Category: Business Written by CNN
If you're moving to a newly built house, say goodbye to mail delivery at your door.
And if some House Republicans get their way, all door-to-door mail delivery will go away.
The U.S. Postal Service is marching towards a more "centralized delivery," where residents pick up their own mail from clusters of mail boxes located in their neighborhood. Local postmasters are sending hundreds of letters to fast-growing communities, warning that cluster boxes will be the way mail will be delivered to new developments.
In the past year, the cash-strapped Postal Service has been asking companies in industrial parks and shopping malls to also adopt this form of mail delivery.
But Rep. Darrell Issa, the California Republican leading the House effort to save the postal service, wants more. He has made doing away with doorstep delivery a key part of his bill, which would require everyone to get mail at a curbside box or from a cluster box.
"A balanced approach to saving the Postal Service means allowing USPS to adapt to America's changing use of mail," said Issa, who is chairman of the House Oversight and Government Reform Committee.
Moving away from door-to-door delivery saves a lot of money. Right now, 35 million residences and businesses get mail delivered to their doorstep.
It costs $353 per stop for a delivery in most American cities, taking into account such things as salaries and cost of transport. By contrast, curbside mail box delivery costs $224, while cluster boxes cost $160, according to a report from the Postal Service's Office of Inspector General.
Delivering mail is the agency's largest fixed cost -- $30 billion. Ending such door deliveries would save $4.5 billion a year. That's more than the $3 billion it would have saved from ending Saturday mail service, according to government reports.
Related: Los Angeles is worst for mail carrier dog bites
That's why ending door delivery has drawn industry support from groups like the Greeting Card Association, which supports Saturday service.
But unions say it's a bad idea to end delivery to doorsteps and will be disruptive for the elderly and disabled.
"It's madness," said Jim Sauber, chief of staff for the National Association of Letter Carriers. "The idea that somebody is going to walk down to their mailbox in Buffalo, New York, in the winter snow to get their mail is just crazy."
Yet postal officials say everything's on the table, when it comes to cost-cutting. Earlier this year, it tried to end Saturday mail delivery, but later reversed its decision.
Last Updated on Tuesday, 23 July 2013 11:42
Category: Business Written by Melanie Hicken, CNN
Bankruptcy or not, Detroit's emergency manager, Kevyn Orr, says the city simply can't afford the pensions it has promised tens of thousands of retired and current city workers, many of whom are counting on the checks to make ends meet.
So how much money do Detroit's retirees actually get?
On average Detroit's firefighters, police officers and other city employees receive pension checks that are similar or slightly smaller in size than the national average of $30,000 a year, according to pension experts. But compared with larger cities that have higher living costs, like Chicago and Los Angeles, Detroit's pensions checks often pale in comparison.
"My basic takeaway was that [Detroit's] pension system itself was not overly generous," said Jean-Pierre Aubry, assistant director of State and Local Research at Boston College's Center for Retirement Research.
Related: Retired Detroit firefighter: "My pension is what I was promised"
While workers who reach the city's top posts, like police or fire chief for example, can retire with annual pensions that reach into the six-figures, the vast majority receive much smaller payments, Aubry said.
Retired general city workers, such as librarians or sanitation workers, received average payments of $18,275 a year in 2011, according to the Detroit General Retirement System. But those who put in the most time (or earn higher salaries) can see far healthier payments. A general city employee who retired in 2011 with an average ending salary of $60,000 and 40 years of service could receive around $45,000 a year.
Such benefits are more or less on par with the Detroit-area union auto workers. Retirees of the three big automakers receive average annual benefits of about $18,000 per year, in addition to another roughly $15,000 to $18,000 in Social Security payments, according to the United Automobile Workers, or UAW.
That's a big distinction: While retired Detroit firefighters and police officers receive more generous pension checks than auto workers -- checks averaged almost $30,000 a year in 2011 -- they often don't receive the added bonus of Social Security payments.
A 30-year veteran of the fire department who retired last year with an average ending salary of $60,000 would have qualified to receive around $44,000 a year, according to calculations using the plan's pension formula.
Related: state workers face smaller pension benefits
Police officers and firefighters in big cities often take home much more lavish pension checks. For example, with average annual benefits of $55,104, retirees of Chicago's police force took in nearly double Detroit's retirees. Meanwhile, retired Chicago firefighters had average annual payments of more than $60,000.
Chicago has its own budget woes, however. Last week, rating agency Moody's downgraded the city's credit rating, citing ballooning pension obligations.
Even retired police and firefighters in Kansas City, Mo. -- a city with roughly two-thirds the population of Detroit and a similarly affordable cost of living -- take in more, with average annual payments of almost $42,500.
Still, it isn't all bad news for city workers. Since Detroit's firefighters and police offers are able to retire a decade (or more) before they reach the typical retirement age of 65, retirees can receive their benefits for decades. In addition, many retired officers have time to pursue other careers and accumulate additional savings.
In addition to a lifetime of payouts, city workers also receive retiree healthcare, a benefit that is rarely offered by private sector employers.
