Wednesday, June 5, 2013

Moody's Sierra Madre Water Bond Rating Is Lower Than We've Been Told By City Hall

Baa1 is not A1, even with grade inflation
When I filed my California Public Records Act (PRA) request regarding the state of our water bonds with the City of Sierra Madre folks downtown last week, what I got in reply was an email from City Manager Elaine Aguilar stating the impossibility of providing the information I'd asked for. Which is pretty much standard for any of the PRAs I have sent the city's way. Their bluff being that I won't be able to pony up the funds needed to bring the lawsuit necessary to dig out any real facts, whereas City Hall has some designated legal assets on call 24/7, fully funded by the taxes of we the afflicted. And as such they don't give, um, a hoot.

Which, while it isn't really a very wonderful situation, can be lived with in a way. After all, this is a blog that recognizes the need to entertain its readership, and sometimes the PRA replies I have received from City Hall are a howl. They also serve as an object lesson in how a local government that is not interested in the requirements of those who pay its way reacts when questioned about things it would prefer to not discuss.

What does make City Hall's PRA replies of special interest are the emails from Elaine Aguilar that accompany whatever useless nonsense they send my way. These are usually a litany of Elaine's opinions on the matter at hand, sent in order to perhaps sway me into accepting her perspective. Or maybe sway you since she knows I'll post them here. They also serve the purpose of creating something to actually send. After all, legally they do have to reply somehow, so it might as well be a chatty email.

When I sent my PRA regarding the status of our Moody's water bond ratings, among other things, Elaine did respond promptly. There was precious little documentation included, but I did get that email stating her opinions. What follows is a portion of that email:

Hello John,
I am responding to your request for public records (your initial email request is at the bottom).  The purpose of this email is to notify you that the City does not have any records responsive to your request.  I don’t have any notes, emails, or documents relating to my comments to the newspaper, or relating to the “current state of our Moody’s bond rating”.  I don’t have any notes, emails, or documents relating to my comments to the newspaper, so I can’t confirm that the newspaper has even quoted me accurately, given the length of time since the article was published.

The item that I can provide is the current link to the City’s water bond rating analysis (link).

As you can see, the link Elaine provided me here as proof of her assertions is an old Moody's press release from September of 2011. The same one I posted to this blog in October of 2011. She then moved forward from there to make some other observations which, if you are interested, can be read by clicking here.

I did have some additional questions about our Moody's bond rating however, so I initiated an exchange that ended up going like this:

Did our bond rating change between the time of the PSN article and now?

Elaine answered me thusly: Hi John – the link I included in my earlier email is the link to the current Moody’s report – the same “September 30, 2011” rating remains. “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)” - Elaine

The problem is that what Elaine says here doesn't appear to be true. I have an old friend from high school back east who makes sick money swapping bonds and doing other downtown New York kinds of things. He sent me a series of screen shots detailing what the real current ratings of Sierra Madre's water bonds are these days. I reproduced one of those screen shots above.

If you'll examine this inset (click on it and it will enlarge a bit), please look for the fourth line identified as "INSU MDY." That is Moody's, and you can plainly see that our current rating is Baa1, and certainly not A1 as stated by Elaine in her otherwise intriguing email. Here is my back east buddy's comment:

Moody's at Baa1. Ugh. Not exactly something I would want in my portfolio. This is why your city can't refinance at lower rates. Baa1 is a lower medium grade bond rating. Rated as medium grade, meaning it comes with some speculative elements and moderate credit risk.

Wikipedia has some useful information about bond ratings and how they work. You can check this out by clicking here. The chart in particular is good. As you will see, a Moody's Baa1 isn't anything to write home to mama about.

One piece of speculation. Our Moody's rating has leavened a tick recently, with the outlook going from "Neg" to "Pos." Why is this? My guess is Moody's has been told that City Hall is going to raise our water rates again. Something that would also indicate that the City is keenly aware of what our real bond ratings are these days.

