Tuesday, May 19, 2015

Massive Doyle - Stockly Era Water Bond Debt: Could It Cost Sierra Madre Its Library?

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One of the sad ironies regarding Rob Stockly's leadership in the purported fight to save Sierra Madre's Library from the budgetary chopping block goes as follows:

The amount of money it will take to pay the interest only 2003 water bond debt racked up when Stockly and some other equally careless and irresponsible individuals were on the City Council would today pay all of the costs associated with maintaining Sierra Madre's at risk library more than 8 times. Or, to put it in another big number way, we would not have to pay a dime in Library costs until the year 2023. Unfortunately for us, it is all going to the Bank Of New York instead.

Have you ever wondered what kind of cerebral dysfunction it took to lock this city into $6,750,000 in water bond debt, and then somehow decide to make interest only payments on the principal until 2020? Without even paying off even $1 of the original amount until 17 years later?

I am not sure I know the answer to that. Or at least I cannot quite find the words to describe my reaction in a family friendly manner.

Here is another question. What exactly is the cost of all that debt and interest to the people of Sierra Madre for the $6,750,000 2003 water bond? That I can answer for you. The combined figure is $14,925,486.00. In other words, due to that unique repayment schedule Sierra Madre's tax and water ratepayers will have ended up paying way more than double the cost of that 2003 water bond once it is finally retired in 2034.

To be exact, that would be 31 years later, and at a total cost in interest debt service alone of over $8 million dollars. Talk about your mad stacks from sad sacks. You could have bought 4 entire libraries with that amount of money and still had something left over for a firetruck.

According to City Hall the total cost for maintaining the Library last year was $804,000. According to the consultant Raftelis, the folks who steered the City Council through its latest round of water rate hikes, the yearly cost in water department debt service is as follows.


Or nearly $200,000 more than the yearly cost of running the Library.

About two years ago City Hall issued a report titled Debt Administration. It makes interesting reading, and can still be found on the City of Sierra Madre website if you look hard enough. In case you haven't seen it yet, here are the bizarre dollar figures associated with that ill-fated 2003 water bond.


I would hope that the Water Department's outrageous bond debt, much of it brought about by the borderline crazy decision to make interest only payments until 2020, would start coming up in some of the budget outreach (or is that input) meetings now taking place.

Water bond debt service costs more each year than what it costs to run Public Works, Planning, Community Services, and, of course, the Library. All of which could see their budgets cut, or even go away altogether.

As this city begins to make its decisions on where and what not to cut, maybe people could take a second to reflect upon what that squandered $8 million dollars could have saved from the chopping block.

That decision to make interest only payments on the 2003 Water Bonds until 2020 could go down as one of the worst ever made in this town. The consequences are not only still being felt today, but also being paid for as well.

Graphics courtesy of Raftelis

Here is a question for you. Note the difference between what water ratepayers in Sierra Madre pay versus what those in Arcadia pay. Since traditionally the water used by these two cities comes from the same place, why the huge difference in money charged to customers?



sierramadretattler.blogspot.com

64 comments:

  1. The Truth Shall Set You FreeMay 19, 2015 at 6:13 AM

    Why issue interest-only debt? Simple. Easy payments from 2003-2020! That way, the money that would need to be spent to pay down the bond debt (like a normal bond) could be spendt on other things.

    Like paying down the 1998 water bond and paying for Platinum Pensions.

    You see, Bart Doyle, Stockly and the other Council Members would have had to really RAISE the water rates back in 2003. Better to let the water dept. almost go bankrupt so the ratepayers could get screwed in 2014 with 2 rate increases (19%, + 18%) and something like another 16% starting 7/1/2015.

    Kinda like the guy who can't afford to buy a new car so he gets a 7 year car loan for the low, low payments instead of a 3 year car loan.

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    1. It's no coincidence that the 2003 interest-only bonds don't have big payments due until 2020 when the 1998 water bonds are paid off. Thanks, Bart!

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    2. Everyone here is acting like this rate structure was some sneaky or stupid decision, when clearly Sierra Madre has a history of refusing to pay $3 more a month for water during required elections to raise the rates, and so in order to get upgrades done to the system, shenanigans such as this are going to rear their head. If you wanted to go back in history and alter the past, today you would be paying $3 more a month and be looking at retiring these bonds in 2034.

