Tuesday, October 20, 2015

Desperation & Deception: Sierra Madre Makes Plans To Spend $2.3 Million Dollars From Various Reserve Funds On Badly Needed Water Infrastructure

Raging waters.
It was a pretty sobering meeting, though I can think of one premise cited throughout the evening that probably wasn't quite as correct as it should have been. That being water loss through infrastructure failure is a fairly recent event here. As most people are aware leaky pipes have been the norm around here for years.

It is only now that Sierra Madre is being forced by the State of California to drastically reduce its water usage that this has become so urgent an issue. Specifically it is the prospect of having to pay $10,000 a day in fines to Sacramento that has finally made City Hall sit up and take notice. Which is probably why the state has been making such threats. It is the one proven way to get cities such as Sierra Madre to pay attention to their water wasting ways.

Of course, should El Nino somehow bring the rain necessary to alleviate the effects of the drought this winter the urgent need to repair water mains and all those pipes attached to them could be alleviated. If the prospect of all of those state fines went away things here would likely return to the way they have been for a while.

Old habits do die hard.

Councilmember John Harabedian brought up the prospect of raising money through the selling of more water bonds. Here is a brief refresher on why that would not be possible for Sierra Madre.


The entire Moody's run down on Sierra Madre's dismal water bond situation can be linked to here. There is a clarity to their expose' that only truly dispassionate New York money men can bring. 

And remember, Moody's is only talking about the bad bond stuff from the 1990s here, which was actually a consolidation of some previous toxic water bond debt. There is many millions more in bad bond debt that the complete idiots responsible for the failed Downtown Specific Plan saddled us with in 2003. And for whatever reason (I've yet to hear one that makes any sense) we are only paying the interest on that financial disaster up until 2020

Sierra Madre's water bands, all of them, are rated junk. Any attempt to issue more of them would be sheer folly. At best the city would be forced into an extremely high interest situation. One that would only serve too put this city into even further into debt than it already is.

Here is what the service on Sierra Madre's debt from the 2003 DSP water bonds looks like. Note that the City of Sierra Madre is only paying interest on that debt right now, and just how many additional millions of dollars that is costing you. Then think about all of the new pipes Bruce Inman could have bought with that kind of dough. 


That this did not come up last night is hardly surprising. It never does. This is one of the greatest scandals in Sierra Madre history, and the consequences stare us in the face every day. The crisis this city is facing now is directly linked to this massive, destructive and entirely unnecessary interest only bond debt.  

Have you ever wondered what kind of institutional dementia it took to lock this city into $6,750,000 in water bond debt in 2003, 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?

What exactly is the cost plus interest to the people of Sierra Madre for that $6,750,000 2003 DSP water bond? That I can answer that 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 this 2003 DSP water bond once it is finally retired in 2034.

To be exact, that would be 31 years later, with the total cost in interest debt service alone being over $8 million dollars. Talk about your mad stacks from sad sacks. With that kind of money you could have repiped the entire city and still have had enough left over for two new libraries.

And again, we're not even adding in the 1990s bond debt that Moody's is so upset about. If you did the figure would balloon to over $24 million. Get the picture?"

One interesting moment last night was the revelation that the recent series of water rate hikes didn't really have very much to do with infrastructure renovation. Which is odd because in the Raftelis draft report justifying the jacking up of Sierra Madre's water rates for the 5th, 6th, 7th and 8th times in the last decade or so water infrastructure repairs were discussed. As they were in the Moody's report.

Here is an example:


Now if you were to ask the man in the street why water rates have been cranked up these last few years that good fellow would likely tell you it is because the pipes need fixing. And sure 'nuff the man in the street would be wrong. The water rate increases were put into place mostly because of Sierra Madre's massive water bond debt. It was to cover covenants and other fine financial details related to the maintenance of so heavy a bond debt load, and keep the bankers in New York happy. 

In other words, it was done in order to repair our junk bond rating. But the city even failed at that. Once the water rate hikes were voted into place and the bills sent out to this community's long suffering and captive customers, Moody's issued its new report.

The result? They still rated our water bonds junk. As they are even today.

Councilmember Delmar discussed the importance of leveling with the public about Sierra Madre's water mess. She cited the lack of trust, which is a very accurate assessment. What this post is covering today is no secret to those who understand the real issues. A lot of people know this material.

A good place to start the leveling would be Sierra Madre's water bond debt. It is why the city has no money to stop both the daily water loss through leaks and solve its discolored foul water problem. It is also why the city is not likely to meet that 32% water use reduction number, and could be at risk of having to pay huge fines to Sacramento.