So why wasn't Elaine upfront with me about our bad water bond ratings at Moody's? Why did she state that our water bonds are rated higher than they are, and then supply a bogus old document as some sort of proof of this? I honestly don't know.

But I do know I don't enjoy being told things that are not true. Particularly in a PRA reply, a document that is required in this state to carry at least some legal viability. And look at it this way, when has the City ever been forthcoming on a water bond matter? Why have they refused to acknowledge that it is the driving force behind their mad passion to raise our water rates for the third time in three years?

Perhaps they really are hiding something.

Why debt is killing Sierra Madre's water company

Our water bond debt service is costing us $853,845 a year. Throw in the $145,688 a year that we are sending the Metropolitan Water District to pay down a $1.46 million dollar loan they floated us a few years back, and we're talking $996,033 every 365 days. Round that off to a cool $1,000,000 a year, and you can plainly see that our Water Enterprise (as it is officially known) could soon be going belly up unless they raise our rates again.

(These figures are available on pages 52 and 53 of the Comprehensive Annual Financial Report for the City of Sierra Madre, fiscal year ending June 30, 2012. It can be found on the City's website.)

This is $1,000,000 that would otherwise be used to repair Josh's famous "leakers," drill new wells (they're useful in drought years like 2013), and do the other kinds of maintenance that has not been getting done because so much of the revenue the water department generates goes to cover large volumes of highly corrosive debt.

This debt is the real reason why our neglected water infrastructure is in its current state of advanced decay, and why the City needs to raise rates yet again. We are literally being bled dry by bad debt.

Here is one more question. Don't you think that the City of Sierra Madre should be telling us the truth about why they want to raise our water rates again? Don't you think they owe at least that to the people whose money they wish to take at an even higher rate than they do now?

Personally, I think that unless they start telling us the truth, and soon, we will have no choice but to launch a Prop 218 protest to stop them from taking more of our money for water.

If only as a matter of personal pride.

http://sierramadretattler.blogspot.com

91 comments:

  1. John you just have to understand how it all works, just squint your eyes and you will see that the last two positions are A1. You have to see it as City Hall sees it. It's just that simple. Ha-ha!!

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    1. Anybody can improve their credit rating by squi ting.

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  2. Maybe there are special City Hall glasses you need to wear when reading these things.

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  3. If the city did tell Moody's that they are going to raise water rates, shouldn't that have included in their PRA response?

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  4. Who picked this city manager? Did she lie on her resume to? We need a new city manager. Bet she has another job picked out some where else already. Does she have a nice severance package to leave with? I hear she micro manages everyone to the point where there afraid to do anything without her making sure it's what she wants reported.
    She must be a Bart Doyle pick.

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  5. Baa1? Isn't that the name of one of those false idols in the old testament? Baal?

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    Replies
    1. Maybe it's the Golden Calf. It would be bad for the city to worship that.

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  6. Hmmm -

    according to the June 30, 2012 CAFR (comprehensive annual financial report), page 13:

    "Due to financial projections in the Water fund and lower than expected revenues, Moody's downgraded the Water Fund bonds from AA to A-minus."

    So one should expect the 2013 CAFR to include the further downgrading of the bonds to Baa1 that became effective May 21, 2013.

    It would be interesting if the mod's high school friend could look into the past and verify that the prior bond rating was indeed A-minus back in FY 2011-2012.

    Lastly, how did the City know that the rating changed from AA to A-minus (as documented in the CAFR), but the City Manager could only produce a news report that reported a downgrade from A3 to A1 (and hey, what happened to the A-minus rating that was reported in June 2011? When was the A-minus changed to AA? Where in Moody's grading system is "AA" and "A-minus" defined?). It would appear that someone is not doing their "due diligence" with their formal response to the PRA requests - perhaps the rapidity of the response should be the first clue?

    ps to the mod: I would be happy to contribute personal funds to any effort to pry the truth from City Hall via the legal system.

