Here is a nice little budget hole facing the Yarber administration in a few months.
Check out the savings column. This page is from a refinancing of some Jackson-issued bonds in 2010. Total amount of the refinance: $27 million. The deal generated a bunch of cash for Jackson up-front- Nearly $6 million a year for a few years. Jackson received $5.3 million in FY 2013. However, a little swing in the wrong direction takes place in September: Jackson only receives $1.9 million. It gets worse in 2015- Jackson pays nearly a million dollars a year for several years. Translation: Jackson is about to experience a $6 million hole in the budget over the next two years. Jackson actually loses $10 million on the deal. Loses. Call it a Malachi special. JJ reported in 2010:
Unfortunately for Jackson, the city council was given very little time to consider this matter. Rick Hill was supposed to bring this presentation to the work session Monday. Didn't happen. It was given to the council members less than a half hour before the regular meeting Tuesday. Our city council thus had only a few minutes to study the strengths and weaknesses on a TWENTY-FIVE MILLION DOLLAR LOAN!!! What exactly are the details of this refinance? Here ya go:
1. The city faces a $9.8 million deficit for fiscal year 2011.
2. Here is a breakdown of the fees:
Baker Donelson (Anthony Simon): Bond Counsel. $150,000
Malachi: Financial Advisor. $80,000
Rice Financial Products: Underwriters $5.50 price discount per bond ($140,000).
Tony Gaylor, Betty Mallet: Underwriter's Counsel. $95,000.
3. Malachi projects upfront savings of $5,520,779 for FY 2011........Page 14 is where the devil appears. Jackson will have borrow $26,544,903 in general obligation bonds. However, read the savings column in the table posted above. Jackson will save half a million dollars a year for several years. Unfortunately, Jackson will start paying nearly a million dollars a year for four years. Then it will pay nearly $2 million and then around $4.5 million a year for four years and finally $6 million for the final year. Net cost IS $10,829,286. You read that right. For a few million dollars now, Jackson will PAY nearly ELEVEN MILLION DOLLARS down the road. Earlier post
It hurts just reading this again.
8 comments:
It's no different than a payday loan--something very familiar on the streets of Ward 3...
The city council members could have easily voted "no" until they could go over the refinancing deal. A great example of "legal graft". Why hasn't State auditor Pickering conducted an audit on the City of Jackson?
Holy crap. How in the world do you even start to fix this.
Two-way the one-ways and force parking lots into every neighborhood. That will get us out of this mess.
>>>Holy crap. How in the world do you even start to fix this.<<<
The first step is to stop doing it!
* Stop hiring and electing people and consultants who work for and like payday type loans and budget shenanigans like this.
Then and only then does it make sense to start filing the budget holes. Otherwise, the "leaders" and their bond pimps will be digging for backfill in the middle of the busiest streets.
This is depressing as hell. But sadly, not surprising. Sigh...
Has the guy from the Detroit city council been fired yet?
Harvey Johnson has been dealt with by the voters. Unger is probably still on the payroll. Rick Hill has retired. The former city attorney is now working for the county. Ms. Barrett-Simon and Mayor Yarber have nothing but smiles as they continue their official duties with the public's approval.
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