It is time Sierra Madre leveled with the public about the greatest financial scandal in its history. That being its toxic water bonds. Tell the people what the real cause of the problem is here.

Name names. There is a first time for everything, you know.

Somebody made a great post last night. Here it is:


Throw in some news about all of that water bond debt and the idiots responsible for it and who knows? Maybe Jerry Brown will realize that the residents of Sierra Madre are not culprits but rather victims and cut the folks a break.

Maybe there might even be state investigation. Wouldn't that be something?

Bonus Coverage

Massive Doyle - Stockly Era Water Bond Debt: Could It Cost Sierra Madre Its Library? (May 2015 click here)

sierramadretattler.blogspot.com

53 comments:

  1. Ms. Delmar made the only relevent remark last night. The Mayor looked at the audience and asked what could be done about that? Then quickly moved on. This meeting was a farce. Ya could've stayed home and just read the city manager's report. Even with the money to start fixing leaky pipes, it can't even begin until probably after the first of the year. The infamous parcel tax was mentioned again. I left at 9:00P and had heard nothing about cutbacks to city employees. I'm still not over Elaine's suggestion that it would cost $154,000 to have employees read all the meters in the city in one day. Plus having to do the input of the data. Inman keeps getting the shaft but ya have to understand, he's under the City Manager. She has to okay what he does. But none of the CC send it back to her. I wonder why that is?

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    1. The City claimed it cannot figure its production of water each month and the billing for residences occurs every two months so the cannot figure the amount of loss of water. Certainly at the end of 2014 you would have both totals for the year and could then figure your loss of produced water that went unbilled through leaks.
      The state only looks at billing numbers and the 30 percent reduction thereof. It is starting to look like Christmas early, snow job!!!
      Also since only 67 metered water users went over was that for one month or two months? Any if they decrease their usage we meet the state numbers and we have not fixed one pipe.
      SOUNDS LIKE CHRISTMAS IN THE SUMMER IN SIERRA MADRE...more snow to come!!!

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  2. Concerning this letter to Gov. Brown from Citizens of Sierra Madre it might help clean up Sierra Madre faster if a similar letter was sent to California Attorney General and ask for California law enforcement take over along with a forensic audit much like West Covina asked for and received very sobering news of complete failure in it's accounting and spending system. This type of inspection needs to be handled quickly before those dirty hands inside city hall get a 'white wash' committee installed.

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    1. The only Council Member who might push this excellent proposal is Ms. Delmar. Anyone got her ear to suggest this?

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    2. Kurt Zimmerman called for a forensic audit years ago. John Buchanan gave birth to a cow

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    3. Buchanan was one of the worst to ever sit on the Council. Chaps my rear end how if flat out lied to us and tried to distort the facts and meanwhile pondered and pontificated like a lawyer - all mouth no substance.

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  3. Water meters can be read through a WiFi system and new meters with WiFi capabilities in less than a week all those water meters can be accounted for and billing can take place on a monthly time schedule rather than a bimonthly schedule accounting recovers revenue faster.

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    1. Sounds like a City Hall insider writing this suggestion. Give me a break!

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  4. Who killed the Water Company?

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    1. Video killed the water company.

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  5. Who was on the City Council that agreed to that water bond arrangement. Those people should be embarrassed to show their faces around Sierra Madre. It would be nice though if anyone remembers who voted in favor of it.

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    1. Bart Doyle and his trained monkeys.

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    2. Are they the same folks who agreed to the One Carter mess, over the objections of the planning commission?

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    3. 7:56, Just one council person had a share in both disasters, I think - Rob Stockly.

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    4. A very small group of people did a huge amount of damage to this town.

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    5. Let's give credit to all who deserve it... 2004 City Council
      Bart Doyle, Mayor
      Robert Stockly, Mayor Pro-Tem
      Doug Hayes, Council member
      George Maurer, Council member
      Tonja Torres, Council member

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    6. and subsequently lets thank John Buchanan and Joe Mosca.

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    7. There is a whole list of heirs to the worst city council in Sierra Madre history. They would be John "Green but No Solar Please" Buchanan, Joe "Flee the country like your pants are on fire" Mosca, Nancy "Wild Thing" Walsh, and Spanky Pants Moran. Oh, and Goose of course. Can't forget Goose.

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    8. Will Noah Boo Hoo Green make another attempt at Council?

      after all, he whined that one of his dreams in life was to be elected to something - anything - just something

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  6. Not only did we get a hugely wrong water bill several years ago (corrected) but we also got "0" usage water bills two readings in a row. So, what happened? I later learned that no bill is supposed to leave the Water Department "office" with a "0" so I would like to suggest that sloppiness in City Hall manifests itself at several levels. We paid the third water bill and refused to pay the total for 6 months usage for any charged in the third tier. Think about how often that has happened across town. It can't just be us.