      In 2019 the 1998 bonds are paid. That means in 2020 we have 500k freed up in revenue to cover 307k in extra bond payments on the 2003 bonds. If Sierra Madre ratepayers would speedily have agreed to pay $3 more a month, then in 2020 they could look at a full 500k in savings, which would cover 2/3 of the library. Instead they are looking at only 200k in savings, or 1/4 of the library. Except would it? Can money we spend on water bills be used to fund the library? I thought that was illegal.

      But wait, we had a Community Redevolpment agency with 340k in payments whose final payment is 340k in 2020. That means in 2021 we have another 340k in savings, or a little less than half of the cost of the library. Except it won't do that because it's paid for by taxes in the community redevelopment zone.

      But wait, there's more! We also have the pipeline bond which is supposed to retire in 2018 and is interest free, of course, getting this money interest free doesn't count against the insanity of the other water bonds for some reason... regardless, if paid timely it would have freed up 185k in 2019, but because we don't pay things that won't happen until 2021. Who knows maybe we won't pay it some more.

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    3. The Truth Shall Set You FreeMay 19, 2015 at 10:57 AM

      Wow, I guess 9:22 thinks if she/he goes long winded she/he can baffle us with BS.

      I guess in your alternate reality that justifies a boatload of deferred interest? Can you show us where the Bart Doyle City Council proposed a large enough water rate increase to cover the bond debt? Of course you can't.

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    4. Very old school sounding explanation from 9:22. Good to see the "blame the residents" canard up and walking again. Think there is anyone left who will actually believe it?

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    5. The only thing that justified deferred interest is ratepayers unwillingness to pay an extra $3 upfront a month. Which we all know they were unwilling.

      So now when 2020 rolled around instead of saving $15 a month they will only save $9. That's how it works.

      Regardless, we are arguing about the horrors of $6 a month difference in water payments for the shocking period of 14 years. Apparently this is a horrific boondoggle of such epic proportions, we will lose our library. Seems like a bunch of hooey to me.

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  2. With the 3rd water rate increase in 2 years coming 7/1/2015, that will totally wipe out the reduction of the UUT to 8% on our bills. Thanks, Bart Doyle!

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  3. Rob Stockley and Bart Doyle were/are the two most destructive people in Sierra Madre.
    Both very bad men. Main characters in the Downtown Specific Plan that damn near destroyed Sierra Madre.
    Now this water bond scam....both these guys should be in prison.

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  4. A lot of bad things happened back then. The rape of One Carter, the Downtown Specific Plan that had neighbors practically fighting in the streets, and bad water bond deals. What a curse these people have been to our community.

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    1. It was the Stockly/Doyle/Buchanan dream of development.
      Word went out that we were for sale.

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    2. Sounds like these two country turnips got taken over the coals.

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    3. what did we expect?

      at the time, Rob was a commercial banker

      Buchanan was/is a shill for SoCal Edison

      and Doyle was a lobbyist for the construction industry (or whatever he was doing)

      all had self interests or interests of their employers ahead of the residents

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  5. What was that $6,750,000 spent on ????? Please tell.

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    Replies
    1. A lot of it went for DSP related water infrastructure.

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    2. 7:20 --- I hope you meant to say $14,925,486.00. Because that is what it has really cost the tax and rate payers.

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    3. It went to the Miramonte Reservoir. Which cost 14 million total to build.

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    4. Wrong. It was a number of projects. Only $6.75 million went for building. The other $8 million was in interest payments.

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    5. We spent 6.75 million for construction, somebody else paid the rest which meant the whole miramonte reservoir cost 14 million total to build. The ratepayers say they can't afford $6 more a month to save the library, so they certainly weren't going to cough up a $1000 upfront to not have interest payments at all. They also wouldn't pay $3 more a month to save $6 more a month a decade later. Which is probably smart actually because $6 is the same as the $3 back then because of the power of inflation. Though that's not why the ratepayers wouldn't pay it.

      In any case, if you want to include the interest, the city personally paid 14.925 million for a 14 million reservoir.

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    6. No. Paid nearly $15 million dollars for $6.75 million in water infrastructure. Dumbest deal ever.

