Of course it hadn't happened yet when I did write about it, but upon further review I think I was reasonably accurate. Occasionally those Agenda Man things do go off track a bit, but this time maybe not quite as much. Of course, the reason might have something to do with the topics covered being very familiar. After all, this is truly The Process City Council, which apparently is something that involves going over the same ground over and over again, with only incremental progress to show for all that effort.
Last night was almost like watching a rerun. Or paint dry.
But there are a couple of things I'd like to cover before I turn this post over for public comment. The first being the indecipherable way City Council agenda topics are written. The item in question here is 1C from the Consent Calendar, and this is how it was described on the City of Sierra Madre site:
Authorization Of Payments On Behalf Of PFA - Recommendation that the City Council approve the $919,047.50 addition to the revolving note for the demands paid by the City on behalf of the Public Finance Authority.
When I first read that mess I could not make heads or tails of it. It had all the clarity of mud. I called around to all of my wise friends, and none of them could figure it out, either. Who exactly is the Public Finance Authority, and why are they spending over $900,000 of our money?
You'd think they'd be at least a little bit clear about something like that.
Apparently I wasn't the only person annoyed about this, because late yesterday an email was forwarded to me from City Manager Elaine Aguilar. People had been complaining. This e-mail had apparently been making the rounds for most of the afternoon, because my copy looked to be about fifth generation. But here is her explanation of what the opaque statement above was really all about.
The PFA is the Public Financing Authority -- the Authority is a "component unit of the City," and it is composed of the same individuals as the City Council, similar to how the CRA Board is composed of the same members as the City Council. The PFA is the agency authorized to enter into debt, and therefore the PFA is the agency which authorizes payment on the bonds.
Twice a year (May and November) payments (interest, or principal) are made on the bonds. As you're aware, there are three bond issues: Redevelopment Agency Tax Increment Revenue Funding Bonds (1998), Water Revenue Refunding Bonds (1998), and the Water Revenue Parity Bonds (2003).
The bonds are structured to pay principal in November, and two payments of interest (in May and November). The November payment is usually on an October agenda, while the May payment is usually on an April agenda.
In October (10/12/2010) the following bond payments are on the agenda for authorization by the PFAS: (In November, interest and principal are due on the CRA bonds; principal and interest are due on the Water Refunding Bonds; and interest only is due on the Water Revenue Parity bonds.)
CRA Tax Increment Revenue Refunding Bonds/Interest $77,125
CRA Tax Increment Revenue Refunding Bonds/Principal $245,000
Water Revenue Refunding Bonds/Interest $92,250
Water Revenue Refunding Bonds/Principal $335,000
Water revenue Parity Bonds/Interest $169,672.50
So from a short meaningless run of office jargon on the City Council Agenda to what was really going down. So if nobody had complained would we have ever been told where nearly a million dollars of our money was going last night? I guess not.
Look at it this way, if City documents were actually clear and easy to understand, who would need this blog? They make their own problems sometimes.
Couple of math observations. Add the $919,000 here to the additional yearly interest payments and the full 12 month figure pencils out to $1,148,050. Which is what we pay yearly for bonds that are doing us absolutely no good whatsoever. Whatever their original intent, or where that money was actually spent, all they do for us now is devour large chunks of our tax money.
Something we need to remember when Joe Mosca starts pushing street repair and sewer bonds in a few months.
Of course, we mustn't forget that Sierra Madre's bond rating was recently BBB, or junk. Which was better than it was a year or so ago when we were anathema and didn't have a rating at all. But in May, just around the time the water rate hike was announced, that rating went up to A-.Which is why the water rate hike is so deeply linked to our bond situation. As has been noted by City Staff, because of the huge debt being carried we are now dangerously close to going out of compliance with our bond covenants. And unless more water revenue is brought in and fast, we could get into some rather serious trouble with the folks holding the paper on all of these notes.
So how were we going to be allowed to issue Joe's Sewer and Street Repair Bonds if we couldn't straighten all that out plus improve our rating to something better than "junk?" Raise the water rates about 40%, of course. The bond people truly appreciated the courtesy, and I suspect rewarded us with that better rating. Which in my opinion is what this was really all about. The rusty pipe thing was just something thrown out there to baffle the townies.
So I get an e-mail from my neighbor up the street
He doesn't write often, but when he does it is usually pretty good. And you don't know how much I hate to have to admit this, but the most popular post this blog ever uploaded was mostly written by this guy. It was about the permits kids had to fill out to engage in "water play" at last summer's 4th of July parade. Maybe you remember it. That post is now closing in on 3,000 page views. Which makes it Number 1 on The Tattler Hit Parade. By far.
So this time he's writing about getting his new City of Sierra Madre water bill. He is not happy.
John, I just got my water bill. It's got lots of cool stuff in it.
First, there is a card that let's me be an anonymous a**hole to my neighbors. For example, I can put the card on their door and inform them that "Your sprinklers don't need to run every day. Most landscapes do fine with only 2 or 3 days a week of watering." I think I'll test this out by putting one on your door. Better yet, I'll have the neighbor's kid do it on a ring and run basis. Feel free to shoot his butt full of buckshot if you catch him.
Second, they notify me that the new enviro tiers are in place just to prepare me for future taxation purposes. They have no impact now because the council still hasn't decided if they are going to raise the rates and, if they do, if they will adopt tiers.
Third, the council reassures me in the "411 on the H2O" that the water increase is all about improving infrastructure. Nothing to do with bond debt payments. So, of course, no need to mention them in the Prop 218 notice.
Then, in a schizoid response to the question "what are the consequences of the past rate increases not being implemented?" the council notifies me that because rates have not been raised "the Water Department is in jeopardy of not meeting the legal requirements attached to the Water Revenue Bonds issued by the City in 1998 and 2003. While the City continues to make its bond payments in a timely manner, the City must increase its revenues to meet future operating expenditures, as well as the bond commitment, without jeopardizing capital reserves."
So, they are raising my taxes to pay for "the bond commitments," which are distinguished from "operating expenditures." In other words, the rate increase is going directly to satisfaction of the bond commitments.
They really do think we are stooopid.
Yes, they certainly do.
Consider this to be an open thread. Lot of stuff I didn't cover this meeting. I'm leaving that up to you.