Governmental Affairs and Policy Committee Meeting Notes
Sunday, September 13, 2009, 8:30-11:30 a.m.
ICMA Annual Conference, Palais des congrès de Montréal, Québec, Canada

1.	Welcome and Introductions
•	ICMA leadership visit (Dave Limardi, Darnell Earley)
2.	GAPC Pep Talk: Roles and Responsibilities (Patrick Urich & Scott Hancock)
•	The ICMA Policy and White Paper Process
3.	White Paper Updates
•	Intergovernmental relations (Michael Howell-Moroney and Donna Milam Handley, University of Alabama at Birmingham)
•	Performance metrics for ARRA funding (David Ammons, University of North Carolina)
4.	Committee Business
•	National committee updates:
o	Steven Thompson – GASAC Update (Invited)
o	Lee Feldman - FEMA NAC Update
o	Richard Brown - Various Updates
5.	Small Group Discussions
•	Review and discuss white paper short list and roster of white paper topics
•	Small group discussions (hot topics, updates, pending legislation)
•	Report-outs and recommendation on white paper(s)
6.	Conclusion & Next Meeting

1.	Welcome and Introductions
Committee chair Patrick Urich, County Administrator, Peoria County, Ill., welcomed the members and guests in attendance in person and via conference call.

Committee Members in Attendance
Bob Agee, Annapolis, Md.
Pam Antil, Novi, Mich.
Larry Arft, Beloit, Wis.
Darin Atteberry, Fort Collins, Colo.
Ron Bottoms, La Porte, Tex.
Richard Brown, East Providence, R.I.
Joe Carey, Milwaukee County, Wis.
Leon Churchill, Tracy, Calif.
Toby Cotter, Richfield, Wis.
Tony Dahlerbruch, Rolling Hills, Calif.
Lee Feldman, Palm Bay, Fla.
Tonya Galbraith, McCordsville, Ind.
Scott Hancock, Maryland Municipal League
Matt Hart, Mansfield, Conn.
Sara Imhulse, College Park, Md.
Mary Jacobs, Sierra Vista, Ariz.
Roger Kemp, Kemp Consulting, LLC, Conn.
Victor Lauria, Novi, Mich.
Murray Levison, Sacramento, Calif.
Bob McEvoy, New York State City/County Management Association
Mark Ryckman, Corning, N.Y.
Tim Schuenke, Delafield, Wis.
Lee Worsley, Catawba County, N.C.

Guests and ICMA Staff

David Ammons, University of North Carolina
Don Borut, NLC
Dave Childs, Washoe County, Nev.
Jason Cozza, SUNY Stony Brook, N.Y.
Joshua Franzel, ICMA
Donna Milam Handley, University of Alabama at Birmingham
Michael Howell-Moroney, University of Alabama at Birmingham
Elizabeth Kellar, ICMA
Alison Richards, ICMA
Cathy Spain, NLC
2.	GAPC Pep Talk: Roles and Responsibilities
Patrick Urich and Committee Vice-chair Scott Hancock, Executive Director, Maryland Municipal League, discussed the role and importance of the Committee. Committee members serve as an early warning system to identify policy issues, funneling information from the ground level up. Traditionally, local government management professionals and ICMA have struggled to find their niche in the policy process; we are good at implementing. We have found some success with the policy white papers. The committee is comprised of ICMA members who serve on the committee for one-, two-, or three-year terms, and state league directors who serve on the committee indefinitely. This is a working committee, so members are encouraged to participate.

NOTE: Committee members are encouraged to review the committee member roles and responsibilities and ICMA policy process included as part of the September pre-meeting packet.

Don Borut, Executive Director, National League of Cities, provided brief remarks on the role of the Big 7 (seven associations, including NLC and ICMA, that represent state and local government) in federal policy and commented on how helpful the ICMA white papers have been. He noted the dynamic between elected officials and professional managers has improved over time—NLC is no longer “spooked” by managers being involved.

Among NLC’s current policy issues of importance are:
•	Intergovernmental relations/restoring the partnership
•	Mandatory collective bargaining for police and fire
•	Process for looking at and measuring federal monies
•	Recovery Act reports due soon and the media scrutiny surrounding spending; we need to frame and provide good examples of what is working
•	Health care – municipalities are the 4th largest employer nationwide
•	Transportation reauthorization – where will the money come from? Gas tax revenue is down with increased use of hybrid and other more efficient vehicles; we need alternative revenue sources for transportation
•	Energy and sustainability
•	Immigration.

Cathy Spain, Director, Center for Enterprise Programs, NLC, discussed a mutual bond assurance company in development, to better enable cities to borrow money for capital improvements. 

NOTE: A summary mutual bond assurance company business plan was e-mailed to the Policy Committee and is included as an appendix to these meeting notes.

