Since JPS is going to raise your taxes to cover the $150 million bond issue, JJ decided to look at the actual fees on the deal. Get ready.
The bonds were issued in $114 million and $36 packages. Dorian Turner, the attorney for the school board, led the way as bond counsel on the larger issue: $243,813. Yup, you read that right. The school board attorney made nearly $250,000 off of the bonds. Think about that while your property taxes go up three mills. Here are the other fees (p.98 in 2008 report) on the $114 million issue:
Mississippi Development Bank (Issuance fees): $70,000
Balch & Bingham (Issuer counsel fees): $25,000
Trustmark (Trustee fees): $3,600
Baker Donelson (Underwriter counsel): $75,320
Community Capital (Financial adviser): $65,800
Moody's (Bond rating agency): $22,230
Spence Flatguard (state bond attorney): $1,000
Jones Financial Services (co-financial adviser): $28,200
TOTAL: $538,416.
Keep in mind these were general obligation minds, which are not that complicated compared to other bond issues that might be specific for buildings and sites. Harrison County issued nearly $114 million in bonds that year for its wastewater treatment plant. (p.88 in 2008 report) The fees were only $283,925. Butler Snow only charged $36,425 for bond counsel fees. The fees for the smaller issue are not on DFA's website.
Note: Moody's downgraded JPS's bond rating last month. One financial expert told me the downgrade from Aa2 to Aa3 was not a big deal as it was still a good rating (Here is a link to the Moody's rating system description. Aa3 is still considered a good investment.) The press release states:
New York, May 23, 2012 -- Moody's Investors Service has downgraded the Jackson Public School District (MS) GOULT rating to Aa3 from Aa2 affecting $144.95 million in outstanding parity debt and downgraded the GOLT rating to A2 from A1 affecting $42.4 million in outstanding parity debt. The GOULT debt is secured by an unlimited ad valorem tax pledge, while the GOLT debt is secured by a special ad valorem tax to be assessed at a rate not to exceed three mills. The rating actions affect $144.95 million of outstanding GOULT debt and $42.4 million of GOLT debt.
Subsequently Moody's Investors Service has withdrawn the Aa3 rating on Jackson Public School District's Series 2008 and 2007 general obligation bonds affecting $144.95 million of rated debt outstanding and the A2 rating on Jackson Public School District's 2000B, 2003B and 2005 Limited Tax Notes affecting $42.4 million of rated debt outstanding.
SUMMARY RATINGS RATIONALE
The downgrade to the Aa3 GOULT and the A2 GOLT ratings reflect the District's below average wealth levels, declining population and high debt burden. The rating also takes into account the District's narrow financial reserves.
WITHDRAWAL REASON
Moody's has subsequently withdrawn the ratings because it has insufficient or otherwise inadequate information to support the maintenance of the rating. Please refer to the Moody's
Investors Service's Policy for Withdrawal of Credit Ratings, available on its Web site, www.moodys.com.
STRENGTHS
-Sizable Tax Base
-Institutional Presence of the State Capital
CHALLENGES
-High Debt Level of 2.7% Net Direct Debt
-Declining Population
-Narrow General Fund Balance of $14,558 million (6.9% of revenues)
What could make the rating go UP
-Improved General Fund reserves and liquidity
What could make the rating go DOWN
-Erosion of General Fund Reserves
-Declines in the taxable value
Tuesday, June 12, 2012
Moody's downgrades JPS to Aa3. JPS board attorney made $243,813 on bond deal.
Subscribe to:
Post Comments (Atom)
16 comments:
We need to immediately increase the Superintendents pay to exceed 247K per year. We can't expect education improvement when the educators make less than the help.
Is Dorian employed by the board? retainer?
She is listed on the JPS website as the school board attorney.
The school board attorney is an employee of the school board. Wouldn't it be a bitch if she also is covered by PERS?
I do believe that is an ethics violation if not out right illegal to collect the fees. But hey, this is Jackson.
Kim: It's an ethical violation to collect fees from your client??? Really? Maybe I'm missing something here.
Nobody complained all those years when David Watkins was soaking JPS and taxpayers for similar fees while he was board attorney.
Depends on the scope of agreement... Billy could you post a copy of the agreement between those two parties. you could very well be right But it's not a given.
Looking at the over all schedule of fees much seems redundant. But its illustrative of the areas to be examined for waste.
This blog wasn't around for watkins or at least didn't focus on bonds until 2009 when Jackson damn near went into the interest rate swap swamp.
Kim, the key is the engagement letter for Turner and I suspect the contract or letter will show everything was legally approved by the school board.
Does this go in the same column as Rudy Warnock and the Madison Board or are there separate columns? Every school board attorney in the state has a license to steal.
School bond issues are partly where David Watkins mad his bones as well. Back in 1997 when the legislature passed that AHEAD (might have wrong acronym) legislation and 100+ school districts did bond issues Adams and Reese got most of the business (Watkins, Jim Young & Dorian Turner). Dorian was always the "face" of the firm for all things JPS. I believe the now-defunct Crosthwait, Terney & Noble got the rest of the business that year (Crosthwait & Noble still exists, but Champ Terney is no longer with us).
It is a racket and an inside game, school bond business is.
Shadowfax, don't leave Eric Hamer out of your Madison County comparison. They both get paid a salary and and separate fees for work product, I believe. Rudy's fees are based on a percentage of the project, so when he puts on his County Engineer hat and runs the numbers up he knows he's going to be getting his 7% on the increase. Not sure about Eric...
I have personal knowledge of the events and made more than 17 visits to the school board over 2 years to register my multiple complaints. What is not recorded is the $1.2MM opportunity cost to the district primarily because of incompetence. What is not mentioned is that the Sup personally directed the business to MS Jones and paid fees that were not essential. It is clear that here were overt racist preferences shown throughout this transaction. Thank goodness that he was finally fired. Jackson (and I am a 50+ year resident) is getting what it deserves.
What it looks like after the house of cards collapses. Jackson (and many other places) will be just like Harrisburg PA, which was ruined by an incinerator boondoggle.
David Unkovic was the former state appointed Receiver for Harrisburg. Unkovic's March 2012 resignation was reported here.
Some of what Mr. Unkovic had to say about what was done to the citizens and taxpayers of Harrisburg:
"In order for a Democratic republic to work, a fundamental respect for the law is essential, particularly by the public officials elected to carry them out and their lawyers and agents. As Thomas Jefferson explained in 1789, “The execution of the laws is more important than the making of them.”
Many in the capital have treated the law simply as an “object” or a “hurdle” to be manipulated as necessary to accomplish a political goal. I believe the disdain for the law is so embedded in Harrisburg’s political culture that it constitutes a very insidious form of corruption.
The tentacles of this corruption stretch into many corners. And this degree of corruption is usually difficult for the public to perceive — such tentacles are often hidden from the average citizens.
Many public officials and other powerful people take the position that “those city people voted for whom they voted, and they will have to live with the consequences.” But the truth is that the average citizens on the streets of Harrisburg did not know about the depth of harmful acts by those they had elected.
They could not have understood there was a highly sophisticated, multi-hundred million dollar debt scheme going on, as shown now in the forensic audit. They did not know about — much less could have understood — the inappropriateness of the interest rate swaps, as revealed now in the forensic audit."
View the audit report here.
Zip it KF. Attorneys have to eat to, just like doctors. We all on the govt teat!
No suprise that Kingfish wants to give Watkins a pass.
The blog wasn't around then. BFD.
Post a Comment