Thursday, October 6, 2011

Moody's Downgrades City of Sierra Madre Water Enterprise Revenue Bonds to A3 from A1

It really is unbelievable. Just when you thought all the water rate increase controversy was finally over, the unwanted gift that keeps on giving suddenly raises itself to an entirely new level. And if you have ever wondered just how inept these people really are, well, I have a whole new challenge for you. Apparently we are about to go into heretofore uncharted territories of incompetence. A place that echoes with all those tall tales of why they needed to take more of our money. Each one turning out to be entirely untrue.

Moody's, which recently became the focus of international attention by having the chutzpah to downgrade the credit rating of the United States of America, has now heaved its rather unsentimental approach to rating bonds straight at the City of Sierra Madre. Here is how they put it all down:

Moody's Investors Service - Global Credit Research - 30 Sep 2011

$3.4 Million Of Rated Debt Affected

New York, September 30, 2011 - Moody's Investors Service has downgraded to A3 from A1 the rating on the City of Sierra Madre Water Enterprise (CA) Revenue Bonds secured by the net revenues of the city's water enterprise system, affecting $3.4 million in outstanding Moody's rated debt. The bonds are secured solely by revenues from the City's water system.

SUMMARY RATINGS RATIONALE: The downgrade reflects debt service coverage levels which were just sum-sufficient in 2010 and 2011, city officials' slow implementation of increased rates in response to weak coverage, the enterprise's strong cash position, and a stable, affluent customer base within the City.

Strengths: Affluent, stable customer base immediately east of Pasadena, CA

Challenges: Debt service coverage which has fallen well below rate covenant for two consecutive years

WHAT COULD MAKE THE RATING MOVE - UP:
- Significant increases in debt service coverage achieved and maintained over the long term.
- Sustained implementation of regular rate increases which would bolster unrestricted cash reserves

WHAT COULD MAKE THE RATING MOVE - DOWN:
- Decreased debt service coverage despite actions taken to bolster unrestricted cash reserves
- Material reduction in unrestricted reserves

This is all pretty self-explanatory, and I don't think I need to write all that much to make the point. The City of Sierra Madre took one of the most bizarre routes to raising the water rates of its resident customers in the history of such things. And in the end it didn't matter, they took our money and still failed to achieve their goal. Here is the breakdown:

1) At first the water rate increase was proclaimed necessary by the City under Mayor Joe Mosca because our pipes were ancient and bursting with frightening regularity. Without that additional money we'd all end up having to bring our water back from city wells in buckets. Or something.

2) Resident researchers called various concerned agencies in Sacramento and discovered that the water pipe repair story was false. Something put out by the City as a sop to get more money out of people they obviously do not respect. The real reason the City needed to raise water rates was to cover water bond rate covenants.

3) The City, in a complete about face, proclaimed that the water rate increase is necessary because of, you got it, water bonds. The residents are told that unless we become compliant with these water bond covenants, our bond rating will fall. And if that happens we will never be able to refinance our $3.4 million in old water bond debt. Which, in its present state, comes with an exorbitant interest rate. At least by today's standards.

4) Rates are raised, new water bills go out reflecting this, people send in their checks, and then what happens? Our bond ratings plummet anyway.

Look at it this way. We were told that water rates had to go up to raise money for pipe repair. Turns out that wasn't true. Then we were told that we needed to raise water rates in order to keep a premium bond rating. Something very necessary if we are to ever refinance our $3.4 million in high interest rate water bonds.

So what happens? The water rates go up, and our bond ratings fall. And it looks like we will continue to have to service those old water bonds at a very high interest rate because the inept people running our affairs in City Hall couldn't bring themselves to tell the people of Sierra Madre the truth right from the beginning. Rather they chose instead to waste time by making up stories about old pipes. Like we're children who can be coerced with fairy tales.

In the end this is about failed leadership from people who just can't seem to bring themselves to tell people the hard truths. About this or anything else.

