Mayors of Tshwane, Johannesburg and Cape Town.

In 2015, trade between Houston and South Africa was approximately $1 billion, making Houston the third busiest gateway for U.S. – South Africa trade by value.  Exports to South Africa include motor vehicles and parts, industrial machinery, chemical products, electrical machinery, oil and refined products, plastic products, optic and photographic instruments and precious metals. Imports include organic chemicals, mineral fuels, iron and steel, aluminum products, motor vehicles and parts and edible fruit and nuts.

Houston firms with major operations in South Africa include, but are not limited to American Bureau of Shipping (ABS), Baker Hughes, Inc., Dresser-Rand Company, KRB, Inc. and Schlumberger Limited.

Johannesburg is the largest city in South Africa and is one of the 50 largest urban areas in the world. The economic powerhouse of Johannesburg generates 17 percent of the country’s gross domestic product, mostly through manufacturing, retail and service industry sectors. Top global companies such as McDonald’s, Nokia, Toyota and Coca-Cola have their South African headquarters in the city which is located in the mineral-rich Witwatersrand range of hills and is the center of large-scale gold and diamond trade. Pretoria is a city characterized by service and hi-tech industries, and research and educational institutions. Cape Town is the second largest city in the country and is located at the southern tip of Africa.

 

City Council Endorses Historic Pension Reforms

Houston Mayor Sylvester Turner. Now that this item has been approved by City Council, the City will move forward in partnership with the three pension systems to seek legislative approval of the package reforms during the upcoming legislative session.
Houston Mayor Sylvester Turner. “It is a big deal that employees have agreed to these benefit changes.”

On a 16-1 vote, Houston City Council has endorsed Mayor Sylvester Turner’s historic package of pension reforms.  The vote clears the way for the City to move forward in partnership with the pension systems to seek legislative approval of the reforms. 

“I am bubbling over on the inside,” said Mayor Turner.  “I am thankful to everyone who has helped get us to this point.  That includes City Council, the pension systems, our City employees and many others.  This plan is historic, transformative and budget neutral. We are solving our pension problem permanent and we are doing it without needed a tax rate increase.  There is no other plan out there offering the same benefits. The Houston solution can be the model for other cities with similar challenges.”

The police, fire and municipal pension systems all signed off on the package of reforms prior to today’s City Council vote, marking the first time that the City and all of the pension groups have been united.

The plan immediately reduces the City’s nearly $8 billion pension debt by over 30 percent and then sets a 30-year fixed payoff schedule for the remaining $5.3 billion of debt.  This immediate reduction is accomplished through a combination of benefits changes that include scaling back cost-of-living adjustments, higher employee payroll contributions and phasing out of the Deferred Retirement Option Program, known as DROP, which allows employees to accept retirement benefits while continuing to work for the City.  In return for the concessions, the City has agreed to issue $1 billion in Pension Obligation Bonds to make up for years of prior underfunding of the pension systems.

“It is a big deal that employees have agreed to these benefit changes,” said Turner.  “I know this has not been easy, and I thank each of them for their patience, understanding and service.  This plan will provide stable and sustainable retirements at an affordable cost to the taxpayers who foot the bill.  Retirees won’t have to worry if the check will be there.”

Moving forward, predictions about the anticipated performance of pension system investments will be based on a more conservative seven percent assumed rate of return.  If there are market changes that cause costs to exceed pre-agreed limits, there is a mechanism to force additional changes in benefits to bring everything back in line.  A requirement that both sides share information will ensure compliance with the required 30-year payoff schedule.

State Senator Joan Huffman and State Representative Dan Flynn are expected to carry the Houston pension legislation.  Bill filing for the 2017 legislative session begins mid-November 2016.   

Houston celebrates Citizenship Month in November

Festivities promote “good citizenship” through inclusiveness, civic engagement and public service

Houston Mayor Sylvester Turner invites the community to celebrate the “Many Faces of Houston” during the eighth annual Houston Citizenship Month in November.  The month’s festivities commemorate what it means to be a contributing citizen of Houston through civic leadership, community service and actions that embrace racial and ethnic diversity, inclusiveness and unity.

The public is invited to enjoy a variety of programs and activities sponsored by community entities.  The events include performances, exhibits, films, lectures, talks, children’s story hours, arts and crafts, festivals and charity events.  The event venues include city libraries, museums, university campuses, neighborhood centers and green spaces.  Houston Citizenship Month is an initiative of the Department of Neighborhoods Office of New Americans and International Communities. The celebration is organized under the leadership of the Mayor’s Advisory Council of International Communities.

