Monday, June 7, 2010

Atlanta burned by interest rate swaps, Hill is thinking again

See sidebar on lower right side of page for a collection of all posts on Jackson's attempt to use interest rate swaps.

Atlanta Constitution-Journal
reported recently how interest rates swaps burned governments in the Atlanta area:

"At least a dozen local governments and other institutions that used derivative deals called swaps to try to lower the cost of bond issues have ended up owing as much as $394 million in fees to the Wall Street investment banks that set up the deals, an AJC analysis of public debt documents shows.

That total includes at least $100 million in fees paid to firms such as Goldman Sachs, J.P. Morgan and UBS AG just to cancel the deals when they went sour.

The city of Atlanta was among the hardest hit by its use of swap schemes — complex, multi-party deals involving varying interest rates, cash payments and loan guarantees. Atlanta shelled out about $86 million to cancel most of its derivative deals. The city also still owes roughly $79 million on another soured swap deal, an obligation it hopes it can reduce in time..." Article

What are swaps? Very complex financial instruments but for those of you who didn't go to Wharton, think of it as as City using borrowing money on short-term adjustable rates that can burn badly if the markets go the wrong way. Jackson tried to use these in refinancing its 2002 and 2004 bonds in 2009 but this blog led the fight in killing it while the Clarion-Ledger completely abdicated its responsibility as a newspaper in ignoring the story. Meanwhile, Rick Hill is getting creative again (Uh-oh):

"The city is looking into the possibility of refinancing its general fund debt in hopes of saving an additional $27.6 million over the next five years after a study released to city council members yesterday predicted a $48.5 million budget shortfall by 2015....

City Deputy Director of Administration and Finance Rick Hill said the city, by refinancing its general fund debt, is delaying debt payments that are currently due, to free up excess cash that the city can use toward its deficit by 2015 if the city does not make drastic cuts to its expenditures or raise revenue through tax increases.


Hill added that the move comes with two disadvantages: "You're moving the debt payments out, but paying more interest. (Also), on out in the years, you'll be paying that money back, so you'll have to have money then to make that payment so the city's millage will be going back up out into the future. We've got to plan how we're going to figure out how to cover that millage increase out into the future."

Hill said the city would be responsible for an extra $1.6 million in additional interest payments by delaying its debt payment, but hoped the city would be in a position to benefit from upcoming projects within the next five years that will generate new sales tax to counter the delayed debt.

"What this does, is it buys us some time to get the new Convention Center Hotel built, buys us some time to get the Farish Street Entertainment District development online, and gives us time to get out of this economic downturn we're all in," Hill said. "Hopefully the Capitol Green Project can also be online to get our sales tax back to where it needs to be."

3 comments:

Anonymous said...

Appears that the Hinds Supes are playing with some swap fire also.

Also during the meeting:

The board voted 3-1 to continue consulting services with Malachi Group regarding the interest-rate swap approved in 2006 and to continue its swap collar, a financial mechanism the Malachi Group says will protect the county.

Through the swap, the county traded its fixed interest rate on $7.5 million in general obligation bonds issued in 2005 for a floating rate with Rice Financial Products Co. in New York.

Fisher voted against the deal, saying it will cost the county about $45,000. He became upset when county budget officials couldn't verify how much the county has made from the swap or how that money has been spent.

Graham, Anderson and Smith voted for the continuation, saying the county has made more than $4 million in four years through Malachi Group's services and the swap.

Kingfish said...

Please tell me this is fiction. Please.

KaptKangaroo said...

KF,

We all love an up market. Unfortunately these folks get to play with OPM.

KK



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Trollfest '07 was such a success that Jackson Jambalaya will once again host Trollfest '09. Catch this great event which will leave NE Jackson & Fondren in flames. Othor Cain and his band, The Black Power Structure headline the night while Sonjay Poontang returns for an encore performance. Former Frank Melton bodyguard Marcus Wright makes his premier appearance at Trollfest singing "I'm a Sweet Transvestite" from "The Rocky Horror Picture Show." Kamikaze will sing his new hit, “How I sold out to da Man.” Robbie Bell again performs: “Mamas, don't let your babies grow up to be Bells” and “Any friend of Ed Peters is a friend of mine”. After the show, Ms. Bell will autograph copies of her mug shot photos. In a salute to “Dancing with the Stars”, Ms. Bell and Hinds County District Attorney Robert Smith will dance the Wango Tango.

Wrestling returns, except this time it will be a Battle Royal with Othor Cain, Ben Allen, Kim Wade, Haley Fisackerly, Alan Lange, and “Big Cat” Donna Ladd all in the ring at the same time. The Battle Royal will be in a steel cage, no time limit, no referee, and the losers must leave town. Marshand Crisler will be the honorary referee (as it gives him a title without actually having to do anything).