And did you notice Moody's recommendation? The City needs to increase our water rates several times over if we are ever to come to grips with our bond debt problems. So when were we going to be told about that?

Here's a question. Since the water rate hike didn't achieve its stated aim, which was preserving a high bond score, shouldn't we get our money back? Obviously we didn't get what we thought we were paying for. It seems almost fraudulent for the City to keep money that was gotten under pretenses that turned out to be so entirely false.

Remember when the G4 Council was trying to spend out all of our CRA money to avoid having to give it to Jerry Brown? Some residents suggested that much of it should have been used to pay down our water bond debt. And what was Elaine Aguilar's comment? "City staff doesn't recommend that."

So instead that money was spent on things like a playground swing set, an outhouse in Memorial Park, a consultant study about Sierra Madre consumer consumption habits, a study about parking spots, plus assorted other complete wastes of our money.

I have another question for you. Has there ever been a worse government in Sierra Madre than the one we have now?

http://sierramadretattler.blogspot.com

73 comments:

  1. Didn't MaryAnn suggest that they raise the rates at a higher lever (triggering another another notice period?) And didn't she assure that the citizens would not protest after they heard the whole truth (that we needed the raise to protect our credit rating?)And didn't Josh Moran say that it would cost the city a bundle if they had to send out another notice? I think I heard all that in those many meetings last year. And they turned MaryAnn's idea down flat because it was MaryAnn's idea. What a bunch of morans our City Council turned out to be!

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  2. This happened less than a week ago. Moodys doesn't downgrade bonds for no reason.
    It takes a lot to have a bond rating lowered.

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  3. What a bunch of fools. Mosca has to have been our worst mayor ever. The lies about the pipes had to have been his idea. And now we can see what the result really is. But where did we hear it first? On a blog.

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  4. When was our transparent city government going to tell us about this?

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  5. Somebody, please address City Council at the next meeting and ask them about it. Remember it was Nancy who pushed for the new swing set (so to speak)! I'll be out of town, or I'd do it.

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  6. Willful incompetence from people who believe the solution to any problem is to lie about it.

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  7. Patch has an article up already. Credits the Tattler and John Crawford for breaking the news. Has Patch finally figured out what a bunch of crooks run this town?

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  8. We need to ask Joe Mosca to resign Tuesday.

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  9. the fat lady is singing!October 6, 2011 at 7:06 AM

    Maybe this is why Mosca has disappeared? and this is the reason to get rid of every one of the crooks. We ARE the city of BELL....

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  10. Maybe this explains John Buchanan's stress at the volunteer awards dinner. This Moody's report came out 9/30. The timing fits.

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  11. Better re-reread he the Patch. Stephens doesn't give credit for breaking the story. He cites Crawford and the Tattler as background and links to the Tattler. Story went up at 5:30 am; Took a lot of rewriting on Patch's part to make it look like an original news release.

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  12. Buchanan will announce it's PETA's fault.

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  13. I wouldn't worry about Patch. The people who read it don't understand stories like that.

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  14. Elaine Aguilar - please resign.

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  15. City Hall said all kinds of awful things would happen if we were out of compliance with debt coverage. That was the reason the rates had to be raised. So rates went up and we were still out of compliance and nothing really happened. Our pipes, reservoirs, and filtering system did not get repossessed.

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  16. Why wasn't this news on the City's Eblast?
    Bet they were not going to say a word.

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  17. If you can't say something nice about someone, you're probably talking about Joe Mosca and John Buchanan.

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  18. The cat is out of the bag now. Can we say FAIL?

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  19. May of 2010 the city got its bond rating back.
    May of 2010 the city started process to raise water rates.
    Sept of 2011 the city is downgraded.

    Bunch of financial wizards in city hall.

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  20. First poster at 10:16 pm

    I remember MaryAnn MacGillivray trying and trying to make the 4 idiots understand.
    She had a reasonable suggestion/solution.
    Like she always does.
    They don't listen, because she isn't part of their gangster/criminal cartel.
    She represents the honest residents of Sierra Madre. The people who value living in a small town. The people who care about their investment in their OWN HOMES or RENT in a good place to live. Not some over built over populated FOR LEASE signs everywhere wrecked town like we see all around us.