For a calendar of events, visit http://www.citizenshipmonth.org/.

JPMorgan Chase commits $1 million to fight homelessness in Houston

Mayor Turner: Houston nearing goal of $14.5 million to end chronic homelessness

Mayor Sylvester Turner today announced a $1 million grant from JPMorgan Chase to support Houston’s ambitious efforts to end chronic homelessness through The Way Home – the Houston region’s nationally recognized homeless housing initiative.  The award makes JPMorgan Chase the first corporate donor to support The Way Home’s development of permanent supportive housing for homeless Houstonians.

The Way Home has now raised $7 million towards its $15 million goal to finish creating 2,500 units of housing for chronically homeless individuals.  These vulnerable individuals have all been homeless for a year or more and suffer from a disabling condition.

“JPMorgan Chase’s support is more than just a grant, and it’s more than just about getting the homeless off our streets. It’s an investment in solving homelessness and changing the lives of homeless Houstonians,” said Mayor Turner.  “The Houston region is on track to end chronic homelessness, but we need the community’s support to cross the finish line.  Therefore, I challenge other corporations, large and small, across our city, state and nation to follow JPMorgan Chase’s lead and invest in The Way Home to help Houston become the first city in the nation to effectively end chronic homelessness.”

Ending chronic, veteran and family homelessness is a top priority for Mayor Turner and the City of Houston, as well as the U.S. Department of Housing and Urban Development, Department of Labor and Veteran’s Administration.

More than 100 local governmental, business, faith, nonprofit, and charitable organizations are working together under The Way Home umbrella to build and manage a single system focused on a “Housing First” model to solve homelessness.  Since 2011, more than 3,325 chronically homeless individuals and over 4,920 homeless veterans have been permanently housed, helping reduce overall homelessness by 57% and essentially ending veteran homelessness in the region.

“The Way Home is an example of Houston at its best: leaders of nonprofits, the city, county and other stakeholders coming together to tackle the challenge of homelessness,” said Carolyn Watson, head of philanthropy for JPMorgan Chase in Houston. “We are committed to assisting those who fall into homelessness so that they have a path back to safe, affordable housing as quickly and compassionately as possible. We are honored to participate in this partnership, which will create quality, affordable housing for Houstonians in need.

The $1 million grant will be invested in The Way Home’s Permanent Supportive Housing Capital Grant Fund, managed by the nonprofit Corporation for Supportive Housing (CSH).  In 2013, CSH began a partnership with the City of Houston to meet the housing and services needs of people struggling with homelessness.  As part of this community-driven process, the City and local stakeholders also prioritized the creation of affordable housing to prevent future homelessness.

“CSH has national expertise ensuring dollars are spent wisely to create quality affordable housing that ends the cycle of homelessness,” said Deborah De Santis, President and CEO of CSH.  “What is so striking is how the community, through the City government and partners involved in The Way Home, and now with this generous commitment from JPMorgan Chase, is working together, setting an example for the rest of the country by not just talking about ending homelessness but actually doing it.”

Zika Abatement Paying Off for Houston Neighborhoods

Mayor Sylvester Turner speaking in June 2016 about the city of Houston staying proactive in the fight against the Zika virus. He said, "We want all of our residents to have the information and the products that they need to protect themselves from this virus."
Mayor Sylvester Turner speaking in June 2016 about the city of Houston staying proactive in the fight against the Zika virus. He said, “We want all of our residents to have the information and the products that they need to protect themselves from this virus.”

More than 35,000 tires and 4,500 tons of debris have been hauled away in the 32 weeks since the City began special weekend sweeps to clean up illegal dump sites that can serve as Zika breeding grounds.  The effort, which is expected to cost the City $3.6 million this year, targets economically-challenged areas of City Council districts A, B, D, H, I and K.

“Crews are out every weekend removing tires and other junk dumped in our neighborhoods,” said Mayor Sylvester Turner.  “Houston is leading the state and, possibly, the nation when it comes to attacking Zika.  We’ve been lucky that we have not seen any Zika infections due to local transmission.  However, I believe it is a just a matter of time.  We have repeatedly asked the state for financial help, but those requests have gone unanswered.  With some extra money, we could increase collection frequency beyond the weekends, establish additional drop-off locations for heavy trash and develop and distribute more informational materials.”