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  7. I cannot believe Elaine said it would cost an extra $150,000.00 to read all the water meters every month. Did I hear her correctly? Was this $150,000.00 extra each moth or per year, I am not sure?

    The council members should not take this figure at face value. They should have asked Elaine for a detailed breakdown of the costs that add up to $150,000.00. How many extra people, at what hourly rate, for how many hours.

    The council must make her give them the details for everything she says. I think they would find that she inflates the cost of things she does not want to do and underestimates the costs of the things she does wants to do.

    For some reason the five of them are afraid of her. I sure hope that there are two better choices to vote for to replace Harabedian and Capoccia next April and that the UUT increase is voted down.

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    1. Get rid of the UUT, contract the library, fire and police, fire Elaine. Then figure out how you are going to pay all of the above. I'm sure you will find the perfect council member to do all that.

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    2. that is one expensive meter reader!

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    3. Reading every meter every month would cost an additional $150,000.00 for a year's worth of this work by the "water department" according to Madam City Manager last night. How did she anticipate that question? Was it part of the staff report? How accurate was that calculation? I know how to read my water meter. Everybody should know how.

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    4. That makes no sense. Do City employees get paid more when they read meters? They work their hours and the pay stays the same. The City Manager is full of hoot.

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  8. As the author of the Brown letter I am very tempted to mail it. I wrote that in a moment of frustration of what's gone on at city hall all these years. I worked with Mr. Brown many years ago but I'm sure he will remember me and actually get the letter. The problem I'm having is that I don't want to cause us more problems, I want it to do good for us residents. Anyone out their have a clue if this is the right thing to do? Really don't want to write Governor Brown about our brown water that is costing us a lot of green. What do you think?

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    1. You mean to say you think things can get worse?

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    2. Send the letter please to the A.G. as suggested in earlier Replies.
      If we don't get some help from the 'outside' the debt and malfeasance will literally bankrupt the City.

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    3. I agree with your letter. There is no transparancy at City Hall. Last night was the first time I heard a CC apologize for his mistakes. I was impressed. But he still doesn't act boldly. He still tries to appease. That's not what we need. There is something wrong with City Hall; in the past and perhaps ongoing. The complaint has to start somewhere. It could cause problems, but as one person said, " Can it get worse?"

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  9. Well maybe, the gov may look upon us with a different eye, and eye for our green so to speak. Not really sure, it would be nice if we could take care of this problem at the local level and not bother Sacramento.

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    1. Ha ! Not buying that statement!

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    2. Decaf, my friend. Try the decaf.

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    3. If we did it at the local level, it would be covered up. No transparency here.

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  10. 8:24 With all the costs we are faced with we need to fix this and it should not always be with raising our TAXES. We have a lot of intelligent people in town that I'm sure could figure out the right path we should be taking. With the deplorable situation with our Police and Fire I have my concerns wrong decisions will be made, we need to work on our costs. I think with proper guidance from City Hall we could do better for less money with the Sheriff. The Fire Department is a whole other matter that definitely needs a good look at.

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  11. Because this it The Tattler and we don't care, let's change the subject for a minute:

    Perhaps the real reason that John Harabedian opposes the LA County Sheriff proposal for Sierra Madre is because his endorsed candidate (and now a criminal person of interest of the FBI) Paul Tanaka didn't get elected Sheriff.

    If Tanaka had won, would Johnny be a big LASD fan?

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  12. 9:09, bet your right about that. Not who is the best for the job but who knows whom.

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  13. Like Felikian knows Harabedian, so Harabedian 'adjusts' the rules so Felikian can have a huge house extension. That is not a 'privilege' available to any of the rest of us.
    With this blatant corruption ,you can only wonder what they do when not in the public eye.

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  14. Our water infrastructure disaster is the result of corruption. That is what corruption looks like. Broken rusty old pipes, water running down the streets from rupture after rupture, and stuff coming out of your tap the color of old dentures. A lot of the crooks still live in town. Why did we let them off the hook?

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  15. "We need to address the age of our water system and we have been doing that with our reservoir replacement projects, and we need to address the fact that the aquifer - that water table that we draw all of our water from - is declining," Inman said. "Both of those issues need to be addressed and neither can be addressed without increasing the rates."

    But Sierra Madre resident John Crawford says he has his doubts that the city's proposed water rate increase is necessary.

    Crawford has launched a campaign on his blog, "The Tattler," and is collecting protest forms in an attempt to halt the hike.