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  7. Since City Managers are notorious for out right "lying" to your face and behind your back, since they have a "GOD" like syndrome buzzing around in their heads and they and anyone they chose are above the LAW.

    And they can do it in a blind of an eye, just as if your witnessing a transformation in to a person you have never met nor spoken to in your life.

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  8. Look on the bright side. The city can't borrow any more money!

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    1. That is why they want to raise water rates. So Moody's will bump up our bond ratings and they can borrow more.

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    2. I will gladly pay you Thursday for a hamburger today.

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    3. Wimpy economics.

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    4. THE CITY IS BROKE!

      THE WATER ENTERPTISE IS BROKE!

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  9. So much for this being an "upscale" community. We're so badly run that we can't qualify for a better rate!

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    Replies
    1. The city has yet to find a problem that sucking more money out of the residents wouldn't cure.

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    2. Think of them as sub prime water bonds.

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    3. We are on the upscale side of things, no doubt. The problem is that we are run by an up yours city hall.

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  10. If we can somehow get to the "low information" voters here in Sierra Madre, we can do something about this, very soon.
    It's time the disaster fascist reign of the Bart Doyle gang of greedy thugs comes to an end.
    We can vote in honest people on our city council, and hold them accountable for standing up for the interests of the people of this town.
    Tattler, get out and tell you neighbors, if you can't get out, send email, write people notes, speak to neighbors and friends. Print out a couple of the Tattler columns everyday they speak of Sierra Madre corrupt government issues and pass them to friends and neighbors.
    We can do this. We did it in 2006 and we can do it again.
    This time we will be aware of the "sheep in wolves clothing" like the fugitive Joe Mosca was.

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  11. Hope all saw trailer with water conservation message on it parked on Baldwin

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    Replies
    1. MAYBE ARROWHEAD SPRING WATER SHOULD BE SELLING BOTTLE WATER TO CITY HALL EMPLOYEES!

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  12. The remedy for lying or making false statements, or withholding factual information, in most bsiness activity would be an immediate firing or in some cases criminal prosecution. If our city or its administrators / officials, have indulged in such activity they should be fired by the City Council immediately. Further if any of our City Council is implicated in the false representation of our business affairs, they too should resign immediately.
    This is very serious business.

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    1. Yes. And I am sure the city will dig a deep burrow and hide.

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    2. THE CITY MANAGEMENT & CITY ATTORNEY SHOULD BE CHARGED FOR MALPHEANANCE!

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    3. That would be "malfeasance".

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    4. I am glad there are others paying attention!

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  13. Is our leagal counsel complicit by allowing this obvious misrepresentation of City financial standing? These are just outright lies.

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    1. My guess is Elaine went free form on the later replies. I doubt the city atty would have let her answer the bond rating question in quite that way. Elaine has been caught.

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    2. THE CITY ATTORNEY REPRESENTS THE CITY EMPLOYEES, not the city residents who pay their city salaries!

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    3. Totally disagree 10:11.
      Nothing, nothing at all, comes out of the city manager's office that hasn't been vetted by the city attorney.
      Aguilar may have been too fast and easy talking with the reporter, but in writing? Everything is seen by the current reps for Colantuono and Levin.

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  14. It seems to me that alot of people are so unhappy with living in Sierra Madre that maybe they should move

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    1. What? And miss all the joys of civic involvement? Disliking the policies and prevarications of City hall does not mean you hate the city. Fighting all that means you care.

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    2. I thought love it or leave it went out of fashion after the Vietnam war.

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    3. Sierra Madre is great...It's the Uber Development .."Lets square the Hillsides and build super size megaliths crowd" that the problem...We see a delightful community,they only see $$$$$....

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    4. THE CITY STAFF NEEDS TO BE MOVED OUT OF TOWN!

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    5. If it weren't for the push back from the slow growth members of the community, there wouldn't be a Sierra Madre. What would there be? An Orange County designed downtown with three story buildings, and McMansions everywhere else.

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    6. Sierra Madre - Love It Or Leave It!