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  21. Maybe we should fire everyone responsible and use the money to pay down the water bonds.

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  22. Whatever MaryAnn says the 4 Asses vote the opposite. Why? Because they are against her. Reason flies right over their stupid heads.

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  23. The Tattler sure "Pi$$ed in City Hall's Cherrios" this morning. This is too funny.

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  24. The Bottle Shop just delivered a case of Scotch to City Hall's front counter.

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  25. Enjoy your breakfast this morning, Dirts!October 6, 2011 at 8:17 AM

    LOL

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  26. I hear the snack cakes are made of crow.

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  27. All it takes is a ten minute conversation with Mr. Mosca to realize he is a person who has difficulty with telling the truth. Most people keep the conversations with him to a shorter amount of time, so they might buy that he is sincere. The only thing he is sincere about is his own self interest. Take that kind of personality as a mayor, and how is he going to inspire integrity in his working partner, the city manager? If lying is accepted, people who are prone to do it will indeed do it.

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  28. What a miserable situation and why oh why did we ever get the bonds in the first place? That was some pretty stinky leadership too.

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  29. Heads should roll for this! Their lies and incompetence will cost every resident dearly.What more justification does a thinking person need to support a recall?

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  30. If Mosca had any decency he'd resign. Needless to say, he won't.

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  31. They never told the community when they lost the bond rating for failure to turn in financial statements a few years ago. I bet we would have never heard a word about this. Thanks John

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  32. So when do our bills go up?

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  33. Occupy City Hall.

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  34. 8:55 they already did. didn't you get you summer water bill?

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  35. Do I understand this right that now the people who caused this are going to demand we pay more for their mistakes?

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  36. 10:16, your memory is accurate. MacGillvray did propose the solution you describe, the slow-witted council majority did reject it, and here we are. Just goes to show you what happens when people are more interested in their own agendas than in public service that benefits the whole town.

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  37. 9:01, I meant again, so when do our bills go up again?

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  38. Will the newly required increase have to go through the proposition 218 process?

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  39. The only reason to pay more would be to ensure that the city could borrow more money!!! I see no reason to pay more; we don't need to borrow any more money. We need to pay off our existing bonds and tighten our belts. Oh, and recall Mosca!

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  40. Do I detect a "BELL"..and what else is lurking in that cistern we call "City Hall"?

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  41. Run them out of town! NowOctober 6, 2011 at 9:51 AM

    All this has happened because Bart Doyle and his little foolish band of followers, we call the DOWNTOWNDIRTS and the DICs, wanted to over develop our town, they wanted to over develop our hillsides and they wanted to over develop every square inch of our 3 mile square town.
    Now look what a fine mess you DIRTS and DICS got us into!

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  42. don't forget while Mosca and Buchanan were calling emergency so-called unplanned public meetings about an impending disaster of exploding pipes throughtout Sierra Madre and lied about this situation until caught, they had already put a plan into motion long before the "disaster situation" was marketed to us where they had already researched and were moving forward to use the rate increases to secure bonds where Buchanan was planning a new 7 million dollar libarary and a new $ 50,000 counter top for city hall.

    this was all about a series of planned lies and distortion to manipulate public trust and create a false emergency so political favors could be repaid and Buchanan could get his ultimate reward - a libarary where he could claim that he actually accomplished something during his tenure

    they (Mosca, Buchanan, Moran, Walsh & key city staff) were using the lies to begin building a water infrastructure that would allow large scale development that was in align with SCAG's goal of doubling Sierra Madre's population

    this whole situation was a lie

    Buchanan lied
    Mosca lied (which is a constant pattern)
    Moran lied
    Walsh lied

    our city attorney openly allowed our council to operate in the gray areas of the law and violate the state constitution

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  43. Article up on the Pasadena Star News site. This story is getting big. Tattler cited.