ICMA president Dave Limardi and president-elect Darnell Earley stopped by the meeting to welcome and thank members and staff for their contributions to ICMA, the Committee, and the Profession. President Limardi noted that the ICMA Code of Ethics, which provides a professional compass, was signed 85 years ago in Montréal and defines ICMA members as leaders with character.
3.	White Paper Updates
NOTE: White paper drafts were included with the Committee’s pre-meeting packet, sent via e-mail and posted online. Committee members should e-mail Josh Franzel at jfranzel@icma.org with any questions or comments.
a)	Intergovernmental relations
Michael Howell-Moroney and Donna Milam Handley, University of Alabama at Birmingham, joined the Committee via conference to discuss their draft white paper commissioned by ICMA, Measuring the Results of Economic Stimulus Investments: Local Government Leading the Way. 

•	Review of the paper’s recommendations
i.	Creation of a core council of 20-25 federal, state and local officials – this council, plus related policy groups, would identify policy priorities and stakeholders for a consensus building approach to intergovernmental relations
ii.	Immediate study of the American Recovery and Reinvestment Act
iii.	Subsequent identification of other salient intergovernmental policy issues
iv.	Begin with substantial federal funding with a plan for a growing share of state/local support. 

•	Review of and lessons learned from the 1959-1996 Advisory Commission on Intergovernmental Relations (ACIR)
o	Collegial, but seen as “bought and paid for” by the feds
o	Avoided controversial issues, tending to make incremental/practical recommendations
o	Staffing problems, including absenteeism.

•	Questions and comments from the Committee
o	The big intergovernmental issue is political. There is a lack of understanding from the federal government of how federal legislation impacts and burdens state and local governments. ARRA is a teachable moment to underscore the broken partnership.
o	How will this new core council be funded versus ACIR (which received federal funding with ad hoc state and local funding)? The authors propose the core council would receive a federal appropriation for startup costs but other funding sources would be identified.
o	How much funding? Perhaps not a study group but a working committee could establish who, what, and how much money.
o	How would we deflect criticism of yet another organization with all the other organized think tanks and the demise of the ACIR? We need an organization devoted to intergovernmental relations, not just an element.
o	Don Borut, the 2009 chair of the Big 7, met with Cecilia Munoz, intergovernmental liaison at the White House; she was unaware of the ACIR. The forthcoming white paper may be an opportunity for ICMA, as a nonpolitical organization, to reinforce the importance of restoring the partnership.

b)	Performance metrics for ARRA funding
David Ammons, University of North Carolina, joined the Committee via conference call to discuss his draft white paper commissioned by ICMA: Measuring the Results of Economic Stimulus Investments: Local Government Leading the Way.

ARRA provides an opportunity for local governments to deliver/communicate return on the nation’s investment—the lasting benefits to their communities. The white paper recommends reporting in a uniform fashion for aggregation—measuring overall conditions before and after a project, without specifying the stimulus. Dr. Ammons provided example measures for street resurfacing: 1) paved lane miles in satisfactory or better condition as a percentage of total lane miles, before and after; 2) baseline assessment of street inventory condition, before and after; 3) lane miles last resurfaced by decade. A committee of local government executives could be established to review the measures.

Questions and comments from the Committee
•	ICMA’s Center for Performance Measurement should be involved
•	Why was the expansion of police technology not included in the paper?
•	The recommendations in the white paper may lead to unintended consequences for those communities who have not adequately planned for lifecycle replacement costs; these communities may rely on federal funding
•	This is an opportunity to be seen as a federal partner, if local governments “do this right” (measurably demonstrate outcomes from the Recovery funding
•	Federal terminology is off-putting, with use of words like enforcement and compliance from the Inspector General’s office
•	Is there an FTE formula alternative?
•	Measuring unemployment rates?
4.	Committee Business
a)	National committee updates
Lee Feldman, City Manager, Palm Bay, Fla., updated the group on the Federal Emergency Management Agency’s National Advisory Council (FEMA NAC), which comprises the main council and several subcommittees. Issues include:
•	National Response Framework, which replaced the National Response Plan Partner Guides. It has been recommended to do away with these guides.
•	Target Capabilities List Draft Voluntary Guidelines; 4 of 31 target capabilities (multiagency, incident command, hazmat, and mass transit) have been reviewed. Targets have classes—ranging from 1, for the largest levels of government, to 5, applicable to all governments. The subcommittee will be expanded on a capability-by-capability basis to seek outside expertise.
•	Post-disaster assistance
o	Stafford Act, which is up for review. The Act provides a formula-driven, public assistance program block grant for local government assistance post-disaster and helps speed up the flow of money to local governments.
o	FEMA increase to federal contributions depending on the disaster type.
o	Bifurcation of federal authority for post-disaster assistance; current legislation doesn’t allow for consolidation.
o	Post-disaster housing

Questions and comments from the Committee
•	What about the cumbersome task of preparing and submitting reimbursement documentation for post-disaster assistance? The proposed block grant might eliminate the need for so much documentation.
•	RSD housing inspection is currently not a reimbursable expense, but should be.
•	Is anything being done to address the reimbursement gap between damage to homes and their actual value? Addressing the gap issue would be a legislative change to the Stafford Act; the FEMA administrator is only able to submit to the White House five legislative changes annually, so it is difficult to address all issues.

