Saturday, May 25, 2013

October 2011: Moody's Drops Sierra Madre's Water Bond Rating Two Places

Mod: As the City of Sierra Madre gears up to raise our water rates for the second time in a little more than two years, it is important to remember just how poorly the folks downtown handled it last time. The inability of the City to admit that the coming water rate increases are due to its bad bond deals continues to this day, with just under $1 million going to the Bank of New York yearly to cover debt and interest obligations. Just in case you have ever wondered where the money for badly needed infrastructure repair and new wells goes ... This Brian Charles authored Pasadena Star News article (link) also includes Elaine Aguilar's now infamous claim that our Moody's water bond ratings would be back to AAA within the year. That statement was made by her in October of 2011 and, like so much that Elaine has told us on the topic of water, it didn't turn out to be reality based ... The only way that Sierra Madre's water division can recover as a functioning business unit is to either get out from under its $19 million dollars in disastrous water bond debt, or continually raise our water rates. Which option do you think the City has once again chosen?

Moody's drops Sierra Madre water bond rating

By Brian Charles, Staff Writer
Posted:   10/06/2011 10:34:26 PM PDT
Updated:   10/06/2011 10:35:37 PM PDT

SIERRA MADRE - Credit rating agency Moody's downgraded the city of Sierra Madre's Water Enterprise bonds from AAA to an A bond rating due to insufficient water rate revenues, according to a report by the credit agency.

The downgrade does not affect current indebtedness or bond payments and Sierra Madre officials said Thursday the second year of an incremental rate hike approved in early 2011 will serve as the remedy.

"The bonds will be re-evaluated in another year, and assuming the revenue estimates and the revenues that rate payers are paying, we will regain our triple A rating," said Elaine Aguilar, Sierra Madre city manager.

Last year, rusty water pipes were paraded through Sierra Madre City Council meetings in an attempt to rally support for rate hikes. City officials said the hikes were needed to upgrade 2.95-square-mile city's water system that supplies water to less than 11,000 people.

City officials pitched the rate hike as necessary to keep the water system from falling apart and said nothing about a bond rating or bond indebtedness, according to John Crawford, resident and blogger for the Sierra Madre Tattler, who broke the story on his website early Thursday morning.

"When they first packaged raising the water rates, they pitched as the pipes were broken and the pipes needed to be fixed," Crawford said. "They didn't say it had anything to do with bonds."

It didn't take much detective work to discover the real issue was pulling in enough revenue to keep credit rating agency from dinging Sierra Madre's bond rating and making moves such as refinancing bonds next to impossible, he said.

"Later on Sierra Madre residents discovered that this was about the bond covenants," Crawford said.

Sierra Madre city officials switched tactics and repositioned the rate hike as necessary to satisfy credit agencies, but the public outcry had grown intense - there was massive opposition to the rate hike and the increase was challenged legally with the city eventually emerging victorious, he said.

The political scuttlebutt forced the City Council to hedge on a full-scale rate hike.

Instead of spiking rates high enough to meet the bond covenants requirement of 120 percent of funding for this year, the city slowly rolled out the rate increase and won't meet the revenue levels needed to satisfy credit agencies such as Moody's until 2012, Sierra Madre Mayor John Buchanan said.

"You trade-off coming fully up to speed on your bond covenants right away, against the need to bring your people along slowly ... and not hitting people with the increase right away," Buchanan said. "Of course the first proposal in front of us was for a steeper increase, but there was a second issue, the residents were opposed to a steep increase and we have a fair number of senior citizens on a fixed income."

Crawford blasted city officials Thursday for the quagmire left by not being forthcoming on the bonding issue from the beginning and a failed plan to keep the city from being downgraded.

"We pay more money and we still don't have a triple A rating."

Mod: One more thing. The 3rd most viewed article The Tattler ever produced is called "The Real Water Rate Misinformation." Written in November of 2010, it continues on this blog's Top 10 list to this day. The article details City Hall's less than honorable avoidance of our water bond issues back then, and how they only owned up to their problem when forced to by the people of Sierra Madre. The similarities with what is going on now are striking. You can link to this post by clicking here.

http://sierramadretattler.blogspot.com

27 comments:

  1. The city wouldn't put Cool-Aid in our water would they? Something doesn't taste right.

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    1. It is a service for us to enjoy.

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    2. I remember asking former councilmember, Kris Miller Fisher, back in early 2000 a question. "What is this guy, Bart Doyle's focus on in this town?"
      Her reply came in one word "WATER". I didn't get a chance to ask another question, and didn't really grasp her meaning until years later....then it became obvious. Bart, Lambdin, Stockley and Hayes crucified this nice lady, Kris Miller Fisher. The local paper at the time, by anti-measure V liar, Beth Buck, cricified Miller Fisher. These people hated this little woman because she knew the truth. Sort of like how they set up and slandered MaryAnn MacGillivray.

      Wake up, Sierra Madre and realize there are greedy and dishonest people in this town who lie, cheat and steal your money.

      Thankfully, Tattler readers know the truth.