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  44. Unbelievable! What a bunch of incompetent clowns. The next election cycle can't come soon enough. Fire Elaine "city staff doesn't recommend that" AguiLIAR, and clean house at City Hall. It's time to elect city council members who represent the residents of Sierra Madre, not developers and big business. Enough is enough! The gang of four are now bereft of any credibility whatsoever, and apparently have no shame.
    Thanks again to the Tattler for continually providing the only real news source in Sierra Madre.

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  45. 9:49....add "Snake Pit" as well!

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  46. Does everyone who reads this blog, reads the facts on this blog, understand why a group of us wanted to recall Mosca in 2007?
    It should be crystal clear we had good reason to do so.
    How in the devil could the residents of this town re-elected this man?

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  47. Mosca was blocked twice from becoming mayor by Don, Maryann and Kurt. In retrospect how smart a call was that? The damage done by Joe Mosca when he was Mayor is considerable. Today is sure an indication of that!

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  48. I find it hard to believe that four human beings could be capable of such appalling ineptitude.It appears more like a bunch of chimpanzees playing house.I am giving the 4 the benefit of the doubt that it was stupidity and not malfeasance that governed their actions..Am I wrong?

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  49. Interesting to note that Moody's indicated that the city has not properly serviced it's bond debt in two years. This coincides with the influx of the newest council members, making up the current G4 who we have come to distrust and detest. Joe Mosca telling lies should be no surprise - this is, after all, how he initially gained a council seat, by outrageously lying to the voting public, telling us what we wanted to hear just to get on the council so he could then push his true agenda for the development industry and his own planned meteoric political ascendance. Buchanan, Mosca, Moran and Walsh are just the latest string of criminals who have worked their way into positions of power in this town in order to profit by it's destruction via development; their actions and those of their predecessors (excluding Zimmerman and Watts, who actually took their jobs as residents' representatives seriously), going back as far as 20 years ago, have shamelessly put us into this precarious place. They should pay for this, not us, and no further water increases should be allowed at this point, at least until some clarity ( I.e., permanent removal of the offending parties from our council chambers by whatever means necessary) is achieved. Only then, with a council comprised of residents who are not courting development for development's sake, can we move towers effective resolution ( and not towards incurring ever more bond debt, as Buchanan would like us to do). Also interesting to note that Moody's characterizes this community as "affluent" and therefore we can afford higher water rates - a gross generalization indeed, especially in this economy. Appearances can be deceiving and Moody's needs to take a closer look.

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  50. 11:29 yes, yes, yes.

    And John Buchanan can be heard on a council video saying "Oh, there will be more bonds."

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  51. chickens coming home to roostOctober 6, 2011 at 11:54 AM

    Many well meaning Sierra Madreans voted for who they thought were "nice people" as opposed to "mean people," and they joined with some Sierra Madreans who voted for people who would make their investments pay off. That's the sad story of how we ended up with people who do not have the capacity to govern, governing.

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  52. Since the Sierra Madre Blvd. water main project started, our water pressure has been cut in half, and the work up on the Blvd. is shoddy at best. Our city is run by baffoons and their shenanigans are pathetic! I'm done with all of them, none of them will get my families votes... NONE!

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  53. Thank you Joe, John, Josh, and Nancy....October 6, 2011 at 12:00 PM

    you can only sell bonds if someone wants to buy them. investors want low risk. in order to sell new bonds, the city will need to pay a higher interest rate to entice buyers. we are screwed again.

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  54. 11:42, what he said was:
    "We're Going To Be Floating Bonds"

    The Tattler,
    WEDNESDAY, MARCH 23, 2011

    Love that Tattler search engine!

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  55. Can you imagine if that when this whole mess started then Mayor Joe Mosca had simply said we have a problem with some old water bonds, and in order to keep the city from going into a difficult financial bind, we will need to raise rates a little. Then turn it over to the City manager to explain what the problem was. People would have been upset, but would have also realized that there wasn't much else to do but take care of this. After all, these were old bonds and the responsible parties aren't around to blame anymore. Instead we were led down a ridiculous water walk to never never land, which has taken us to where we are today.