The City is hopeful it will qualify for a portion of the $1.1 billion set aside last week by Congress to help fight Zika.  To date, the only Zika related funding awarded to the Houston area is a $1.5 million grant for surveillance, testing and prevention from the Centers for Disease Control and Prevention.

Houston and Harris County report a combined total of 58 Zika cases, all of which were infected while traveling outside the U.S.  If someone contracts Zika through the bite of a mosquito in Houston, rapid response teams will be immediately dispatched to the affected neighborhood to disseminate information on Zika protection and mosquito reduction.  Properties will be surveyed for potential mosquito breeding grounds and minor repairs will be made to stop mosquitoes from getting inside homes.

Residents are encouraged to follow the three Ds of mosquito defense: drain, dress, DEET!  Drain standing water and keep hedges trimmed.  Dress in long pants and long sleeves, keep windows and screens repaired and use air conditioning.  When outside, spray exposed skin with mosquito repellant containing DEET, reapply as necessary and use netting to protect babies in strollers or car seats.

Mayor Sylvester Turner leads a 30-member delegation on a trade mission to Cuba

Houston Mayor Sylvester Turner.  “ I am proud that HFD consistently achieves that status while utilizing  strategic partnerships, innovation, best practices and shared sacrifice.”
Turner…“We can’t say that Houston is a world class city unless we are reaching out and establishing international relationships.”

Mayor Sylvester Turner and Greater Houston Partnership Board Chair Jamey Rootes are leading a 30-member delegation on a three-day investment and trade mission to Cuba.  Representatives from the Texas Medical Center, Houston Port Authority, Houston Airport System, Houston Community College, Houston Hispanic Chamber of Commerce, United Airlines and several City Council Members and Houston based companies are accompanying the mayor on this historic trip. This is the mayor’s first trade mission and the first time a Houston mayor has visited Cuba.

“We can’t say that Houston is a world class city unless we are reaching out and establishing international relationships,” said Mayor Turner.  “This trip speaks to the special connection Houston has with Latin America.  With the changes brought about by the Obama Administration and the new direct flight between Houston and Cuba, there are opportunities to explore in the areas of healthcare, sports, energy, trade and the arts.  I want to begin the delicate process of drawing Houston and Cuba closer together.”

“We want Cuba to think of Houston as its preferred partner and gateway to America,” said Greater Houston Partnership President & CEO Bob Harvey.  “More than a decade ago, the business community voiced its support for opened relations with the country. We are excited about the opportunity to strengthen ties with Cuba.”

Plans for this trade mission began in late 2015 when U.S. Ambassador Jeffrey DeLaurentis visited Houston as part of the U.S. State Department’s Experience America program.  Houston made a strong impression, and the ambassador quickly returned for another visit after Mayor Turner took office.

The trade delegation’s itinerary includes meetings with Ambassador DeLaurentis and the Cuban Ministers of Foreign Trade and Foreign Investment, Energy and Mines, Tourism and Public Health as well as the Cuban National Institute of Sports.

The U.S. and Cuba are natural trade partners, especially in the area of U.S. agricultural exports.  In 2014, Cuba imported nearly $2 billion of agricultural products.  It is estimated that shipments between Texas and Cuba will increase to $18.8 million.  These exports to Cuba would have a total economic impact of nearly $43 million.  Cuban imports from Texas also include oil, machinery, automobiles, iron and steel.  The Port of Houston would likely be a major benefactor of this increased activity.

On July 20, 2015, the U.S. and Cuba restored full diplomatic ties for the first time in 50 years when they reopened their embassies in each other’s capitals.

United Airlines begins nonstop flights to Cuba from Bush Intercontinental Airport on November 29.

Houston’s Mayor Turner Announces Historic Pension Reform Plan

“This reform accomplishes the objectives I set at the beginning of this process,” said Mayor Sylvester Turner.
Mayor Sylvester Turner…“This reform accomplishes the objectives I set at the beginning of this process.”

Negotiators for the City, the Houston Police Officers’ Pension System, the Houston Firefighters’ Relief and Retirement Fund and the Houston Municipal Employees Pension System have developed Preliminary Points of Understanding on a structural approach to long term, sustainable, defined benefit pension reform.  Detailed formal plans continue to be developed and will need to be presented to the governing bodies of the three pension systems, City Council and the state legislature for approval.