    We get a lot of Chicken Little talk - `pipes are breaking, pipes are rusty, and we should all fear for the end of the world,' which is usual talk you get when people are asking for a lot of money," he said. "There are a lot of people on fixed incomes in Sierra Madre that this will hurt."

    City officials, however, warn that without the rate increase, Sierra Madre's water budget would be operating in the red as early as next year and the approximately $2million in water fund reserves would be exhausted by 2015-16.

    In addition, because reserves are low, the city would be in default on its bond notes and could face penalties or other repercussions, said Karin Schnaider, the city's administrative services director.

    "There is no other long-term solution other than the water rate increase," Schnaider said.
    http://www.sgvtribune.com/general-news/20100709/sierra-madre-residents-face-possible-water-hike

    So who didn't see this coming and who did?

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    1. Umm, the money from the water rate hikes went for bond covenants and servicing debt. How much of that money went for infrastructure repair? Like … none? Even Capoccia apologized for that last night.

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    2. Oh, and Bruce Inman's pension. Which he really ought to start using soon.

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    3. So City Hall got their multiple water rate hikes and now all of the pipes are fixed and everything is just fine and dandy, right?

      Oh, wait...

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    4. Capoccia was especially full of crap on that one. Listening to him moan about how sad he was because all the water rate money went to service bond debt and they didn't raise rates enough to include water main repairs was just sad. He needs a check up from the neck up.

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    5. The last City Council 2012-2014 knew that the proposed rate increase would only fund limited capital improvements (such as the Mtn. Trail water main.) Apparently, one of them has forgotten that.

      The main purpose was to get the water dept reserves up so the water dept. wouldn't run out of money. Second was to meet the bond covenants.

      Don't forget the water dept. needed to pay back about $1.3 million to San Gabriel Valley MWD, too. If the City can resist borrowing more money the 1998 bond issue is paid off in 2019. Unfortunately, we'll then have to pay off the 2003 "Interest -Only Bonds. Payment schedule is above.

      Keep shining the light on this, Mr. Tattler. Goodness knows the taxpayers are being kept in the dark here.

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    6. Most people in town believed that the water rate increases were to pay for infrastructure. Instead most of it went to the Bank of New York to pay interest on old bond debt. You can only wonder how so many got the wrong impression.

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    7. Most people on this website yell that they will never pay more money to the water company, then ask why people structured debt in such a way that debt payments remained at the same dollar amount year after year (because the taxpayers, specifically the ones that frequent this website, won't vote to pay more money upfront to pay less money over time).

      Lastly, we continuously get a wholly annoying argument that seems to involve fury that we pay interest on money at all. At this point, the Tattler has made a lifelong habit of not reporting the actual monetary difference between a fixed interest loan versus the one we got. I can only assume this is because it makes less interesting reading, though it undermines the objectivity of whatever it is everyone is supposed to be arguing about.

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    8. So $24 million dollars in water bond debt in a town of less than 11,000 people is OK because it is fixed interest? Hmm. You do know that $24,000,000 divided by 11,000 comes to $2,182 bucks for every person in town. Including the little babies. Of course, we get nothing out of that. Kind of like city hall.

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    9. And after all the millions of dollars are spent, we still have a massive pipe leakage problem !
      Sorry this is annoying to you 7.28 .

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    10. No pipes, no gripes. What's $24 million in bad debt between friends?

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  16. Wake up Sierra Madre !
    Millions of dollars in our taxes have evaporated .Millions more dollars are required to fix the problem. Nobody is responsible.Nobody on the CC is naming names. There is no consequence for this malfeasance. There are only 2 people on the CC we can trust and they are obviously outnumbered and out voted.
    In such circumstances why would we give the City any more money ?
    The City management is incompetent and dishonest .And we are expected to listen to them ?

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  17. Fitch Affirms Pasadena, CA's Water Rev Bonds at 'AA+'; Outlook Stable
    October 20, 2015 12:51 PM Eastern Daylight Time
    AUSTIN, Texas--(BUSINESS WIRE)--Fitch Ratings has affirmed its 'AA+' rating on the following bonds issued by the city of Pasadena, CA on behalf of Pasadena Water and Power (PWP):

    --$72.5 million outstanding water system revenue bonds, series 2007, 2010A, 2010B and 2011A.

    The Rating Outlook for all bonds is Stable.

    http://www.businesswire.com/news/home/20151020006543/en/Fitch-Affirms-Pasadena-CAs-Water-Rev-Bonds

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  18. West Covina has the right next step to stop this Ponzi Scheme:
    http://calwatchdog.com/2015/07/13/audit-reveals-serious-pervasive-deficiencies-west-covina/

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    1. Betty Yee, come on down!

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