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    7. Obviously, 10:26 am, you have not heard that "what comes around goes around". Update your hearing!

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    8. Some people confuse obedience to authority with loving your town or country.

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  15. Better yet the City Mgr, complicit staff and supporting Council vacate their jobs.

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    1. I AGREE FULLY!

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    2. REMEMBER, SO FAR THERE ARE NO CITY'S WHO HAVE AGREED TO HIRE HER?

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  16. So after years of mismanagement or worse,our City has taken to extortion by raising water rates to finance their speculative development schemes designed to enrich a select few at the expense of the unwashed!There are words which describe this behavior: Racketeering for starters.

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  17. Elaine's reply to the mod's PRA is disrespectful. Guess she figured the truth wouldn't come out.

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    1. It was not very smart of her to pick things like that in an email.

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    2. But the truth came out again.
      Thanks John.

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  18. and....what is their IQ!

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    1. If you mean Elaine, Nancy, Josh, and Johnny H.....combined their IQ wouldn't break 300.

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  19. The current water fiasco is exactly why we needed to dump Colantuono and Levin. for the other law firm.

    Covering up the current mess is exactly why Moran, Walsh, and Harribedian stayed with Colantuono and Levin.

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    1. The other law firm has a long record of representing water districts and water departments. Wouldn't it have been nice to see them represent us in the current negotiations with the Raymond Basin water master and Arcadia? The three that voted for Colantano and Levin only did so because changing law firms was Koerber's idea.

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    2. I remember that 1:55. It was a great strength the other law firm had.

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  20. Moody's, Fitch, and S&P do not raise and lower bond ratings on a whim. It is serious business.
    It is with just cause that ratings are lowered. It is a sign to investors that all is not well.

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  21. It makes me sad to realize that Chris is the ONLY person I can trust on the council.
    The other 4 are on the muddy side.

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    1. Yes, it seems that way.
      Moran, Walsh and Harabedian are in with the racketeers.
      Capoccia is questionable. He's probably better than the above 3, but needs to be watched closely.

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    2. I trust Capoccia as an honorable person. But I'm beginning to think he may be naive.

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    3. Naïve is a great work for Capoccia. He is also very trusting of Elaine and I get the impression he believes everything she says. It won't be until he is out of office and is standing on the other side will he see how much Elaine lies.

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    4. John Capoccia drank the kool-aid and now believes Elaine.
      Too bad because while I like him as a person, I no longer support or trust him.

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    5. He won because he ran against the UUT. I doubt that those who voted for him are happy he's now supporting it.

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    6. CHRIS IS THE ONLY REASONABLE ONE OF THE GROUP!

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  22. Doesn't Elaine know that there are Tattlers that have resources to catch her lies?
    Why should anyone believe a word that comes out of City Hall, when everything about the water and water rates have been proven to be nothing but lies.

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    1. Tats not only have resources, they have brains.
      The City tends to forget this.

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    2. There is something fun about calling out the city on it's BS. So much of what they put out is inaccurate or even flat out false, it becomes a game. We have won it so many times.

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  23. The word is out and people that never paid attention are mad. There is a revolt brewing among the villagers.

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    1. This is what has always confused me. Why can't the city be honest about these things? There are always strange angles and things that just aren't true. It is very weird.

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    2. The more they make stuff up, the worse it gets for them.

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  24. If the truth was known.....people would be fired. They are covering their butts and the butts of their friends.

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    1. They're also covering up for the 2003 City Council that stuck us with these water bonds.

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    2. Who signed off on the 1998 and 2003 bonds?

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  25. 2003- Mayor Bart Doyle City Manager Tamara Gates

    1998 Refinancing Mayor Doug Hayes City Administer John Davidson

    If you want more information google http://www.emma.msrb.org/ and search for Sierra Madre in the upper right hand green search box.

    Everyone should have their own Official Statement of the Water Bonds.

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    1. Was Doyle on the 1998 City Council? I can't imagine Hayes being able to pull something like this off all on his lonesome.