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  56. To answer your question about worse government, there probably has been but talking about that won't help us now.

    1) Note here that the issue isn't only about increases--it's about revenues and how they're used. Revenues were just sum-sufficient. Hmmm. I am so thinking "audit" here. Slow response of city officials. Well, I think it's time to raise hell. I would like to know how much money is needed and how much is received? And what monitoring is done to avoid this happening -- then and now? Incompetence is the nice word. Get rid of these staff people and those above them who empower and protect them.

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  57. Did anyone posting here today consider the possibility that those in City Hall are more CORRUPT than INCOMPETENT?


    Corrupt - Having or showing a willingness to act dishonestly in return for money or personal gain.

    Incompetent - Not having or showing the necessary skills to do something successfully.


    Think about it!

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  58. All of them are corrupt.
    Dr. S. gives us a good solution.
    Do we have the courage to do it?
    I sure hope so.

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  59. Joe has had a really terrible couple of weeks. What happened to Golden Boy?

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  60. So, how many Brown Act violations do you think were made during the past week? I can't believe these dweebs weren't texting and twittering and talking between themselves pretty much non-stop. #1 Topic? Do you think Crawford will find out? Who are we going to throw under the bus? Elaine or Sandi? Sandi's already left. Let's say it was Sandi's fault...

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  61. I think they found out about the downgrade when they read the Tattler this morning.

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  62. Can you imagine how embarrassed John Buchanan and Joe Mosca will be when they go to their COG and SCAG meetings knowing that all the representatives know that Sierra Madre's bond rating was lowered while they were in charge?

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  63. The "DOC" was right!!!Audit indeed!!!! Long overdue.Resisted to the max by every one except,Kurt Zimmerman,,,What kept even the questioning parties from supporting one?What were they afraid of?Humm..Inquiring minds would like to know...Let us see how many of the "concerned" citizens will demand and push for an forensic audit!

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  64. Can you imagine how astonished the COG people will be to discover that John and Joe raised our water rates and our bond ratings still went south? Knowing COG they will probably be given medals.

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  65. Raise the rates!

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  66. I'll drink to that.

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  67. They already did, 4:02. Ask your mom to show you the water bill.

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  68. In my limited understanding of bonds, rates and all, we, the residents of this city, will be paying for this bad management, one way or the other.

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  69. somebody stop by the Buc or Lucky Baldwin's and give Josh Moran an update on this

    he'll probably buy a round a drinks thinking this is good news

    party on Josh.....dude

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  70. how will Joe spin this news?

    certainly he'll receive numerous emails wanting to meet him during normal office hours at the park bench in Kersting Court?

    what a legacy of incomptence and petty snipping for Mosca

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  71. You can always email me at joemosca@joemosca.com. Or look me up in Kersting Court. That is lonesomejoe@kersting.com. I'll be the one feeding the pigeons.

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  72. 12:37

    it's not in Mosca's character to be honsest and forthright, after all he borrowed a dog for his first campign poster to decieve us with a small town image

    Buchanan has been about himself all along and he was lying about the water situation so he could build a new library for his legacy and also build an infrastructure that would allow large development which benefits his employer

    Moran stood along side the lies because he would benefit and his family/friends would benefit from a new infrastructure with new real estate sales

    Walsh as always, is just clueless - never prepared and bitter at anybody who questions her

    yeah, it would be nice to have honor on our Council but it's not in their core character

    instead they choose to lie to us, lie again when caught to hide pork projects and protect political allies and supporters

    we had an ethical council majority and they were voted out

    aren't we lucky?

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  73. 5:27
    Lucky, don't think so.
    Clueless or just stupid....yep, that's the naive voters of Sierra Madre.
    Have they learned this time? Sure hope so.
    Their very town depends on that one.

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