Lee also mentioned that he is encouraged that Craig Fugate, the new FEMA administrator, is not bypassing local governments—he is reaching out to local communities. 

Richard Brown, City Manager, East Providence, R.I., updated the Committee on the work of the NFPA 1710 Technical Committee; College of Occupational Guidelines for Law Enforcement; National Infrastructure Protection Plan SLT coordinating committee; Emergency Management Accreditation Guidelines;  DHS quadrennial review; and the FEMA Target Capabilities List Work Groups (on which he; Mark Ryckman, City Manager, Corning, N.Y.; Jim Thompson, City Manager, Casa Grande, Ariz.; Victor Lauria, Commander, Novi Police Department, Mich.; and Jeff Braun, Emergency Management Coordinator, Fort Bend County, Tex. serve). Victor Lauria reiterated the importance for local government management involvement/review.

Richard said that feedback on the FEMA Fusion Center document offered an opportunity to educate FEMA on the role of local government managers.

Mark Ryckman provided a brief update on public safety spectrum sales; the recent auction was not successful. 

Committee members are reminded that Ron Carlee, County Manager, Arlington County, Va. (who soon will transition to the ICMA staff), is the elected chair of the National Homeland Security Consortium.

Richard encouraged Committee members to get involved with FEMA at a regional level.

He is part of the highly competitive Executive Leaders in Homeland Security program, which entails four weeks of on-site training. So far, there is very little general management involvement in this program. He encouraged other interested Committee members to apply (and if they do not succeed the first time, to reapply).

b)	Other

The Committee discussed communication among Committee members and with the staff; staff reported development of a Google Group which may facilitate conversation.
5.	Small Group Discussions
•	Review and discuss white paper short list and roster of white paper topics
•	Small group discussions (hot topics, updates, pending legislation)
•	Report-outs and recommendation on white paper(s)

The Committee broke into three discussion groups to discuss hot topics, and then reported back to the group. Ideas included:
•	Recovery Act
o	Follow up to Recovery Act measures white paper – What are the critical programs implemented with Recovery Act funding that should continue?
o	ARRA, energy efficiency block grants – A good model, but the application process needs to be streamlined. We need to collect examples.
•	CNG vehicles and the lack of fueling stations at a state/regional level
•	Health care—Without any action, increases in health care costs 10% annually. There are many unanswered questions and concerns about the draft bills circulating in Congress:
o	How will cities and counties be affected as employers?
o	What about the community at large?
o	What happens if paramedics can’t get fully reimbursed or the ER is full?
o	What are the financial impacts?
o	Do local governments like the idea of a cooperative or a public option?
o	Texas and other states already have a cooperative “public pool” for cities. Susan Smith mentioned as a contact for state league pool.
o	Federal legislation that supersedes union HC rules.
There was general agreement that an ICMA White paper should not try to do too much.  Some consensus that a focus around local governments as employers could be helpful.
•	Future of infrastructure. What financing approach makes sense?  Miles driven?  Gas tax?  Relationship to Transportation reauthorization?
•	Revenue diversity
o	What can local government do to increase the diversity of their revenue sources? 
o	Given the changing national economy, how have practices evolved?
o	How would a VAT affect local revenues?
o	Would local governments be excluded from a VAT?
o	Would they be limited to only property taxes & user fees?
o	What about a services sales tax?
o	Maryland wants local government to have more authority to raise taxes at the local level.
o	Questions about Internet tax policy.
•	Regionalism. Local options being exercised to consolidate certain operations, e.g. dispatching. Connecticut has no county government.
o	Are consolidations a trend?  Home rule preferences work against that.
o	Shared services?
o	What about first tier suburbs? 
o	More metropolitan focus from Obama Administration.
•	Value of the Profession
o	Performance metrics
o	See work of John Nalbandian
o	Look at communities that are “properly” managed
o	Make case to state governments
•	Transportation Act reauthorization
o	Impact on locals/regions/networks
o	Investment strategy for arterial roads
•	Changing structure of local governments
•	Transformation of 9-1-1 systems
•	Technology and local governments
•	Other discussion points
o	Concerns about unfunded mandates from state governments related to the Water Quality Act.
o	Broadband – extend to rural areas?

