elpasospeak

Does a person’s signature tell you anything about them?

Maybe someone trained in psychology can help us here.

We deserve better

Brutus

The city issued about $200 million of bonds the other day.

We have to pay for the services of bond counsel as part of the issuances.  It looks like the city uses the same counsel for many of its entities including the water utility, the airport, the housing finance organization, and the specially created entity that financed the ball park.

The most recent contract between the city and our bond counsel that we have been able to find is one issued in 2008.  At that time the fees were set at:

The way we calculate it counsel’s paycheck for the recent issuances looks like this:

$35,375,000 of quality of life bonds at one dollar per thousand plus $5,000 to start comes to $40,375 in fees.

$62,000,000 in new certificates of obligation works out to $5,000 to start plus one dollar per thousand up to fifty million dollars and then 80 cents per thousand for amounts above fifty million.  That comes to another $104,000 in fees.

The $110,000,000 in refunding bonds are special.  They demand a higher fee since after all they are by their nature more difficult to justify.  These bonds end up costing us the $5,000 to start, one dollar per thousand for the first fifty million and then 80 cents per thousand for the last 60 million.  Then we have to add another 25 percent bringing the fee to $162,500.  Also consider that when the original bonds were issued bond counsel was paid again.

There were probably some expenses like pencils and photocopies and maybe even some travel.

Jackpot

It looks like the haul for this latest round of debt will cost us about  $306,875 in bond counsel fees.

Considering the fact that we issued more debt earlier this year we would guess that we are pretty good clients.

We deserve better

Brutus

The other day in Re-re-financing we saw that the city council was going to vote on issuing new bonds to re-finance bonds that were issued in 2007.  The bonds that were issued in 2007 were used to re-finance bonds that were issued before that.  We haven’t been able to trace when they were originally issued.

Looking further into the issue the “Amended Continuing Disclosure Report For The Fiscal Year Ended August 31, 2014” showed us that:

The bonds that were issued in 2007 are being paid down at the rate of 3.2 million dollars a year in 2015 increasing to a rate of 5.7 million dollars a year in 2027.  It unfortunately was not going to stop there.  The final payment listed was going to be in 2032 for $32,795,000.

What they are doing is that they are selling bonds with slow payments in the early years and huge payments at maturity.

In fact, just looking at the final payments for some of the bonds they have already issued we can see that they are back-end loaded.  Our children and grand children will have to pay these bills:

2032 $32,795,000 General Obligation Refunding Bonds, Series 2007

2032 $11,355,000 Combination Tax and Revenue Certificates of Obligation, Series 2007

2032 $12,395,000 General Obligation Bonds, Series 2007A

2033 $17,530,000 General Obligation Bonds, Series 2008

2034 $17,700,000 2009B Combination Tax and Revenue Certificates of Obligation

2034 $49,470,000 General Obligation Refunding Bonds, Taxable Series 2014

2035 $48,245,000 Taxable General Obligation Pension Bonds, Series 2007

2036 $19,150,000 2010B Combination Tax and Revenue Certificates of Obligation

2038 $10,520,000 Combination Tax and Revenue Certificates of Obligation, Series 2012

2038 $12,870,000 Combination Tax and Airport Revenue 2014

2040 $22,705,000 Combination Tax and Revenue Certificates of Obligation, Series 2014

There are many more.  We left off the ones under ten million dollars.

No intention

The bonds above come to over $250 million that will be due in the 2030’s.

Remember that city council had to impose a franchise fee on our water utility just to cover a $3 million budget shortfall this year.

They simply will not have the money to pay off these bonds.  What will they do?  If we have city representatives  that think the same way our current ones do they will re-re-re-re-finance the bonds.

At some point in time this will fall on our heads.

Don’t think for a minute that businesses being asked to move to El Paso have not figured this out.

We deserve better

Brutus