Meet KIM Waaaaaade at the Entergy Tent. For five pesos, Kim will sell you a chance to win a deed to a crack house on Ridgeway Street stuffed in the Howard Industries pinata. Don't worry if the pinata is beaten to shreds, as Mr. Wade has Jose, Emmanuel, and Carlos, all illegal immigrants, available as replacements for the it. Upon leaving the Entergy tent, fig leaves will be available in case Entergy literally takes everything you have as part of its Trollfest ticket price adjustment charge.

Donna Ladd of The Jackson Free Press will give several classes on learning how to write. Smearing, writing without factchecking, and reporting only one side of a story will be covered. A donation to pay their taxes will be accepted and she will be signing copies of their former federal tax liens. Ms. Ladd will give a dramatic reading of her two award-winning essays (They received The Jackson Free Press "Best Of" awards.) "Why everything is always about me" and "Why I cover murders better than anyone else in Jackson".

In the spirit of helping those who are less fortunate, Trollfest '09 adopts a cause for which a portion of the proceeds and donations will be donated: Keeping Frank Melton in his home. The “Keep Frank Melton From Being Homeless” booth will sell chances for five dollars to pin the tail on the jackass. John Reeves has graciously volunteered to be the jackass for this honorable excursion into saving Frank's ass. What's an ass between two friends after all? If Mr. Reeves is unable to um, perform, Speaker Billy McCoy has also volunteered as when the word “jackass” was mentioned he immediately ran as fast as he could to sign up.


In order to help clean up the legal profession, Adam Kilgore of the Mississippi Bar will be giving away free, round-trip plane tickets to the North Pole where they keep their bar complaint forms (which are NOT available online). If you don't want to go to the North Pole, you can enjoy Brant Brantley's (of the Mississippi Commission on Judicial Performance) free guided tours of the quicksand field over by High Street where all complaints against judges disappear. If for some reason you are unable to control yourself, never fear; Judge Houston Patton will operate his jail where no lawyers are needed or allowed as you just sit there for minutes... hours.... months...years until he decides he is tired of you sitting in his jail. Do not think Judge Patton is a bad judge however as he plans to serve free Mad Dog 20/20 to all inmates.

Trollfest '09 is a pet-friendly event as well. Feel free to bring your dog with you and do not worry if your pet gets hungry, as employees of the Jackson Zoo will be on hand to provide some of their animals as food when it gets to be feeding time for your little loved one.

Relax at the Fox News Tent. Since there are only three blonde reporters in Jackson (being blonde is a requirement for working at Fox News), Megan and Kathryn from WAPT and Wendy from WLBT will be on loan to Fox. To gain admittance to the VIP section, bring either your Republican Party ID card or a Rebel Flag. Bringing both and a torn-up Obama yard sign will entitle you to free drinks served by Megan, Wendy, and Kathryn. Get your tickets now. Since this is an event for trolls, no ID is required. Just bring the hate. Bring the family, Trollfest '09 is for EVERYONE!!!

This is definitely a Beaver production.


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Trollfest '07

Jackson Jambalaya is the home of Trollfest '07. Catch this great event which promises to leave NE Jackson & Fondren in flames. Sonjay Poontang and his band headline the night with a special steel cage, no time limit "loser must leave town" bout between Alan Lange and "Big Cat"Donna Ladd following afterwards. Kamikaze will perform his new song F*** Bush, he's still a _____. Did I mention there was no referee? Dr. Heddy Matthias and Lori Gregory will face off in the undercard dueling with dangling participles and other um, devices. Robbie Bell will perform Her two latest songs: My Best Friends are in the Media and Mama's, Don't Let Your Babies Grow up to be George Bell. Sid Salter of The Clarion-Ledger will host "Pin the Tail on the Trial Lawyer", sponsored by State Farm.

There will be a hugging booth where in exchange for your young son, Frank Melton will give you a loooong hug. Trollfest will have a dunking booth where Muhammed the terrorist will curse you to Allah as you try to hit a target that will drop him into a vat of pig grease. However, in the true spirit of Separate But Equal, Don Imus and someone from NE Jackson will also sit in the dunking booth for an equal amount of time. Tom Head will give a reading for two hours on why he can't figure out who the hell he is. Cliff Cargill will give lessons with his .80 caliber desert eagle, using Frank Melton photos as targets. Tackleberry will be on hand for an autograph session. KIM Waaaaaade will be passing out free titles and deeds to crackhouses formerly owned by The Wood Street Players.

If you get tired come relax at the Fox News Tent. To gain admittance to the VIP section, bring either your Republican Party ID card or a Rebel Flag. Bringing both will entitle you to free drinks.Get your tickets now. Since this is an event for trolls, no ID is required, just bring the hate. Bring the family, Trollfest '07 is for EVERYONE!!!

This is definitely a Beaver production.

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