They can also extend their pension benefits to a spouse after they die by opting for smaller monthly pension checks, said Don Taylor, president of the Retired Detroit Police and Firefighters Association. The amount the payments are reduced by depends on the spouse's age.
Taylor himself receives about $2,500 a month from his 26 years in the Detroit Police Department, about a few hundred less than he would receive if he hadn't opted to include his wife in the plan. Taylor, 64, will also receive a small Social Security check from his 10 years as a travel agent. But other than that, he has no other retirement savings.
Regardless of whether Orr's proposed cuts go through, pension checks for younger employees will be less generous, said Leon LaBrecque, founder of a Michigan-based wealth management firm, who has worked with hundreds of Detroit city retirees.
Current workers have already agreed to pension cuts. For example, in 2011, Detroit police and firefighters agreed to a roughly 15% cut for pension benefits accrued from future years of service.
"There's this myth that everyone in Detroit is getting a fat pension," LaBrecque said. "But that's clearly not true."
Last Updated on Tuesday, 23 July 2013 11:24
Category: Business - Original Written by Amber Bogins
Courtesy Urban Design Associates
The Economic Development Corporation (EDC) of the City of Detroit has approved the preliminary terms of a deal with McCormack Baron Salazar (MBS) to build a 300-unit residential and retail development along Atwater St. at the Dequindre Trail.
MBS plans to spend $55 million building Rivertown, Phase One as a series of low-rise apartment structures along both Atwater and Franklin Sts. between the Dequindre Trail Greenway and Riopelle St. The site is adjacent to the State of Michigan's Outdoor Adventure and Discovery Center, currently under construction at Atwater St. and the Dequindre Trail.
Phase Two of the plan would build an additional 200 housing units on the vacant property extending along Atwater St. west of Riopelle St. The EDC owns most of the property involved and would transfer it to the developer if it can meet the other terms of the agreement. It is also offering a loan to help the developer with implementation costs.
George W. Jackson, president and CEO of Detroit Economic Growth Corporation, which managed negotiations on behalf of the EDC, said, "It is time to reignite the redevelopment of the East Riverfront, and we're excited that a quality developer has recognized the opportunities here. McCormack Baron Salazar is a firm with a solid reputation, and we are confident that it will lead others to the prime real estate we have along the Detroit River."
Richard Baron, chairman and CEO of MBS, said, "I'm a Detroit native, and it's good to be home again to participate in the revitalization of a great city. We have a project that takes advantage of one of its most valuable assets, the Detroit River, as well as all the investments in the state park and RiverWalk that are literally a few steps from our door." The EDC assembled the property, demolished structures, and has made $8 million in road and other infrastructure improvements around the property.
Wayne County has supported the project with assistance preparing the site for redevelopment. "This project is proof that collaboratively pooling our resources brings in positive outcomes for the people of Detroit and Wayne County as a whole," said Wayne County Executive Robert Ficano. "We're glad to have contributed $200,000 to complete the environmental report that helped developers determine the viability of the EDC's land on the east riverfront."
The EDC vote today allows MBS to begin due diligence and an application for financing from the U.S. Dept. of Housing and Urban Development (HUD). The HUD participation will allow a portion of the apartments to be available for families meeting HUD income thresholds. Goldman Sachs Urban Investment Group is also providing equity capital for the project, Invest Detroit is providing a subordinated loan, and Michigan Economic Development Corporation is also supporting the project.
Jackson said, "Make no mistake, we have created a new culture of collaboration in Detroit. When an economic development opportunity arises we know we can count on strong participation from private, public and philanthropic organizations. That's a transformation as important as any other."
The EDC owns a number of prime redevelopment properties in the East Riverfront District, and it manages the master plan for the district, which guides the redevelopment and acquisition of property for residential, commercial, and related uses, plus park, and recreational opportunities.
Last Updated on Tuesday, 23 July 2013 10:30
Category: Business Written by Robert Frank | CNBC Reporter and Editor
Everyone has their own definition of "wealthy." Some say it's $1 million, others say $100 million. Some say it means making more than your brother-in-law. Others say it means not having to work or having strong relationships with family and friends.
But a new survey from UBS shows that most investors say "wealthy" means $5 million—with at least $1 million of that in cold, hard cash.
The UBS Investor Watch asked 4,450 investors if they consider themselves wealthy. Fully 60 percent of those worth $5 million or more said they're wealthy, while only 28 percent of those worth $1 million to $5 million said they were wealthy (those were the only two categories given).
Last Updated on Tuesday, 23 July 2013 11:13
Category: Business Written by Amber Bogins
Standard & Poor's Ratings Services cut its rating on Detroit's general obligation debt to 'C' from 'CC' on Friday, and gave the bankrupt Michigan city a negative outlook.
"The downgrade reflects the city's position as the subject of a bankruptcy petition, as of July 18, 2013," said Standard & Poor's credit analyst Jane Ridley.
Last Updated on Monday, 22 July 2013 14:57
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