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    2. Doyle was on the City Council in 1998.

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    3. The one man wrecking crew.

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  26. THE QUESTION REMAINS UN-ANSWERED!

    1. How much of the $19,000,000 water enterprise debt ended up in the wrong persons pockets?

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    Replies
    1. Who knows? The City isn't talking.

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    2. This City is pretty creepy;maybe the attorney General should be alerted.There appears to be a litany of questionable actions that have taken place over the years and it appears that this trend is continuing.Complaining on the Blog is a start but it is not enough if you want remedy the dysfunction!

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  27. This city council has putzed along for years with their method of selection of city managers (formerly called city administrators) and with the last three city managers--Tammy Gates, on to Yorba LInda and later fired for promissing a developer something she couldn't deliver and then John Gillison, a lawyer who never practiced who when on to Rancho Cucamonga as Assistant City Manager for a couple of years and then was appointed City Manager, then came Elaine Aguilar. What is interesting is that city variously configured city councils used retired Monrovia city manager Don Hooper, as interim city manager for Sierra Madre and he recruited Elaine Aguilar who was an assistant to the city manager of Glendale (not an assistant city manager, but an assistant to the city manager). She had not applied and was not seeking the job. The first list of applicants did not even make the paper cut such was the situation at the time. Before that, for many years (23) we had City Administrator Jim MacRae who was woefully underprepared for the job and he is probably the back story as to why our water department is in such a mess. He finally was told to get an assistant City Administrator and Sean Joyce (from Walnut) was hired, who succeeded him and who hired John Davidson (also from Walnut--who left Walnut under a big cloud--resigned and then wanted his job back and the city said "no thanks, your resignation stands") as his assistant. Also, back in the day we had city attorney Charley Martin, who often acted as iterim city manager when the city was out looking for replacements. Here is the real crime, under Bart Doyle Charley Martin was forced into retirement and that should have never happened. Colantuno and company followed and here we are now.

    And I haven't even started on the finance director, hired under Bart Doyle, who was on administrative leave from West Covina and "let go" from Sierra Madre, told to leave the building as they shut down the computers. Kurt Zimmermann's request for the forensic audit may just have uncovered this mess but he was defeated in this effort.

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    1. It appears that the good people of this community have a special talent and readiness to elect and hire scallywags and riffraff to manage their community!

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    2. Sadly there is a considerable population of folks in this town that only wants to be told they're nice. That and a pat on the fanny wins their hearts.

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    3. Yes and so accepting of pederasts as well.

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    4. The City management team and City Counsel reacted to Zimmerman's suggestion like they had been shot with a hot arrow!We need more Zimmermans and fewer opportunist to represent us!

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    5. You have a longer memory than I do, 5:06 - but one thing - Gillison left to be the Director of Development. This after he did his part to facilitate hillside development here.

      And everyone can watch the council responses to Zimmermans audit suggestion on Neuroblast.
      Thanks Neuroblast!

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  28. Now 2:05 pm; ask who on the city council gave the go ahead for the cities retirement funds (P.E.R.S.) to be a part of the employees package with out much discussion or much public input? Would that be Doug Hayes?

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  29. With all of the new construction that is visible in Sierra Madre lately, are the developers required by the City to pay a larger amount of fees for the water they must be using? What about when the ALF begins construction? How much in water fees is the City asking the developers to pay since this will be one of the largest developments this City has seen in quite some time.

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    1. good question...does anyone have an answer? Maybe not,the City, full of Milk and kindness, can always fleece a little more from their Subjects to help subsidize the projects.

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  30. Elaine was hired because of her strong ties to SCAG.

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    1. Does it get any worse!That is one heck of an recommendation!

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  31. Any report from last night's CC meeting, especially regarding water?

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    1. The CC meeting is next Tuesday.

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  32. S&P current rating is A Stable as of May 2013. Moody's rating is A3. The rating you are looking at is insured rating, It's the rating on the insurer of the bonds. A big difference.

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