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    7. How did we allow such perfect fools to put us into this kind of debt?

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    8. Okay, let me try to make it clearer to you: THE MIRAMONTE RESERVOIR COST 14 MILLION ACTUAL DOLLARS TO BUILD. THE FEDERAL GOVERNMENT PAID FOR 7.25 MILLION OF IT. If you want to think that your interest dollars should be counted against the cost, then you ended up actually paying 15 million dollars for something that cost 14 million dollars to build.

      And you just called it the dumbest deal ever. And now people are talking about other people being fools when they don't even know the most basic information about what they are so angry about. If this is what an educated Sierra Madre voter looks like, I weep for the city.

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    9. You will still have to add in that $8 million dollars in interest. A massive sum of money we now owe because the geniuses you adore decided not to pay anything on the principal for 17 years. That brings the total cost up to $23 million. An even worse deal.

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    10. Why does 4:45 feel like he has to make things up like that?

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    11. 6.75 + 8 interest = 14.75. That's what we paid out of our pockets. The federal government paid the rest. We got a 14 million dollar reservoir, and we paid 14.75 million for it. We don't get to add in what the federal government paid and say we got ripped off. Yes, the reservoir actually cost a total of 23 million. But we didn't pay for it. We paid 14.75 million for it. We did not get ripped off even under the most ridiculous twisting of the scenario possible.

      And, as is usual with completely stupid arguments, peope here are acting like there would have been ZERO interest on that loan. Which one would think any slightly knowledgeable person who exists in the human world that is capitalism knows would never happen. Or maybe you are living in the magical world where we pay stratospheric gobs of money up front? Oh guess what. We don't live in that world either.

      So if we paid it normally, instead of interest only, the total would be 13.04 million. So the difference between interest only and paying interest normally is less than 2 million dollars. Not 8 million. Wow. Hey look.

      Cue: People completely ignoring the truth and going back to parroting that Sierra Madre has been saddled with 8 million in interest because of paying interest only and pretending like there was some alternate universe where we wouldn't have ended up with a minimum of over 6 million in interest. For instance: generally people start grousing at this point that we can't use today's interest rate in the past. How I too long for a time machine. What brilliance I see here.

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    12. Good to here from another planet once in a while. But paying interest only on the $6.75 million SIERRA MADRE is responsible for has cost SIERRA MADRE $8 million dollars it did not have to pay. PERIOD.

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    13. Paying interest only caused about 8 million in interest. Paying interest and principal in a regular fashion would have caused over 6 million in interest. Paying interest only instead of paying principal and interest only results in a less than a 2 million dollar difference. Period.

      You are welcome to google a mortgage calculator and input the numbers and see them for yourself.

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  6. Is Rob Stockley still with the library group? If he is they should run him out of town, what a horrible mess he and Bad Bart left the town in.

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    1. Rob Stockley singlehandedly put the survivial of the libary in jeopardy because of his actions when he was on the City Council and now he professes to be helping to save the libary - go figure.

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  7. I'd like to see Rob Stockley have the courage to come on the Tattler and defend his actions. Remember when Alan Graves was willing to do that. While I disagreed with Alan Graves on that issue, at least he tried to clear the air about some comments he made at that critical building and water meter moratorium City Council meeting. Let's see if Stockley can defend some of his actions. Interest-only loans are a disaster unless your budgeting to pay the principle back each year. If not, you are just kicking the can down the road, using the money to satisfy the unions and then dumping a big problem in someone else's lap after you are long-gone from the City Council.

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    1. Don't hold your breath.

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  8. Elections really do have consequences. Look at what we have now and remember what we had before and tell yourselves never again can we allow the likes of Stockley, Moran, Walsh, Buchannan, and Doyle ever to be able to wield the levers of power again. What a disaster at that time and a disaster we are still paying for 10 years later.

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  9. Interest only payments for bonds make wonderful sense. a city never pays the principle, they just float a new bond when the old one comes due to refinance the debt. sorta like that revolving credit account that never gets paid off. Ethical? NO.

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    1. Try refinancing those bonds now that Moody's has rated them junk.

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    2. The bondholders are making a killing. 5% interest income both Federal & CA tax-free? Helluva deal.