“This reform accomplishes the objectives I set at the beginning of this process,” said Mayor Sylvester Turner. “The plan I am outlining today immediately reduces and later eliminates the unfunded pension liability, controls costs going forward, allows us to retain employees and allows us to present to the state legislature a much more united front.  It is a budget neutral, 30-year fixed payoff plan that includes significant cost avoidance from what the City would need to pay in the absence of reform. No other plan does this and takes the issue off the table permanently. We will have fully funded, secure, sustainable and affordable defined benefit pension plans that our employees can rely on and our taxpayers will find fiscally responsible.”

With implementation of the changes, the City’s unfunded pension liability immediately drops by $2.5 billion and continues dropping for the next 30 years, at which time it will be paid off. This approach replaces the present practice of restructuring the liability every year with a 30-year closed amortization model that is a pension best practice and a requirement of the City’s financial policies. Just like a fixed rate consumer mortgage, the liability will be paid off at the end of 30 years.

To substantially reduce risk related to market performance and in keeping with the national trend for pension systems, the assumed rate of return on pension investments will be reduced to 7%.

To further stabilize the pension funds, the City will be required to make the full annual contribution to all three pension systems.  Payroll contribution rates will be fixed over the 30-year period, providing more predictable budgeting.  The proposal cuts the City’s annual obligation to a manageable level and, most important, is budget-neutral while significantly reducing what the City would need to pay to cover the full annual contribution without reforms.

The plan also employs $1 billion in pension obligation bonds for funds that have not received the full annual required contribution from the City in recent years.  This will increase the City’s debt, but earnings from pension investments are anticipated to more than offset the borrowing costs.

To ensure the City does not find itself in the same place again, there is a cost-management component.  If future market changes cause costs to exceed specified limits, the City and the pension systems will return to the negotiating table to work out adjustments to bring costs back in line.  Mayor Turner characterizes this as a cost management corridor that contains a thermostat that must be kept at a set temperature.  The thermostat concept is the only point on which all of the parties lack unity.  The police and municipal pension systems have gotten comfortable with it, but the firefighter pension system has not, so far. Talks are continuing.

“These points of preliminary understanding are historic in nature because of how impactful they are,” said Mayor Turner.  “I have discussed them with numerous stakeholders and key members of the state legislature.  The response has been very positive.  To my knowledge, no other city in the nation has crafted a plan that addresses the problem in quite the same way.  We have a way to solve our pension issues for good, and our approach can serve as a model for other cities.”

There will be changes in employee benefits.  They are different for each pension system but, basically, will affect one or more of the following: cost of living adjustments, future benefit accrual rates and the DROP program.  More details will be forthcoming once the finer points of negotiation are finalized and the governing bodies of the pension systems consider these agreements.

“These changes are being made in a manner that minimizes the impact on the thousands of police, fire and municipal workers eligible to retire today,” said Turner. “We must retain these employees to continue to serve the residents of this city. I appreciate the pension system representatives who have recognized the status quo must change and have been willing to move away from previously held fixed and non-negotiable positions.  The pension systems have also shared more data than ever before and are committed to continue working on the right way to share the data we need to manage our costs going forward. There is still much work to be done, and I know there will be disagreements along the way, but we have come so far since we first began talking seven months ago.”

Mayor Turner has never wavered from his promise to accomplish pension reform while still maintaining defined benefit plans.  However, he did have his financial analysts study implementation of defined contribution plans.  They found that option would increase immediate costs and provide no financial relief for at least 30 years.

This contribution from City employees is step one of the shared sacrifice model Mayor Turner is asking everyone to help with.  He does not expect City employees to shoulder the entire burden.  Once pensions are fixed, he intends to ask voters to repeal the revenue cap that handicaps the City’s ability to keep up with the needs of a growing population.  No other governmental body in the state has such a restraint.

“I took this job knowing that our City faced difficult public policy challenges,” said Turner.  “I promised pothole repairs in record time, and we delivered. We followed that achievement by closing Houston’s biggest budget gap since the Great Recession. We delivered a budget built on sustainable, recurring improvements, and it was adopted by City Council unanimously and in record time. Now, we bring you a solution to Houston’s pension challenge that meets the needs of our City, its employees and its taxpayers. To all concerned, I say you can trust this solution to deliver on our promise of pensions that protect our employees’ retirement security while remaining affordable and sustainable for the City and its taxpayers”

The proposed pension reforms announced today have been discussed with numerous stakeholders and key members of the state legislature with very positive results.

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