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    3. Both water bonds were done when Doyle was running this city. Now we have to clean up all the toxic debt he left behind. A lot of it was for the DSP nobody wanted. That bunch were some of the biggest crooks this city ever voted into office. They're still killing us.

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    4. Kris Miller Fisher would not be a fan of MaryAnn MacGillivray

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    5. I think you are wrong. The town wreckers have helped to create all kind of unlikely political alliances in town. Those opposed to Bart the Impaler and his flunkies run the gamut of ideological allegiances. There is nothing liberal or open minded about John Buchanan, Josh Moran, Nancy Walsh or John Harabedian. They work for a county political machine that is in the pocket of developers and unions alike. The exploitative alliance of corporate and government power is not where we are at. Those of us who stand up for our community might watch different cable news channels, but when it comes to preserving our town we all stand together.

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    6. There is the weirdest political mix ever here in town. Far left and far right have united in preservation efforts - the unity falls apart outside of the city boundaries.

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    7. The fight is between those who believe our town should be independent and free of all the corruption in this county and state, and the lying suck ups.

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    8. Guess which ones wants to raise our water rates and taxes?

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  2. Instead of exacting a fee for developers and new home builders to up grade he water delivery system through out Sierra Madre the city council loaded the entire problem on the backs of the old timers who started and stuck with the city from the beginning.

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  3. Has there ever been a full accounting of where all of that bond money went?

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    1. Of course not. That would tarnish the reputations of Doyle, Hayes, Stockley and rest of the idiots.

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    2. It's not a part of the process.

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    3. I wonder why they never tell the truth?

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    4. Your kidding,Right?We have allowed a bunch 0f racketeers to pick our pockets!!!

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  4. Because this is the Tattler and we don't care, where were the Mayor and the Mayor Pro-Tem* this morning? Capoccio ran the race and I saw Josh and Korber there

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    Replies
    1. Have you called any motels?

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  5. Its Bigger Than ThisMay 25, 2013 at 11:29 AM

    You have to look further than just the bond interest issue here. Sierra Madre is likely being massively ripped off in the municipal bond rate manipulation scheme on wall Street:

    The Scam Wall Street Learned From the Mafia, by Matt Taibbi
    http://www.rollingstone.com/politics/news/the-scam-wall-street-learned-from-the-mafia-20120620

    "Organized crime learned their lessons from John D. Rockefeller," Spitzer explains. "It's much more efficient to control a market and boost the price 10 percent than it is to run a loan-sharking business on the street, where you actually have to use a baseball bat and collect every week."

    "If you want to know why Wall Street has been enjoying record profits, here's your answer: Corruption is a business model that brings in $66 for every dollar you invest.

    "When we allow Wall Street to continually raid the public cookie jar, we're not just enriching a bunch of petty executives (Wolmark's income in 2008, two years after he was busted in the FBI raid, was $2,464,210.18) – we're effectively creating an alternate government, one in which money lifted from the taxpayer's pocket through mob-style schemes turns into a kind of permanent shadow tax, used to maintain the corruption and keep the thieves in place. And that cuts right to the heart of what this case is all about. Wall Street is tired of making money by competing for business and weathering the vagaries of the market. What it wants instead is something more like the deal the government has – regularly collecting guaranteed taxes. What's crazy is that in order to justify that dream of regular, monopolistic tribute, they've begun to see themselves as a type of shadow government, watching out for the rest of us."

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    1. Great post. Thank you.

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  6. And it only gets better: Municipalities are gambling by borrowing money to cover employees' pension costs.

    http://www.syracuse.com/news/index.ssf/2013/01/pension_bonds_add_risk_to_publ.html

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    1. That's how Orange County went bust.

      http://www.nytimes.com/1994/12/08/business/orange-county-s-bankruptcy-the-overview-orange-county-crisis-jolts-bond-market.html

      You have to cut the public pensions and administrative overhead, not duck that issue. Obviously that kind of borrowing means you've hit the wall with the taxpayers, something that the Sierra Madre City Council is still in denial about.

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    2. You mean to say you can't solve the city's financial problems by just raising fees, rates and taxes every year or two? Gosh, that sounds like dangerous thinking!

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  7. I have never been a believer in "the process." I am instead a believer in individuals doing the right thing.

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    1. GOOD LUCK in this town

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  8. You Hoo..the chickens are coming home to roost. I don't think our fair Ciry can stand up to a wholesale fleecing. Elaine is graabbing, Police are grabbing, bond indebitedness is grabbing, water infranstructure is grabbing, anxious Council Members are grabbing, Sierra Madre is a "plucked bird". Not much left to GRAB!

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    1. Take away City Hall's money and they are just another small group of people with opinions. Stop the water rate hike, vote NO on the UUT do over. Let's take Sierra Madre back.

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  9. So Cal water district say they have enough water stored away for 2013 maybe 2014 but after that it's highest bidder gets the water, those who fail to secure enough water will have to ration water for their district's or cities.

    http://www.pasadenastarnews.com/news/ci_23325107/steve-scauzillo-will-summer-bring-water-rationing

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