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    3. Maybe the residents should buy the bonds and let the city pay us. Lol lol

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    4. No bondholder is stupid enough to put any of those bonds up for sale. I checked.

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    5. Because those bonds are junk we can not negotiate a better deal. We are being robbed.

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  10. A terrible irony in this is that Stockly was employed in a bank at the time he helped create this problem. He should have known better.

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  11. Stoickly as I understand it is no longer at the bank but is now teaching our children. What grade is he teaching and OMG what is he teaching them. God save the Queen.

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  12. How San Bernardino is dealing with its bad bond debt.
    http://m.kfiam640.com/articles/local-news-465708/san-bernardino-city-council-approves-bankruptcy-13604213/

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  13. Hell with the Queen, save this city from such a financial fiasco. And while were at it please replace the city manager. I bet that the boys who put her in power have given her a nice exit package for backing what the building industry is pushing for. This also explains why she hires who she has, the long range influence is going to be felt for a long time. Come on council please fix this big mistake.

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  14. Here it comes America......the death of big government

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    Replies
    1. That'll never happen. Unions and elected officials need to fund their Platinum Pensions, Golden Health Plans & salaries. Wake up and smell the coffee.

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  15. Wonder what Stockly,s exit plan is?

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    Replies
    1. Silly bird! He'll retire on a LAUSD pension.

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    2. Very funny , 10:59A. If the city keeps going the way it is-I'll supply the mixers and garnish, you supply the booze.

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  16. Get rid of Elaine. Petition if we must but she has to go! Then tell the council we want the water debt paid by whatever means necessary. First get rid of staff and don't replace. WE DON'T NEED TO PAY 100,00 FOR MIXERS.

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    Replies
    1. I'm in favor of paying $100,000 for alcohol, though.

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  17. The past is killing our City. The present City Administration is continuing to destroy our Village. It is up to the present City Council to make to hard decisions and fire the City Manager and put the mistakes of the past on the right course. Our current City Manager is part of the problems of the past and a major obstacle in going forward. Elaine's guidance has been detrimental to our Village and she does not have the skill set to do the job. What we need is a new City Manager: John Hutt

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  18. The word has to get out and the drive started.
    Not surprisingly another first on the Tattler!
    We need to replace our City Manager!!!
    Please Write, Email or Talk to your City Council Member. Elaine Must Go

    I recommend John Hutt, but that is just me...he lives here

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    Replies
    1. Sad to think that it will take a near resident uprising to get senior mngmnt at city hall that actually lives here.

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    2. I agree ! John Hutt is the man for the job!

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  19. Last I heard, Stockly and Buchanan still defend their decision to violate the general plan, to ignore the planning commission's rejection of the Carter lot division, and go into business with a notorious hustler developer. That part of the hillsides was reformed and the wildlife banished so that Mrs. Buchanan could walk her dog up there.

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  20. Elaine is just the puppet. There is a whole lot of research to be done here. Getting rid of the city manager is a good start. Researching how we got here should allow the combined efforts of our whole community to bring this city out of the hole we have dug for ourselves, and, to allow us to preserve what we have and love, our way of life here.

    Sierra Madre, we can do this.

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  21. John applied for the Planning director but Elaine refused him on the basis that he didn't have enough municipal experience. She needs to go!!!!!!!

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    1. John Hutt should have Elaine's Job. Elaine does Not have enough municipal experience, people skills, leadership qualities, the list goes on. Parts of which are not for Tattler print

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  22. What kind of experience does Inman have?! He needs to go, along with Aguilar. Time to get the broom out!

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  23. Inman only follows orders. He can stay, Elaine, goes. John Hutt is smart about building and building codes, and much more personable than Elaine, but at this point we Do need someone with municipal experience as the City Manager, it is not an easy job in the best of times.

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    1. I'll take smart and ethical over municipally experienced any day.

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    2. Inman is a film flam man. Follows orders? Ok....the order is walk out the door, and don't come back!

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  24. If Bruce Inman can be our Interim City Manager for over nine months than I'm go with John Hutt over Elaine any day!

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  25. AnonymousMay 18, 2015 at 4:20 PM

    Why don't we / why can't we act like a real city!