There was some discussion of the challenges that ICMA had in the last effort to do a white paper on sustainability.  Are our topics sometimes too broad?  Should we “chunk” some of these mega issues into bite size topics?
6.	Conclusion & Next Meeting
The Committee will next meet in person on March 13, 2010, at 8:30 a.m. in the ICMA Offices.

NLC’s Issuers Mutual Bond Assurance Company
Business Plan Summary

The National League of Cities (NLC) proposes to create Issuers Mutual Bond Assurance Company (Issuers Mutual), a mutual bond insurance company owned by state and local government bond issuers that will provide readily available and affordable municipal bond insurance.  This company will endeavor to replace the commercial municipal bond insurers whose credit ratings were downgraded in 2008 and 2009.  

Because of the absence of triple-A insurance, many bond issuers no longer have access to the market or, if so, only at rates that are significantly higher than they are accustomed to paying.  According to a February 2009 NLC Research Brief, 46 percent of large-city finance officers surveyed (those with populations greater than 50,000) reported difficulties in accessing credit and/or bond financing and 28 percent said bond issues had been delayed or canceled.  

Mutual companies are successful and policyholder-focused company structures that have been used since insurance began centuries ago. Many cities already obtain their liability and workers’ compensation insurance through intergovernmental risk pools that are structured similarly.  It is a business model that is familiar, cost-effective, and long-lasting.

NLC is requesting a $5.0 billion interest-free loan from the federal government ($3.0 billion of cash upfront, and $2.0 billion of call capital) to capitalize Issuers Mutual and provide start-up working capital.  The purpose of the enterprise is to provide reasonably priced bond insurance to its members, who are the issuers.  Issuers Mutual will demonstrate to bond purchasers the value not only of its strong capital base, but more importantly, its unique corporate culture.  It will operate on the following principles that are significantly unlike those of commercial bond insurers:  

1.	 Mission Driven.  Its focus will be to provide great service to issuers and bondholders, rather than profits to shareholders. 

2.	Reduce Borrowing Costs.  The company will serve the public by reducing borrowing costs to lower taxes and fees and at the same time make market access possible so that states and local communities can contribute to the recovery goals of job creation and economic stimulus.
  
3.	Reasonable Return to Members.  It will provide a modest return to bond issuers who purchase their insurance from the company.

4.	Limited Membership. Membership in the mutual will be limited to state and local governments and their agencies.   

5.	Limited Classes of Business.  The company will limit the types of bonds it will insure to short- and long-term general obligation bonds and revenue bonds for essential governmental services.

6.	Simple and Fair Structure.  Issuers Mutual will charge moderate and affordable premiums.  It will not insure the types of securities that led to the downgrades of the bond insurers in the past two years.

The core business of the company will be fixed rate debt and leases.  It will be possible to insure some Variable Rate Demand Notes (VRDNs), but only where there are ceilings on the interest rates that are a fixed number: they cannot be linked to indexes.  

The business plan envisages the new company insuring up to $20 billion in municipal debt in the first year of operation or the equivalent of five percent of the market and growing to 25 percent in the fifth year.  As soon as NLC gains a commitment for federal funding, it will organize the company quickly to provide state and local governments with access to capital.

NLC proposes to repay the federal loan as its surplus capital accumulates.  The plan makes very conservative assumptions about losses based on historical experience.  The premium charged for the insurance will be determined on an issue-by-issue basis based on the creditworthiness of the issuers.

The company and its affairs will be overseen by a board of directors.  It is expected that the company will be organized under the laws of New York State.  The state will assist in obtaining licenses in other states.

NLC has actively reached out to market participants to obtain input on the proposed new company.  It has received constructive comments about how to ensure that there is no political interference with the underwriting process, how it can work with bond pools to provide insurance to unrated borrowers, and how it can encourage improved disclosure practices.

Breaking the logjam in the municipal market will help to stimulate the national economy and put American citizens back to work.  NLC surveyed six state municipal league bond pools recently to determine how they have been affected by the lack of insurance and what they would do if insurance was made available.  They have not been able to access the market and although this group represents a very small fraction of the market, collectively they expect to issue between $1.5 and $2.0 billion for infrastructure projects as soon as affordable insurance is available.

The national economic crisis has put state and local governments across the county under great financial stress.  This stress imperils essential governmental services that taxpayers and rate payers rely on and governments’ abilities to pay for them.  Everything possible must be done to alleviate this stress by reducing the cost burdens of state and local governments.  This initiative of the National League of Cities speaks directly to this issue.  

For more information, contact Cathy Spain at (202) 626-3123 or spain@nlc.org.  Go to www.nlc.org to obtain a copy of the Issuers Mutual preliminary business plan.

August 2009