    These are my cuts!
    1) city coluncil states that city hall has 110 city employees,
    a) we must cut 25% of the 110 full time employees jobs,
    b) is it true that the city manager just hired 3 more full time employees for an additional cost of $600k or more per year? Where does she think this money is coming from?
    2) Salaries
    a) all city employees' salaries, presently earned must be reduced by 15% or more
    3) health benefits & death benefits
    a) city employee earning between:
    1) $0 - 50,000 salaries will be paid $300 a month,
    2) $50,001 + salary earners will be paid $500 a month
    3) that could be a yearly savings of $2 million dollars a year or more?
    4) building department
    a) our fees needs to be reduced in order that property owners want to do business with city hall,
    1) The $4,000 cup is all bull shit, there are few to no player wanting to play the game
    b) we need to be a community that is builder friendly
    1) if remodeling & new construction complies to city and state building standards, push it through, do not delay the plans by 12 - 24+ months and further do not refuse new construction, those building fees & new property tax basis are all ne income to our city,

    Reply

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  26. AnonymousMay 18, 2015 at 4:22 PM

    Continued from post above ( 2 of 3 )

    5) the time has elapsed, we need new city management, there needs to be new thinking for the benefit of all residents and property owners, otherwise the city as we know it will "continue to die a slow death"
    6) If the city choose to raise the water & sewer costs,
    a) then city hall "must improve the infrastructure",
    1) why has city hall failed to improve the infrastructure?
    2) Why has city hall published that our city has 300+ major water leaks, when in effect a 3rd party inspector failed to find any of the major leaks which city hall reported?
    b) no more commingling of water & sewer dept. monies with the general fund
    7) Water & sewer enterprise
    a) the same "salaried city management employees" who have made poor city decisions, who have been paid to mismanage city hall assets and the water & sewer enterprises,
    a) the water & sewer enterprise must be separated / different management from city hall. The commingling of funds and inter distribution of monies needs to stop! Pledging of water and sewer enterprises as collateral for repayment of long term debts / bonds "resulting in city loans" needs to stop.
    b) if the city cannot afford to pay "cash" for purchases, then we do without. NO MORE LONG TERM DEBT!
    c) Swimming Pool - It was found that city hall had failed to run the swimming pool asset. An outside company was brought in which turned out to be a management improvement improvement "stated & quoted by all city council members"
    d) therefore, lease the city library to the friends of the library, let them make it a success, city hall and city council sure can't and have not been able to do that…
    e) then that leads to more questions, maybe city hall & city council does not have the ability to run, or operate any part of Sierra Madre correctly, maybe we need "Change of management"…
    8) Bonds & long term debt
    1) we need to find a way to get rid of & retire those debts, the interest is killing us!
    9) If you know it or not, walk the streets and ask questions, The residents are revolting…
    1) they do not want the UUT "10% Utility tax"
    2) they do not want the Franchise "15% Utility tax"
    3) there is "No Trust for city council decisions or city hall management decisions"

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  27. AnonymousMay 18, 2015 at 4:23 PM

    POST 3 of 3

    4) the residents no longer want to pay
    a) those excessive city salaries & health benefits,
    b) city halls poor choice as to defending those city law suits…re:
    1) police & union suing city hall,
    2) heldreaths v city hall,
    3) chineese mafia threatening to sue city hall for $32 million dollars,
    4) city hall suing Arcadia of water,
    for heaven's sake, the city of Arcadia Public works yard / water pump station is just 1/5th of a mile due south of Sierra Madre public works water pump station which has No water available to pump! Get real Sierra Madre, must improve the water infrastructure, Sierra Madre can have all the available water also to pump, Arcadias ( 3 major electric motors are causing to flow water when our wells are dry! If you have a better explanation why Arcadia can produce water from the same "field wide water reservoir" and Sierra Madre can't, I would love to hear a qualified engineers explanation, Bruce Inman is not a licensed engineer
    5) San Juan Capistrano tierred water rates are found to be "illegal & un constitutional" by state and apopealat courts. San Juan Capistrano was instructed the return the residents over payment for water,
    a) Sierra Madre City Hall should be asked to return "all illegal water monies charged" residents, regarding the tierred water rates…

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